UK assures continued GSP+ for Philippines exporters amid Brexit

MANILA, Philippines —  The British government has assured Philippine exporters they would continue to enjoy trade benefits under the European Union (EU) Generalized Scheme of Preferences Plus (GSP+), even after the UK leaves the trade bloc.

“In terms of those who are concerned about this specific business regimen which underpins Philippines’ exports to the EU, the GSP+ will continue. No deal or deal, it will continue. If we leave without a deal, which I am convinced we will rule out on Wednesday, we would still implement GSP+ in exactly the same way. And if we do arrive with a deal, things will carry on exactly as they are at the moment. Everything remains the same,” UK trade envoy to the Philippines Richard Graham said during the joint membership meeting of the British Chamber of Commerce of the Philippines, Makati Business Club, the Philippine-British Business Council and the British embassy.

The Philippines is a beneficiary of the EU GSP+, which allows the duty-free entry of 6,274 products to the bloc.

The UK is due to leave the EU on March 29.

 “Under the terms of agreement already reached, assuming we pass it, which I believe we will, we go into this transition period of about 18 months where all rules and regulations are exactly the same. Nothing changes in practice on both the tariffs and non-tariff barriers, customs arrangements and so,” Graham said.

In case something goes wrong and the UK leaves the EU without a deal, he said the British government would replicate the GSP+ with the same rules and conditions.

“We might call it something slightly different. I think it is going to be called EA or something like an economic agreement, but it will be exactly the same from Day 1 when we leave the EU. So for all the exporters, it’s really business as usual,” he said.

With the UK set to exit the EU, he said the Association of Southeast Asian Nations (Asean) could get more attention from the UK in terms of trade.

While 48 percent of UK’s exports go to the EU and 52 percent to the rest of the world, Graham said the percentage going outside the trade bloc and to Asean could increase as the latter posts faster economic growth in the next 10 to 20 years.

“I think for the Philippines, with your high levels of English, your knowledge of UK, I think the UK is a better natural partner for you than some of the countries across Europe. So, we want to become your partner of choice, not just in the EU, but also in the West,” he said.

In terms of investment, he said the Philippines could attract more foreign investors in the country if it can provide ease in doing business and pursue its plan to reduce the corporate income tax (CIT) rate.

Under the second package of the tax reform program, the Philippine government plans to cut the CIT gradually to 20 percent from 30 percent, and rationalize fiscal incentives.

Graham said the UK made a similar move of bringing down the CIT to 19 percent from 28 percent and it raised 25 billion sterling worth of extra tax revenue.

He said the UK also introduced tax credits for research and development and capital expenditures for businesses which allowed firms to expand and create three million jobs.

“The Philippines, I think, is heading on a similar journey. I hope you are equally successful because the one thing that socialists and people who are not businessmen will never understand is if you reduce tax, you increase the amount of tax revenue and the key reason for that is, nobody has the incentive to pay their accountants a lot of money just to try a way to maximize not to pay tax,” he said.

“I think if the Philippines does that, you will increase the amount of foreign investment that comes here,” he added.