Garment firms back Roxas plan for allocation of export quotas

Leaders of the multibillion dollar garments industry have agreed to adopt reforms proposed by Trade and Industry Secretary Manuel Roxas II in the allocation of quota to the United States market.

Fractious until last year, garment manufacturers and exporters have found a reason to unite in Roxas’ formula that the re-allocation of export quota to the US will be in the form of incentives to outstanding performance beginning next year.

Taking a unified stand in favor of the merit system of quota allocation were the Confederation of Garment Exporters of the Philippines (CONGEP), Garment Business Association of the Philippines (GBAP), Foreign Buyers Association of the Philippines (FOBAP), Textile Millers Association of the Philippines (TMAP), and Children’s Apparel Association of the Philippines (CAAP).

These associations represent a cross section of the industry, from the suppliers of textile to representatives of buyers abroad.

The garments industry hauls in about $3.1 billion a year or roughly P150 billion and has maintained its number two position, next to electronics, as the country’s top dollar earner. It is made up of over 3,300 direct exporters and subcontractors employing half a million people.

The original reform package for the industry was floated by the Garments and Textile Export Board (GTEB) early last year to prepare local producers for the phaseout of the quota system by the end of 2004. But some key players violently opposed the reform program.

Asked why key industry players have finally acceded to the reform program, Donald Dee, a long time CONGEP leader and chief advocate of reforming the quota system, said they have seen not only Roxas’ sincerity but his foresight and flexibility in allowing industry players to adjust to changes in the marketplace.

Dee cited the openness of the trade czar in relaxing present stringent requirements of the GTEB to allow individual exporters to meet their quotas and his foresight in anticipating that Philippine garment exporters could not survive the competition if they do not shift to higher end garment products before the quota system gets totally scrapped.

A follow-up interview with the quota division of the GTEB showed that the government body has drawn up a general guideline on incentivizing the allocation of quotas. The basic principle is to award higher quotas to better performers.

Performance will be based on productivity, meaning the ability of manufacturers to produce more and better quality goods at lower costs; and market development which will involve the participation in foreign trade exhibits and the opening up of new markets, preferably those which demand medium and high end products.

It is anticipated that if the country’s garment exporters cannot find markets for better quality and more expensive products in the US, their low-end exports will be swamped by cheap products from labor-cheap sources like China, Bangladesh and Indonesia.

The US remains the chief destination of Philippine garments, absorbing eight out of every $10 worth of goods the country exports. — Philexport News & Features