The opportunity for the Philippines to benefit economically from the European Union’s Generalized Scheme of Preferences Plus (GSP+) is limited.
This is according to a study released on Friday by the Philippine Institute for Development Studies and written by Brynn Jonsson Julie, an administrative officer at the Department of Trade and Industry, titled “GSP+ Diversity and Inclusion Analysis of Philippine Exports to the European Union.”
“This study assesses the diversity and inclusiveness of Philippine export activities to the European Union against the backdrop of the country’s status as a beneficiary of the Generalized Scheme of Preferences Plus (GSP+),” Julia said.
He said the GSP+ is a trade deal that eliminates EU tariffs in exchange for developing countries complying with international treaties such as those relating to human and labor rights, environmental protection and good governance.
The paper compiles official statistics and documents, as well as open questionnaires and email correspondence with experts and key public sector informants, to assess GSP+’s financial incentives and find out how and why its results have evolved that way, Julia added. .
He said the study argues that the Philippine’s peculiar political economy, which scholars have dubbed an obstructive state, can be explained by factors outside the purview of GSP+, including the country’s dependence on transnational migration, trade and investment liberalization. and private consumption, as well as challenges related to exporter capacity, local supply chains and infrastructure, government institutions, and income and political inequalities.
The study “confirms that the materialization of the economic stimulus that the Philippines can receive from the system is limited,” Julia stressed, “given the limited economic impact of the EU GSP+ on some beneficiary countries.”
With regard to the diversity of export activities in the EU, he said that while some industries (such as footwear and hats, animals and animal products) did emerge, established ones (such as semi-finished products, machinery and mechanical appliances) generally retained their dominant position in export. activities.
Despite the presence of incentives, Yulia noted that some of them even lose value, for example, wood and wood products, measuring and musical instruments.
Export inclusiveness has been limited to low-productivity agricultural activities, even though the poorest part of the country (Mindanao) has benefited from exports to the area. On the other hand, the country’s richest region (Luzon) has benefited from both industrial operations with increased productivity and agricultural operations, he added.
But even in the country’s richest region, Julia noted, “the materialization of economic stimulus is largely spatially limited.”
The country’s dependence on international migration, foreign investment, import and trade liberalization, private consumption, and capacity issues with its exporters, local supply chains, and institutions have been identified as specific factors that may be associated with anti-development. state in terms of the diversity of export activities in the EU.
Julia said that factors that may be associated with features that hinder development in terms of inclusiveness include the country’s dependence on imports, foreign investment and economic zones; difficulties in developing local supply chains and the country’s infrastructure; and inequality in income and political power.
The study “recommended that more research be undertaken once official statistics on GSP+ exporting firms become available to draw more accurate conclusions about the inclusiveness of Philippine export activity in the EU,” he added.