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http://www.eccp.com/cms/filerep/_uploads/f_20140506-112705_GSP+-WaltervanHattum.pdf
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The New GSP and Potential Benefits for the
Philippines
ECCP Exporters' Forum, 29 April 2014
Walter van HattumEU Delegation Manila
MY MESSAGES
1. EU-Philippines: a strong commercial relationship, but we can take more advantage
2. Options include FTA, GSP, WTO, etc.
3. GSP and GSP+ is one means that, if approved, has a direct impact on key sectors. It is temporary and should be seen as intermediary – early preparation key to take benefits!
4. Given PH strong indicators, longer-term, domestic reforms should do the trick to attract major new FDI and trade
5. Business (you) should do your part in promoting PH to EU (and vice versa) – ECCP can help!
CONTENTS
1. PH-EU: How are we doing?
2. PH–EU trade policy options
3. GSP and changes since 1 January 2014
4. GSP+ and potential for the Philippines
5. Concrete actions
6. Q and A
EU-PH GOING, CAN BE STRONGER
0
2
4
6
8
10
12
14
16
18
2006 2007 2008 2009 2010 2011 2012 2013
USD
, bill
ions
Japan China USA EU
EU 4th LARGEST EXPORT DESTINATON
0
2
4
6
8
10
12
2006 2007 2008 2009 2010 2011 2012 2013
USD
, bill
ions
Japan USA China EU
EU 3rd LARGEST SOURCE OF IMPORTS
0
1
2
3
4
5
6
7
8
9
2006 2007 2008 2009 2010 2011 2012 2013
USD
, bill
ions
China USA EU Japan
PH MAJOR EXPORT PRODUCTS TO EU
-
1
2
3
4
5
6
7
2007 2008 2009 2010 2011 2012 2013
Euro
, bill
ions
Agri prods Electr.& Electronics Transport eqpt Textiles & clothg Others
EU LARGEST INVESTOR IN PH
EU-27
30%
Japan
17%USA
17%
ASEAN
13%
China (incl
HK+Macao)
8%
Australia
3%
S. Korea
2%
Switzerland
2%
others
8%
STRONG GROWTH / OPPORTUNITIES
1. Services Exports + 24% (total €2.6 billion) –travel, tourism, transport, BPOs
2. Agriculture – fish +32%, Coconut Oil
3. Footwear + 98%
4. Manufacturing: electronics still 36% of overall exports
CONTENTS
1. PH-EU: How are we doing?
2. PH–EU trade policy options
3. GSP and changes since 1 January 2014
4. GSP+ and potential for the Philippines
5. Concrete actions
6. Q and A
PH TRADE: IS IT ENOUGH?
EU-ASEAN TRADE IN GOODS2013 (billions of euro)
12
SGTH
MYVN
ID
PHKH
0
5
10
15
20
25
0 5 10 15 20 25 30 35
EU
go
od
s i
mp
orts
to
AS
EA
N M
S (
€b
n)
EU goods exports to ASEAN MS (€bn)
EU FDI TO ASEAN
Singapore
IndonesiaMalaysia Thailand
Philippines
0
20
40
60
80
100
120
140
Euro
, bill
ions
EU – PH TRADE POLICY OPTIONS
• Join forces in the multilateral system: WTO Trade Facilitation Agreement (July), but also plurilateralagreements on services, ITA, or green goods or the Government Procurement Agreement � Integration
• Longer-term and linked to readiness (ambition levels): a bilateral FTA (in regional / ASEAN) context
• Shorter-term: GSP and potentially GSP+ - get ready and take more advantage! (utilisation)
• Dialogue (G-to-G and B-to-B) to discuss opportunities and regulatory issues – EU Philippines Business Network
Bilateral FTAs as building blocks ASEAN
• Singapore:
• Malaysia:
• Vietnam:
• Thailand:
• CLM:
• Indonesia:15
− launched March 2010, concluded in 2012− FTA initialled September 2013− negotiations on investment protection− launched October 2010− 7th round held April 2012− Negotiations to resume− launched June 2012− Concluding round September 2014?− launched March 2013− Fourth round last month − EBA + Myanmar Investment Protection
− Initial scoping
CONTENTS
1. PH-EU: How are we doing?
2. PH–EU trade policy options
3. GSP and changes since 1 January 2014
4. GSP+ and potential for the Philippines
5. Concrete actions
6. Q and A
GSP FROM 1 JANUARY 2014
• 10 year duration: predictability, transparency and stability
• To those who need it most: from 177 to 90 beneficiaries � PH to jump ranks (now #20 beneficiary � #10?)
• graduation of sectors : timely exclusion of competitive products; avoids "overshoot“ to non-competitive products; none for GSP+
• More transparent and predictable for economic operators
NEW GSP90 countries which need GSP trade preferences the most:
• 49 least developed countries under EBA
• 41 Low income' and 'lower middle income' countries
� These countries may benefit from standard GSP and/or GSP+
Partners which are no longer eligible:
• 33 Overseas countries and territories (already access—do not need GSP)
Partners which no longer benefit:
• 34 Partners which have been granted preferences through other tracks (e.g. bilateral agreements, autonomous arrangements—do not need GSP).
• 20 'High income' or 'upper middle income' partners, as listed by the World Bank
FOCUS ON NEED
• Standard GSP: just under 66% of tariff lines covered (reduction or 0%)
• GSP+: just over 66% of tariff lines covered (zero tariffs), both sensitive and non-sensitive duty-free
• Everything But Arms: 99.8% of tariff lines covered
New
• GSP: 15 more tariff lines (6-digit) under the scheme, 4 tariffs lines (8-digit) move from “sensitive” to “non-sensitive”).
• GSP+: 4 more tariff lines (6-digit) under the scheme.
• avoid that more advanced beneficiaries put additional pressure on poorer beneficiaries
Trade preferences under new GSP
• GSP: generous tariff reductions on ~ 2/3 products• Brunei, Malaysia, Thailand will probably be losing GSP treatment• Indonesia, Vietnam will remain beneficiaries
• GSP+: full removal tariffs on ~ 2/3 products• Philippines eligible and meets vulnerability criteria
• EBA: duty-free, quota-free to all products• Cambodia, Laos, Myanmar will remain beneficiaries
20
PH: MOST EXPORTS ALREADY AT 0%
PH TODAY: 20% OF EXPORTS GSP
PHL total and GSP exports to EU
-
250
500
750
1,000
1,250
1,500
1,750
2,000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
EURO, m
illio
ns
-
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
GSP eligible
Actual GSP exports
Total exports (rhs)
GSP UTILISATION COULD IMPROVE
-
250
500
750
1,000
1,250
1,500
1,750
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
EU
RO
, mill
ions
GSP eligible Actual GSP exports
IN KEY SECTORS (€1000)
Total Imports Eligible Preferential Utilisation
Animal or vegetable fats, oils and waxes 353,844 310,310 272,584 88%
Prepared foodstuffs products 205,409 189,206 151,308 80%
Machinery and mechanical appliances 2,943,238 315,501 116,024 37%
Products of the chemical industries 123,623 104,542 101,038 97%
Textiles 220,364 208,754 80,367 39%
Optical , measuring and musical instruments, clocks 362,052 128,055 70,313 55%
Plastics and rubber 111,454 72,615 65,830 91%
Miscellaneous 84,971 55,677 43,460 78%
Base metals 57,839 49,894 43,148 87%
Transport equipment 256,224 72,994 42,574 58%
Total 5,114,787 1,611,894 1,075,982 67%
CONTENTS
1. PH-EU: How are we doing?
2. PH–EU trade policy options
3. GSP and changes since 1 January 2014
4. GSP+ and potential for the Philippines
5. Concrete actions
6. Q and A
GSP+ NEW
• Graduation no longer applies to GSP+• Entry
• Vulnerability – import share criterion: threshold increases from 1% to 2%
• Vulnerability – non-diversification criterion: number of sectors to cover at least 75% increases from 5 to 7 (neutral)
• No entry windows: can apply any time • New countries which can apply: Philippines, Pakistan,
Ukraine.
All eligible countries need to apply to receive GSP+, even if they are already beneficiary under the present scheme
GSP+ NEW
27 conventions (Apartheid no longer relevant and falls, UN Framework Convention on Climate Change in)
Entry• Binding commitment to ratify conventions, to accept
monitoring, and to cooperate • Commitment to accept without reservations
conventions' reporting requirements• Country has not formulated a reservation which is
prohibited by any of those conventions • No serious problems of implementation
Enhanced monitoring • More scrutiny by Council and EP on the basis of
Commission report, every 2 years
GSP+ APPLICANTS
• Applied and approved: Armenia, Bolivia, Cape Verde, Costa Rica, Ecuador, Georgia, Mongolia, Paraguay, Pakistan and Peru
• Applied and in process: El Salvador, Guatemala and Panama
• Applied and in process: The Philippines
POTENTIAL BENEFITS TO PH
• Duties on key export products could go down substantially, including for instance canned tuna, sardines, pineapple juice, fruit jams as well as garments, bicycles and footwear.
• According to DTI analysis: + 270,000 jobs; + 12% exports
• Fits into overall Trade Policy strategy of diversification and bilateral agreement(s)
• Most of all should help increase FDI
BENEFITS TO PHILIPPINES
Customs duty on PH GSP exports
49%
27%
11%
6%7%
ZERO < 5 % 5% to < 10% 10% to < 20% >= 20%
• Already at 0%: main benefit under GSP+ is the exemption from graduation
• includes electrical products, alcohol, activated carbon, optical products, tyres, tennis balls, and jewellery - Worth €560mn
• 27% OF GSP UNDER 5%, worth €300 mn; includes coconut oil and certain alcohol exports
• most Furniture (HS 9401 to 9406) have zero to minimal (1.2%) GSP duty only
• 24% of PH GSP exports pay (reduced) customs duties of 5% or more � opportunities
EXAMPLES OF POTENTIAL (indicative only)
EXAMPLES OF POTENTIAL (indicative only)
• Over 1,600 GSP products (at CN8 level) have ‘low' ad valorem duties (5% to less than 10% under GSP)
• Average duty at 7%
• 11 % of PH GSP exports or some €120 mn
• garments: 5%-9.6%
• Preserved fruits : 6.1%-9.5%
• tobacco products: 6.4%-9.1%
• others like plant products, mixed fruits, confectionery products, biscuits, non-alcoholic beverages, nets, woven fabrics (5%-7.4%)
• 390 GSP products (at CN8 level) have ‘medium' duties (10% to less than 20% under GSP)
• average duty at 13%
• 6% of PH GSP exports or some €63 mn
• pineapple products : 14.1%-17.3%
• bicycles: 10.5%
• tobacco products: 11.6%-14.9%
• fish fillet: 14.5%
• footwear: 11.9
EXAMPLES OF POTENTIAL (indicative only)
• 50 GSP products (at CN8 level) have 'high' ad valorem duties (20% or more even under GSP)
• average duty at 25%
• 7% of PH GSP exports or some €80 mn
• tuna: 20.5%
• sardines/bonito: 21.5%
• pineapple juice: 28.5%
• fruit jams/jellies: 20.5%
EXAMPLES OF POTENTIAL (indicative only)
CONTENTS
1. PH-EU: How are we doing?
2. PH–EU trade policy options
3. GSP and changes since 1 January 2014
4. GSP+ and potential for the Philippines
5. Concrete actions
6. Q and A
CONCRETE ACTIONS
• To follow
• Discussion on Rules of Origin –Cumulation/enabling clause
• Regional Trade Agreements (RCEP, TPP, etc.)
• Countries losing GSP!
• Philippines and IUU!
CONCRETE ACTIONS
• For Governments:
• Trade and Investment Working Group
• Agri/food discussion
• Continuation of discussions on scoping (pre-FTA)
• For Industry
• Inform yourself about concrete implications GSP (already benefits) and GSP+
• Utilisation Rate
• Use of Help Desk
• Dialogue – EU Philippines Business Dialogue
CONTENTS
1. PH-EU: How are we doing?
2. PH–EU trade policy options
3. GSP and changes since 1 January 2014
4. GSP+ and potential for the Philippines
5. Concrete actions
6. Q and A