US ends duty free privilege for Philippines textiles

13 Jul '15

3 min read

The export of textile and garments from Philippines to America is expected to slow down after the US government excluded textile, garment and apparel from zero tariff privilege under its newly extended Generalised System of Preference (GSP) although it gained preferences for travel goods, according to media reports in Philippines.

President Barack Obama signed last week the Trade Preferences Extension Act of 2015 (H.R. 1295), which will reauthorize the U.S. Generalized System of Preferences (GSP) Program until 31 December 2017. The law will restore the GSP program effective 29 July 2015.

The program, however, excludes textile, apparel, and footwear, the Philippines second largest sectoral exports to the US market. At the same time, the US-GSP has expanded its coverage to include some 20 to 30 specific types of travel goods and will provide for retroactive refund of all duties paid by US importers from the time the Program lapsed on 31 July 2013.

Philippines’ overall exports of textiles and apparel crossed $2 billion mark last year, according to the data from the industry and trade statistics department, under the Philippine Statistics Authority. Majority of the country’s textile and apparel exports go to the US market, the reports said.

Philippines earned $2 billion through exports of yarn, fabric and apparel in 2014. Of this, yarn and fabric exports shot up by 34.5 per cent year-on-year to $252.679 million, while clothing exports increased at 16.6 per cent to $1.8 billion, the data showed.

In contrast, exports of travel goods and handbags grew by 135.5 percent. For the period January to March 2014, export of garments grew by 4 per cent, and travel goods and handbags by 289.2 per cent compared to the same period last year.

In a statement, Philippine Ambassador to the US Jose L. Cuisia, Jr. cited the renewal of the GSP Programme saying it will give more Filipino exporters access to the US market, which in turn, would create jobs at home, increase competitiveness of Philippine companies and improve the country’s overall trade position.

The GSP program is a tool that helps an eligible country to expand its exports to the US. It directly benefits micro, small and medium enterprises (MSMEs) and is a major employment generator for many export–oriented agribusinesses and community based industries in the various regions of the Philippines.

The reinstatement of the program means that the Philippines could recoup its lost export share directly caused by program’s expiry in 2013. More importantly, it is also an essential incentive for investors, both foreign and local, as it boosts the competitiveness of products produced in the Philippines in the US market, the reports said. (SH)

Fibre2Fashion News Desk – India

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