PH may lose trade perk from EU

By: Roy Stephen C. Canivel, Philippine Daily Inquirer, Apr 05, 2018

The Philippines may soon lose its eligibility for a trade perk from the European Union (EU) which is aimed at poorer nations, in view of a report that says the country may reach upper middle income status in 2019.

Under current rules, the EU’s preferential trade scheme allows thousands of Philippine products to enter the region at zero tariff.

However, only “vulnerable low and lower-middle income countries” could qualify for the perk, the European Commission said on its website.

However, the Philippines may soon move above that bracket allowed under the EU’s Generalized System of Preference Plus (GSP +).

According to the Socioeconomic Report 2017 of the National Economic Development Authority, it is possible that the Philippines would reach upper middle income status next year.

The report said the country’s strong economic growth performance last year enabled it to achieve a gross national income per capita growth rate of 4.8 percent, higher than the target of 4.5 percent.

“This would make it possible for us to reach the upper middle income country standard definition of just below $4,000 income per capita by the end of 2019,” the report read.

Walter van Hattum, head of the economic and trade Section at the European Union’s delegation in Manila, said in a previous interview that the Philippines could no longer qualify for the GSP+ status once it reached that bracket.

“Once the Philippines reaches this upper middle income level, basically you are no longer eligible for the GSP+ because we want to focus on the poorest countries in the world,” he said in a 2016 interview.

However, the European Commission website said the high or upper middle income economy status must be sustained for three consecutive years for a developing country to be ineligible.

The GSP+ has allowed the Philippines to export more than 6,000 products to EU at zero tariff for the past three years.

Data from the Philippine Statistics Authority (PSA) showed that exports to EU grew by 32.8 percent to $9.26 billion last year from $6.97 billion in 2016. The EU accounted for the second largest share of Philippine exports among economic blocs, second only to East Asia.

Asked for comment, Trade Secretary Ramon Lopez told the Inquirer that the Philippines would still want to keep the GSP+.

He, however, did not clarify if this means asking for special consideration from the EU once the country becomes ineligible for the perk.

“We would work on keeping the GSP+ status as long as there are still poor farmers and fisherfolk and SMEs [small and medium enterprises] in the countryside who continue to benefit from this program,” he said, noting that the perk was a “big help.”