FREE Special Report: Tuna exports most vulnerable to loss of GSP+

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Our Partner Broker’s Analysis and Opinion

Exports to the European Union can survive the loss of a preferential trade agreement that allows tariff-free access of over 6,000 products, however, some agricultural products from the Philippines may be more vulnerable than others.

According to the Department of Trade and Industry (DTI), the effect of losing the Generalized System of Preferences Plus (GSP+) status may differ for each product covered, but tuna and coconut oil will be most affected.

GSP+ offers economic benefits to Philippine trade in exchange for compliance with a set of key international conventions. Attempts by the Duterte administration to reimpose the death penalty and extraordinary measures to fight crime is fueling speculation that GSP+ status may be at risk. We should note that exports to the European Union accounted for 11% of the total exports in November.

Even if the country loses its GSP+, the country will still have GSP regular, which covers a total of 6,209 Philippine products, 2,442 (39% of total) of which are subject to zero duty, while 3,767 (61%) have reduced tariffs.

In comparison, GSP+ grants 6,274 other products zero duty. GSP is a “non-reciprocal” arrangement, which meant that the Philippines would only have to follow technical requirements such as origin criteria and procedures in order to be eligible for benefits.

The GSP+, on the other hand, asks for the country’s compliance to 27 international conventions on human and labor rights, environmental protection and good governance as well as their implementation.

Should EU choose to remove GSP+ status, tuna exporters would still fall under the regular GSP with reduced rates. However, this would lead to a 20.5% tariff which would have otherwise been zero. Tuna will be affected because without EU GSP+, tariff on tuna would be more than 20%. The GSP+ is really a win for tuna exporters. While the GSP+ covers around a quarter of overall products exported to the EU, the utilization rate is at least 60%.

An EU monitoring team is due in the Philippines this month to check the country’s compliance with GSP+ requirements.


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Unicapital Securities
Unicapital Securities

Unicapital Securities is one of PinoyInvestor’s partners in delivering superior and reliable stock research reports that help Filipino investors make smart stock investing decisions! Learn more about them here.