THE EUROPEAN Union (EU) has flagged the Philippines’ export support fund as a possible trade barrier in a report released ahead of proposed trade talks between the two economies.
The Western bloc will raise this and other concerns once talks for a bilateral trade pact start, a spokesperson said earlier this week, roughly four months after the World Trade Organization (WTO) said the Philippines was no longer included in a list of countries allowed to continue subsidizing exports.
This comes as monitoring for trade disruptions in the aftermath of the financial crisis has intensified to include not just import restrictions but also export policies.
One such contentious issue is the P80-million fund President Benigno S. C. Aquino III promised to the export sector in July, a measure the EU counted among the 424 “potentially trade restrictive measures” imposed around the world in a report released Oct. 19.
“[Our report] does not only include measures that do have a negative effect, but also measures that could potentially have a negative effect depending, for instance, on their implementation,” EU Trade Spokesman John Clancy said in an e-mail to BusinessWorld, commenting on the 143-page document.
“The EU will therefore closely monitor how the Philippines will implement the program and how the funding will be allocated,” Mr. Clancy said.
Mr. Aquino had ordered the allotment for the implementation of the three-year Philippine Export Development Plan 2011-2013, which outlines strategies to upgrade products into higher-value commodities and also to improve marketing, an earlier statement from the Export Development Council said.
The plan aims to grow export sales to $89 billion by 2013 from the average $58 billion seen in the past three years, which in turn was deemed to have benefited from an earlier P200-million support fund.
Indonesia and Malaysia too
The EU report also cited Indonesia’s fish import restrictions and Malaysia’s meat inspection rules, among others, in the list of potential trade barriers.
The two fellow members of the Association of Southeast Asian Nations (ASEAN) have similarly been eyed by the EU for trade talks.
“The EU is ready to engage bilaterally with ASEAN members willing and capable of negotiating an ambitious and comprehensive FTA (free trade area agreement) covering all trade areas…” Mr. Clancy said.
“Should the Philippines be interested in FTA negotiations with the EU, the next step could be a technical exercise to identify common objectives on all key issues, including objectives related to export policies,” he said.
Sought for comment, Trade Undersecretary Adrian S. Cristobal, Jr. said the export fund allotment merely intended to improve the capacity of small and medium enterprises.
“What the President agreed to allocate… from his own savings is for interventions to improve the competitiveness of SME exporters,” Mr. Cristobal said in a text message on Tuesday.
“Definitely, this is not a trade barrier, nor is it a permanent ‘fund’,” he said.
The shift from the earlier administration’s promises of a regularly replenished support fund comes after the WTO announced the Philippines had graduated from a list of countries exempted from rules against export subsidies.
The Philippines’ gross national income per capita, in real terms, exceeded $1,000 for three consecutive years, according to a June 16 report of the WTO committee on subsidies and countervailing measures, which was made available to BusinessWorld.
When this threshold is breached, trade rules require such countries to phase out export subsidies, defined as the transfer of funds contingent upon export performance.
A procedure is prescribed for economies that seek extensions.
WTO admitted on its Web site, however, that the agreement “does not provide complete guidance” on which state interventions are fair, and that the issue of allowable benefits from government funding “is not fully resolved.”
Support programs in countries like the Philippines, anyway, are not meant so much to grant local enterprises undue advantage but are more of a response to a void, Philippine Exporters Confederation President Sergio R. Ortiz-Luis, Jr. argued.
“There are a lot of things that should be provided by government that are taken for granted in developed countries like service facilities and laboratories,” Mr. Ortiz-Luis said.
“But in the Philippines, these are vacuums we are trying to fill.”
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By: Jessica Anne D. Hermosa
Source: Business World, October 27, 2011
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