PCCI advice on EU threat to cut PH trade perks over rights issues: Don’t take it lightly

MANILA, Philippines—The country’s largest business chamber cautioned the government against taking lightly the threat of European Union (EU) lawmakers to stop duty-free entry of more than 6,000 Philippine products, saying local industries would be put in harm’s way if the EU restricted trade ties with the Philippines to protest alleged human rights abuses.

Benedicto Yujuico, president of the Philippine Chamber of Commerce and Industry (PCCI), said on Thursday (Sept 24) that the Duterte administration should start a dialogue with the EU on the issue, instead of just dismissing the implications of a resolution signed recently by majority of EU’s lawmakers.

The European Parliament passed a resolution last week, calling on the European Commission to remove a trade concession that has let the Philippines export 6,000 product lines with no tariff to the EU market. The trade perk, which took effect in late 2014, is called the Generalised Scheme of Preferences Plus, or simply the EU GSP+.

The EU lawmakers wanted to remove the trade perk to press the Duterte administration to address alleged human rights abuse cases and stop these. This is the third time that the EU parliament passed such a resolution, with the last two resolutions filed in 2017 and 2018 over similar concerns.

“While I don’t think EU will do this, I think that we shouldn’t take that for granted. I think we have to be careful,” Yujuico said, when asked for comment at a press conference on Thursday.

“We have to advise our government that we have to tread lightly in so far as this issue is concerned,” he added.

Other PCCI officials in the briefing also worried how the EU threat would affect businesses in agriculture, electronics manufacturing, and garments manufacturing.

Many businesses benefit from this trade concession. For example, canneries in the country’s tuna capital General Santos City have been able to compete with other exports because of the EU GSP+, which then made the EU their largest market, accounting for about 65 percent from just a quarter of demand prior to the trade perks. But while there is significant benefit, this also means the Philippines has more to lose here than the EU.

In 2019, the Philippines accounted for only 0.4 percent of EU imports, according to data from the European Commission. On the other hand, data from the Philippine Statistics Authority showed that the EU was the fourth largest export market of the Philippines in 2019, accounting for nearly 12 percent at $8.2 billion.

The Philippines entered the GSP+ arrangement knowing well the conditions attached to it. After all, the GSP+ is more than just a trade tool. It is also a way for the EU to encourage developing countries — like the Philippines — to pursue sustainable growth. The trade perk is conditional on how the beneficiary country commits to international conventions on human rights, labor rights, environmental protection and good governance.

In the latest resolution passed by majority of EU’s lawmakers, the parliament cited more abuses under the current administration, from the murder of Red-tagged activists, fatal blows against media freedom and the move to reinstate death penalty in the Philippines.

Trade Secretary Ramon Lopez, however, dismissed this, explaining that it’s the European Commission, not the European Parliament, that decides on the GSP+. As far as the commission is concerned, Lopez said the country had already explained its part.

“We cannot just assume that it will not be done,” said Yujuico.

“We have to somehow initiate some kind of a dialogue and see what we could do to mitigate this particular concern of the EU,” he added.

Palace spokesperson Harry Roque had also dismissed the EU threat, daring the European government to go ahead and cut the Philippines’ trade perks.

TSB