Philippines and EU GSP+: inclusive and sustainable growth

The EU and the Philippines have a strong trade and investment relation. Trade in goods between the EU and the Philippines have been increasing over time, preserving a solid balance between imports and exports.

Total bilateral trade in goods between the EU and the Philippines reached its record high of 15 billion euros in 2019. Due to COVID, EU-Philippines trade slumped in 2020 and declined by 17 percent. Nevertheless, figures for 2021 indicate that our bilateral trade has reached more than 14 billion euros while for 2022 there are good indications that we will be close to the all-time record level of 2019.

At present, the focus of EU’s trade agenda with the Philippines is in the full implementation of the EU Generalized System of Preference + (GSP+). The EU is working closely with the Philippine government and various stakeholders to ensure that the benefits of this trade preference boost the Filipino external sector and reach its intended beneficiaries, particularly workers, farmers and communities living on the sustainable exploitation of goods and products destined to the export market.

Since the granting of the GSP+ trade preferences to the country in December 2014, we have seen a steady increase in the utilization rate for the Philippines. Phl exports under the GSP+ enjoy zero tariff at the access to the EU market. Agricultural products including processed food and fishery products and manufactured goods highly benefit from GSP+. In 2020, Philippines’ utilization of GSP+ was 75 percent.

Just last month, I took part in a virtual event, attended by hundreds of participants, conducted by the EU GSP+ hub in close coordination with the Department of Trade and Industry. We had a conversation with direct beneficiaries of the GSP+ on how to maximize the benefits of the GSP+ from a trade angle. I was impressed to hear from the business experience how they benefitted from GSP+ allowing them to not only enter the EU market but to expand their market presence in Europe. It is crucial that the experience of successful exporters becomes an example and inspiration for other potential producers and exporters.

In the coming days, the Philippines will welcome a periodic visit from the European Commission and the European External Action Service. Experts from the EU executive in Brussels will engage with the Philippine government and other stakeholders, including international organizations and civil society organizations, to discuss the progress made and challenges faced in the implementation of 27 international conventions in the areas of human rights, labor rights, the environment and good governance, which are the basis for EU GSP+.

Back in 2018, a similar monitoring mission from the EU highlighted concerns, in particular in respect of the situation on human rights and labor rights. This coming mission will reassess the situation and prepare a monitoring report by the end of this year.

It is important to remind that EU trade preference is not forever. For instance, a GSP+ country could lose its preference in case it did not comply satisfactorily with the 27 international conventions. The benefit could be lost also in case a GSP+ country reaches the upper-middle income category (based on the World Bank ranking). As a matter of fact, the Philippines could approach this threshold in the coming years after it recovers from the impact of the pandemic. In that case, the withdrawal of the benefit would be progressive.

Likewise, a new EU GSP regulation is in preparation and will enter into force in January 2024. We expect that the spirit of the system will remain unchanged, with the introduction of new conventions on sustainable development principles, with a growing focus on labor and climate. Of course, it will be for the Philippines to decide if the country wants to apply in order to continue reaping the benefits of the EU GSP+.

In the meantime, GSP+ continues to be an important competitive advantage for the Philippines since it is the only country in ASEAN that is granted with this preferential treatment. This is an opportunity for the Philippines to diversify its export basket and further strengthen its linkages in the global value chain and its overall export market position.

The EU is also funding an important trade-related project called ARISE Plus Philippines for an overall amount of 6.4 million euros. The project is designed to boost Philippine exports. It will also support the Philippines in the implementation of its own National Quality Infrastructure and other trade facilitation measures. It will focus on enabling the Philippines to take full advantage of GSP+ as well as on strengthening the overall EU-Philippines trade relations.

Now is an opportune time for the Philippines to introduce reforms to strengthen the country’s competitiveness and capacity of the country. This will surely support the joint efforts of the government and the private sector to bounce back better. The EU stands ready to cooperate with the Philippines so we recover together from this crisis and enjoy more sustainable and inclusive economies.

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Luc Veron is EU Ambassador to the Philippines.