EXPORTERS have missed out on the opportunity to get duty-free treatment for $654 million worth of shipments to the United States, and have been advised to maximize the country’s trade incentive from Washington in order to recover from Covid-19 losses.
In a webinar last week, Special Trade Representative Nicanor S. Bautista called on exporters to avail themselves of the duty-free shipping to the US packaged under the Generalized System of Preferences (GSP). He argued that the Philippines is spending hundreds of millions of dollars in tariffs that could have been paid for by the GSP.
According to Bautista, the Philippines last year exported $1.6 billion worth of GSP products to the US, but it failed to apply for exemption to $654 million in eligible goods.
“I would really encourage our exporters to talk to your importers [and] tell them your products are GSP,” Bautista explained. “Because if they are, then your importer may be able to purchase more or you can export more of your products because they are duty free.”
He added that exporters should demand from their buyers in the US that they apply for the GSP benefits, as he described the procedure just involves filling out forms and nothing else.
Bautista said exporters can take advantage of opportunities that will arise from the suspension of Thailand’s trade privilege next year. In October, Washington decided to suspend the grant of GSP to Bangkok for its failure to expand market access for US pork products.
Taking effect on December 30, the suspension opens a window for GSP beneficiaries, such as the Philippines, to fill in the gap in the US market to be left by Thai exports.
“This is another opportunity for us, as we export a lot of similar products to Thailand,” said the trade official, who is stationed at the Philippine Trade and Investment Center in New York. “So we should look into this.”
In spite of the suspension, Thai exporters can transact with their clients in the US as per usual; it’s just that the duty-free treatment for their goods will be removed, Bautista clarified.
The GSP allows the Philippines to export a total of 5,057 products, or nearly half of the 10,600 US tariff lines, to the American market at zero or reduced duties. In exchange, the beneficiaries should comply with 15 criteria involving mainly labor welfare, human rights, intellectual property and market access.
In February, six Democratic senators pleaded with the Office of the US Trade Representative to suspend the Philippine GSP over President Duterte’s human-rights record.
They insisted that extending the trade privilege in the face of drug war killings under Duterte could be seen in the international community as a signal of approval for the bloodshed. Aside from the US GSP, the country’s preferential treatment from the European Union has been put at risk as well with the jailing of Sen. Leila M. de Lima and the shutdown of TV network ABS-CBN.
Last year, merchandise trade with the US improved more than 5 percent to $19.63 billion, from $18.69 billion in 2018, according to data from the Philippine Statistics Authority.
Exports to the American market jumped nearly 9 percent to $11.56 billion, from $10.63 billion. Industrial products and garments made up bulk of the country’s shipments to the US.
The US last year stood as the country’s largest export destination to lead Asian markets Japan, China, Hong Kong and Singapore.