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Concerns over FTA with EU raised

BusinessWorld, Philippines

Concerns over FTA with EU raised

14 November 2013

By D.E.D. Saclag

While details of a possible trade pact between the Philippines and the European Union (EU) have yet to be finalized, a non-government organization has expressed concern that the agreement would be too ambitious for the Philippines and undermine its development.

Free trade agreements (FTAs) currently being negotiated between the EU and its trading partners — described by the EU itself as "new generation FTAs" — are not the usual trade agreements, as they go beyond commitments already made under the World Trade Organization (WTO), according to Joseph Purugganan, coordinator at EU-ASEAN (Association of Southeast Asian Nations) FTA Campaign Network - Philippines.

Mr. Purugganan said in an e-mail that an FTA with the EU "will demand higher standards that will give even greater rights to corporations and will add further threats to jobs, farmers and food sovereignty, access to affordable medicine, and the possibility to regulate the financial, environmental and health sectors, among others."

According to the Web site of the European Commission, the EU has five FTAs — with Mexico, Chile, South Africa, South Korea, and Peru — of the kind sought by the Philippines. There are nine other countries that have finished negotiations, but the agreements have not yet entered into force. Eleven have ongoing negotiations, and several others are in preliminary stages.

These "new generation FTAs", Mr. Purugganan said, contain provisions — collectively characterized as TRIPS Plus provisions — that go beyond the Trade-Related Intellectual Property Rights agreement under the WTO.

Should the Philippines sign an FTA with the EU, Mr. Purugganan said, the country may have to expand its obligations in patent protections ; increase the number of medicines eligible for patents ; expand patent protection beyond the current 20 years ; expand companies’ exclusive rights over test data ; and transform regulatory institutions like the Food and Drugs Administration into a patent police.

As a result, "the manufacturing of cheaper generic medicines would be effectively delayed, denying both our government and our people [access] to more affordable medicines and clearly undermine our Cheaper Medicines Law," he said.

He also raised concern over the investment chapter in FTAs being negotiated by the EU, which would afford greater protection and rights to corporations by allowing them to sue governments over certain policies and regulations.

In addition, very little gains can be had from an FTA with the EU as trade between the bloc and the Philippines is already highly liberalized, according to Mr. Purugganan.

Majority of imports from the EU already fall within 0-10% tariff range, he noted, adding that a few products like sugar (47.5%), vegetables and fruit (21%), motor vehicles and parts (15%) and apparel (11%) have relatively higher rates.

Similarly, he said, majority of the country’s exports to the EU already enjoy low tariff rates of 0-5% under the EU’s Generalized System of Preferences (GSP).

The GSP is an autonomous trade arrangement where the EU grants non-reciprocal trade preferences to exports of 176 GSP beneficiary countries. The Philippines is a GSP beneficiary, covering 6,209 tariff lines of which 3,767 are subject to reduced tariffs and the remaining 2,442 get zero duty.

Currently, the Philippines seeks to apply for an expanded GSP program — called GSP+ — which has a larger coverage of 6,247 products, all of which are subject to zero duty.

Against this backdrop, Mr. Purugganan urged government to make the negotiations more transparent.

"I think what is needed is a national conversation on the proposed agreement. That mechanism has the potential to really democratize the process of decision making on trade policy and trade negotiations," he said.

The government will be sending a team to Europe next week to continue talks for a possible trade pact with the EU.

Officials from the Department of Trade and Industry and the Delegation of the EU to the Philippines were not immediately available for comment.

The EU-ASEAN FTA Campaign Network is composed of civil society groups monitoring FTA negotiations between the EU and ASEAN countries, according to its Web site.