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Philippines Seeks Duty-Free Access to U.S. for Apparel

Looking to bolster its garment manufacturing industry, the Philippines is requesting duty-free access to U.S. markets, especially for those goods produced in areas recently ravaged by a destructive typhoon.

The Philippines is also seeking preferential treatment for some apparel goods exported to the U.S. In an effort to stimulate business in typhoon-stricken areas struggling to regain lost footing, this measure is meant to provide incentive for factory owners to set up shop there.

Gregory Domingo, Secretary of the Department of Trade and Industry in the Philippines, said that he is already in negotiation with garment factory owners regarding the establishment of manufacturing facilities in places like Samar and Leyte. The primary concern factory owners have about Domingo’s proposal is that these areas generally have minimum wages that are considerably higher than the national average. There is some discussion about the possibility that government granted subsidies to the factory owners for locating their business to these areas could make up for the hit they’ll take from higher labor costs.

The Philippines has been aggressively seeking free trade arrangements with both the U.S. and E.U. recently in an effort to rehabilitate its central garment industry, beleaguered as a result of the natural disaster. The Philippines has officially applied for GSP Plus status with the European Union. The government formally announced its intent to file for the first time last August after the E.U. revised GSP criteria to emphasize the inclusion of “countries most in need.” Currently, the Philippines enjoys regular GSP, which applies to more than 6,029 products. Within that group, 2,442 products can be exported into E.U. territory completely duty-free.

According to the Philippines’ Department of Trade and Industry, GSP Plus status could increase the nation’s exports to the E.U. by approximately $842 million, a nearly 12 percent jump in comparison to 2012. The export growth, according to some expert estimates, could translate into as many as 250,000 new manufacturing jobs.

Philippine exports in 2011 totaled $2.14 billion, of which $1.92 billion were apparel products and $162 million textiles. The U.S. is the primary destination for the nation’s exports, absorbing 59 percent of them, with the E.U. accounting for 13 percent and Japan 9 percent. In 2009, the textile and apparel industries were responsible for more than 13 percent of the overall workforce.