Young stated that if the request for a derogation is granted, the country would be able to ship an additional $100 million in exports to the EU. Aside from a derogation offer, Gepty stated that the DTI will continue to press for a free trade agreement (FTA) with the EU. “Because our GSP+ preference will expire in December 2023, we are also calling for a Philippines-EU free trade agreement. It is more stable with an FTA,” he said. The EU-Philippines FTA has gone through two rounds of negotiations. The first round took place in May 2016, and the final round took place in February 2017.
The Department of Trade and Industry (DTI) wants the EU to relax the rules on garment exports
Under the European Union’s trade preference system, the Department of Trade and Industry (DTI) would ask the European Union to allow Philippine garment exports to use imported fabric or textiles.
Trade Assistant Secretary Allan Gepty said during a webinar hosted by the Philippine Exporters Confederation Inc. that the agency is working on a request for derogation with the EU so that the country’s garment exports that use imported materials can be included in the Generalized Scheme of Preferences Plus (GSP+).
Under the EU GSP+, 6,274 goods from the Philippines are eligible for duty-free entry into the bloc if they are made in the Philippines.
The EU allows the use of locally produced fabric or textiles for Philippine garment exports to qualify for zero duty.
Due to a scarcity of raw materials, Gepty believes the country’s garment exporters would struggle to meet the requirement.
“For example, most raw materials are sourced from China, and this will not qualify under GSP+ rules in the EU if your inputs are from China,” he explained.
He said a request to invoke derogation would have to be made for the country to be granted a lenient rule on the EU GSP+.
When asked when the request for a derogation with the EU will be made, he replied in a text message, “maybe second to third quarter.”
Foreign Buyers Association of the Philippines (FOBAP) president Robert Young previously stated that the FOBAP, along with other garment-related organisations such as the Garment Business Association of the Philippines, Confederation of Wearable Exporters of the Philippines, Textile Mills Association of the Philippines, and Textile Producers Association of the Philippines, had submitted a request to the Philippine government have made a request to the DTI to ask the EU to invoke derogation under the rules of GSP+.