RP exporters not benefitting from FTAs due to lack of info - ADB

Despite a rush in the forging of bilateral and regional free trade agreements (FTAs) in the first eight years of the new century, only a small percentage of Filipino export enterprises have taken advantage of these preferential trade pacts.

The main reason is, most of them do not know how to get those benefits.

This was one of the highlights of a study conducted by the Asian Development Bank (ADB) of exporters in Japan, Singapore, Thailand and the Philippines made public in a recent roundtable discussion with industry leaders.

The study was made by a team led by ADB senior economist Ganeshan Wignaraya with consultancy support by two Filipino economists, Dorothea Lazaro and Genevieve de Guzman.

Out of 155 companies from three major export industries, electronics, automotive parts and food, Wignaraya’s team found that only one fifth (20) are FTA users. Most of the users were also found by the ADB team to be the big companies.

The FTAs that include the Philippines are: the original ASEAN Free Trade Area (AFTA) of which the Philippines was one of the principal architects, its expansion to FTAs with China, Japan and South Korea and more recently, with India and Australia.

So far, the country has only one bilateral pact, the recently ratified Japan-Philippines Economic Partnership Agreement (JPEPA) that is yet to take effect.

Tracing the reasons behind the low use of FTA benefits, ADB discovered that in the Philippines, a vast majority or 70 percent of the Filipino companies surveyed said there is a lack of information on the impact of the FTAs to business, good or bad. The respondents also revealed that there is a dearth of facts available to the public on the specific provisions of those agreements that they can use to their advantage.

The minimal availment was traced by 26.9 percent of the respondents to the fact that as registered under the export processing zone, they already enjoy incentives that allow duty-free import privileges, while the 23.1 percent said there was too much rent-seeking. Other reasons cited were: too many exclusions (of their products), small margin of preferences which does not make it worth the hassle, and non-tariff barriers in partner countries.

Responding to the presentation, Philippine Exporters Confederation Inc. (Philexport) president Sergio R. Ortiz-Luis, Jr. confirmed that Philippine exports to fellow members of AFTA plus China, started kicking up only in the past eight years, showing a five-year lag time since the country joined AFTA.

The export leader further acknowledged support organizations saw the information gap at the height of negotiations on the JPEPA when industry groups clamored for government negotiators to reveal details on the negotiations.

Since then, a consultation mechanism in negotiations for non-agricultural market access (NAMA) has been put in place. In contrast, the counterpart group for agriculture has been conducting regular dialogues and meetings to update stakeholders on the developments in multilateral or the WTO negotiations and generate stakeholder positions on particular issues. The one on services is yet to be created.

Ortiz-Luis agreed with the ADB researchers in the latter’s suggestion that private chambers, federations and industry associations must, from here on, take the cudgels of informing their members on how they can increase their exports, buy cheaper raw materials and enjoy other benefits that FTAs bring to Philippine SMEs. — Philexport News and Features