The European Union has approved the Philippines’ application for Generalized System of Preference (GSP) Plus status, and the country will now benefit from zero tariffs on 6,274 products—nearly two-thirds of its exports—destined for Europe.
According to the Manila Times, the Philippines expects to increase exports to the E.U. by 35 percent and create 200,000 jobs as a result of the preferential status, which begins as of Dec. 25, 2014.
The GSP+ program, part of the E.U. Generalized System of Preferences (GSP), offers eligible countries zero tariffs on all products covered by the scheme. The Philippines already benefits from GSP trade privileges with the E.U., but only enjoys tariff free exports on a limited number of products.
Exports to the E.U. eligible under regular GSP totaled $2.07 billion last year, 33 percent of total exports. The status change is expected to increase annual export earnings by as much as 600 million euro ($737 million). The Philippines exported 176 million euro ($216 million) worth of textiles and textile articles to the E.U. in 2013, down 20.8% from the previous year. Garments, textile products and footwear are among the top sectors expected to benefit from the GSP upgrade.
“This is a game changer, hundreds of thousands of jobs will be available in the countryside. This will specifically help disaster- stricken areas. The approval of the EU Parliament reflects the EU’s strong support to the Philippines’ development strategy and recovery efforts,” the Manila Times reported Trade and Industry Secretary Gregory Domingo as saying.
In the Association of Southeast Asian Nations (ASEAN) region, which includes Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand and Vietnam, the Philippines is the only E.U. GSP+ beneficiary country.
Philippines Department of Trade and Industry (DTI) undersecretary and lead trade negotiator Adrian Cristobal said, “With the GSP+ in place, our exporters will have better access and comparative advantage in the EU market,” according to the Manila Times. “We expect foreign investors to turn their attention to the Philippines and consider the country as their manufacturing hub for the Asean region.”