US wants comprehensive RP trade deal

Manila Bulletin, 15 March 2006

US wants comprehensive RP trade deal

The Philippine exploratory mission to the US on the proposed specific preferential trading for the garment sector was met with cold treatment as top level government officials, Congress representatives and its private sector still prefer a comprehensive free trade area (FTA) agreement.

Philippine Chamber of Commerce and Industry president Donald Dee, who is also government special envoy on trade and chairman of the Confederation of Garment Exporters of the Philippines (CONGEP), said that during their talks US authorities have already assumed and clearly understood the objectives of the Philippine proposal for a sector specific FTA on garments.

"But the US would like to look at FTA as a comprehensive agreement," Dee said. The US is finalizing bilateral FTA with Thailand. It has an existing FTA with Singapore.

Dee, however, said a preferential trading scheme for the garment sector can be negotiated even under the auspices of the WTO (World Trade Organization).

"We are able to bring across the message that we are hurting and lots of workers are losing jobs," Dee said.

Dee further stressed that an FTA is not focused on increased in trade but on investments of the countries involved.

Other members of the exploratory Philippine mission are Trade and Industry Senior Undersecretary Thomas G. Aquino, DTI consultant and former Garment and Textile Export Board Executive Director Serafin Juliano, and CONGEP president George Siy was in Washington on the second week of February.

The team met with Congressmen and Senators, top-level government officials from the Department of Commerce and players in the U.S. textile and garment industry.

Following the initial talks, Dee said the next step is for the local garment sector to look at its own proposal and if there is really a basis for a specific FTA then it should seek an endorsement from Malacanang.

Dee, however, said there is still enough time for the Philippines.

The Philippines side is aiming to have the sector specific agreement signed in 15 months or before the full lifting of quota restrictions on China takes effect by 2008.

American lobby group Sandler, Travis and Rosenberg is conducting a full six-month study, three months of which is shouldered by the private sector and the remaining three months by the government.

The study is expected to be completed in July this year and should be the basis whether the sector specific FTA with the U.S. should be elevated to the level of government-to-government negotiations.

At present, the U.S. slapped between 2 to 32 percent tariffs on Philippine garment exports or an average of 17 percent tariff and the private sector is pushing for duty-free status of its exports to its largest market, which accounts for 70 percent of the .8 billion annual exports.

Given that state of global supply chain and needs of the U.S. and the capabilities of the Philippine industry, there is a strong possibility the U.S. will agree to the Philippine proposition.

Without the agreement, the industry, which now employs around 400,000 workers, is expected to lose 200,000 jobs, a 20 percent immediate reduction in domestic garment business and export revenue loss of between .2 billion to .5 billion by 2007 or about half of last year’s garment exports at .8 billion.

But once the proposed agreement pushes through, this means the inflow of 0 million new investments into the industry and hiring of additional 100,000 employes.

Once the U.S. agrees with the Philippine proposal, this will be the first of its kind for both the U.S. and the Philippines.

The U.S. has been known to pursue a comprehensive or full blown free trade agreement although it had implement the socalled Qualified Industrial Zone (QIZ) model for some Middle East countries under its peace initiative in the Middle East. The Philippines is also pursuing the same QIZ model. (BCM)

source: Manila Bulletin