THE Trade Act of 1974 in the United States established the Generalized System of Preferences (GSP), the largest and oldest US trade preference program. For decades, the GSP notched some notable achievements in promoting economic development by eliminating duties on thousands of products when imported from one of the designated beneficiary countries and territories. The list of these countries was originally 119, but later became 122, with the Philippines always on the list.
With the US economy struggling under the weight of its mounting debts of $36.22 trillion, the US Congress allowed this trade assistance to developing countries to expire in 2020. During the first Trump administration, and throughout the succeeding Joseph Biden administration, the Philippines had made consistent efforts to urge the US to revive the program.
One can imagine how free trade with the US — which is our biggest trading partner —would favorably impact on the local economy. Ambassador to the United States Babes Romualdez and the Philippine economic team have made representations with the right people in Washington about the revival of the GSP but to no avail.
`Imbued with resilience and hope, our exporters are determined to survive, expecting only a flat export total this year.’
President Marcos Jr. himself made a working visit to Washington D.C. in April last year to confer with Biden. In this visit, one of the things he did was to urge the US Congress to return the GSP, or at least a special bilateral free trade agreement as requested by the private sectors of both countries. Marcos at least recognized that it is hard for the US at this time to take the magnanimous decision that would benefit more than a hundred countries.
Still, the US Congress was deaf to Marcos’ request, despite the various sweeteners that Marcos has already delivered, such as his blind and unequivocal acceptance of the US defense policy against China, manifested most brazenly by increasing the number of military facilities under the EDCA agreement, from five to nine across the country.
After five years of waiting, and with the return of Donald Trump in the White House, hopes for the GSP revival have become dim and improbable. Trump has made good his threat that tariffs on imports from China, Mexico, and Canada would be increased, not only because the US economy needs the money, but also because he wanted to punish these countries for what he perceived as their transgressions.
This is a bad time for the Philippines to request for no duties for its products, with Trump weaponizing tariffs and ramping up his trade war with both allies and adversaries to the next higher level.
Filipino exporters of garments and hard goods, kitchenware, bread and fruit baskets, hampers and housewares are cautiously happy that they have mounting orders — from people who value natural fibers such as abaca over synthetic fibers.
However, they agonize over the possibility that they could not supply the buyers with the required quantity because of the prices and various problems in the supply chain. The GSP could help somehow, but again, it is a fading wish given the ongoing tariff war.
Imbued with resilience and hope, our exporters are determined to survive, expecting only a flat export total this year.
