Adoption of the World Trade Organization (WTO) Trade Facilitation Agreement (TFA) and the Philippines Customs Modernization and Tariff Act could reduce trading costs by as much as 15 percent and help to reduce congestion at the port of Manila, according to European Union Ambassador to the Philippines Guy Ledoux.
Ledoux made the comments during the “Trade Facilitation and Customs Modernization: making better use of trade and Agreements” forum organized by the EU Delegation to the Philippines and the Philippine Chamber of Commerce and Industry (PCCI) at the Manila Hotel on Thursday, as part of the 40th Philippine Business Conference being held from October 22 to 24.
“The Philippines economy is growing stronger, more than doubling its size in the last decade to €205 billion. The recent visit of President Aquino to four EU member states showed a keen interest of our leaders to increase trade predicting there is a lot more to come – and rightly so,” Ledoux said during his speech to the forum.
“Remarkable growth in our trade can be noted during the first six months of 2014, where EU-PH trade increased by 21% to US$ 7 billion. More importantly, this trade is in value-added products: EU imports from the Philippines include electronics, appliances, optical and photographic instruments, and food. The EU supplies about 30% of total FDI to the Philippines, providing over 400,000 jobs. Likewise, Philippine investors have invested some €1.4 billion in the EU, a positive contribution to our economy,” Ledoux added.
Bringing PH-EU relationship to a new level
Taking note of the recent endorsement of the Philippines by the European Commission for inclusion in the GSP+ preferential tariff scheme, Ledoux said the potential of the EU-Philippines trade relationship is now much higher. “Philippines application to GSP+ will – if approved by the European Parliament – play a big role in strengthening this relationship,” he said.
The GSP+ status would eliminate tariffs on up to two-thirds of Philippine products exported to the EU, including garments, processed fruits and fish, woven fabrics, footwear, fruit jams and jellies.
“Philippine ambitions to embark on free trade talks could support this process even further, while the Philippines’ economic reform agenda would eventually be the key decisive factor to attract more FDI and help create more jobs and welfare,” Ledoux said.
Trade facilitation, customs modernization pushed
Ledoux suggested that the benefits of trade facilitation are enormous and might even be more important than a further reduction of import tariffs.
“For example, revenue loss from inefficient border procedures is estimate to be above 5 percent of GDP in some countries. Implementing the trade facilitation agreement that was agreed to in Bali last year would support trade in goods by improving transparency, streamlining customs procedures and eliminating red tape. The OECD estimated that trade cost reductions from the Agreement would be over 15 percent for lower middle income countries like the Philippines. These benefits would come from measures related to documentation, automation and information availability as well as other simplifications,” Ledoux explained.
“Unfortunately, the current stalemate in the WTO to adopt the Trade Facilitation Protocol has put a delay on the adoption of the TFA and I hope the Philippines will join us in the advocacy for making this deal happen as soon as possible, (even) after a positive/negative outcome of WTO General Council on 21 October,” he added.
The EU representative lauded the Philippines for its “ambitious” proposed schedule for implementing the WTO trade facilitation agreement. “I regret that a few WTO members are now stalling the progress made in Bali and I hope the Philippines will chose to implement its commitments with or without the adoption of the WTO protocol. As you know, the EU is ready to support with technical cooperation as we have done in the past,” Ledoux said.
Remove local roadblocks to trade
Ledoux highlighted the progress made so far on the Philippines’ Customs Modernization and Tariff Act, pointing out that it already includes numerous provisions of the TFA.
“Congress and the Senate can do the country an enormous favor by fast-tracking this important bill, including its planned revision of procedures to harmonize and standardize, doing away with manifold import declarations, letting go of ‘de minimis’ value for reported – and taxed – imports, and imposing revenue objectives. The CMTA would support IPR enforcement, trade data collection, risk management instead of full screening, [all]linked to post-clearance audit and automation through a national single window. I know many operators are keen to see the CMTA put in place, especially those whose containers are piled up in the port right now,” Ledoux said.
Acknowledging that it was a sensitive topic, Ledoux expressed misgivings about Philippine planes to expand pre-shipment inspections (PSI) or port load surveys as a measure to relieve some of the workload of Customs operations in Philippine ports, inviting Bureau of Customs Commissioner John P. Sevilla to have a “further dialogue” on the issue.
“Let’s not take any measures that would go against the spirit of the Trade Facilitation Agreement. While I understand the reasons behind introducing PSI, alternatives should be explored that could help with some of the necessary reforms in customs and ease the port congestion,” Ledoux said. Voltaire Palaña