Garments buyers are seeking a waiver of the rules of origin under the proposed free trade agreement (FTA) between the Philippines and the European Union (EU).
Robert Young, president of the Foreign Buyers Association of the Philippines, was quoted by Just Style newsletter the country will not be able to take advantage of the market access if the rules are not eased.
Young said this is because the Philippines has no local textile industry.
The Philippines and EU last year announced intention to relaunch their FTA negotiations.
Currently, wearables from the Philippines enjoy duty-free treatment under the Generalized System of Preferences (GSP)+ but are still subject to rules of origin which effectively tax a certain portion of the product using textile sourced from non-GSP country such as China which is a major source of textile, the newsletter said.
This but many still attract a 12% duty because of strict rules of origin imposing a ceiling for value-added inputs sourced from a non-GSP beneficiary country. This is not always possible, especially given neighbouring China is a major textile source and non-GSP. The European market is the Philippines’s third largest export market for Philippine wearables after the US and Japan.
Young told Just Style labor supply is not an issue in the Philippines and has in fact a surplus.
He said factories are operating below capacity due to weak global demand.