Government to fund lobby for duty-free entry of RP garments in US market

The government has agreed in principle to fund the private sector lobby for a sectoral agreement with the United States for duty-free access of Philippine garments and textile to the profitable US market.

This was disclosed to The STAR by Confederation of Garment Exporters of the Philippines (CONGEP) chairman Donald Dee who said that a Memorandum of Agreement (MOA) for the funding is already being drawn up and may hopefully be signed during the 31st Philippine Business Conference to be held from Oct. 11 to 13.

Government and CONGEP, Dee said, are just ironing out a few legal details regarding the funding.

Dee is optimistic that once the Philippines secures an agreement with the US for Philippine-made garments and textiles, some $400 million to $500 million in investments will be poured back into the sector allowing its to post a stunning growth of 25 percent by 2008.

Likewise, an agreement with the US would also result in an additional 100,000 new jobs in the garments and textile sector.

CONGEP has initiated ground work on securing a sectoral agreement with the US.

However, CONGEP is asking for government subsidy for and in behalf of the industry to negotiate a sectoral preferential treatment angled on a duty-free status.

The cost of the negotiation amounts to $1.786 million or P100 million.

CONGEP is requesting the government to cover the total cost of the lobby work needed to initiate, negotiate for a preferential sectoral agreement with the US.

CONGEP has initiated discussion with a reputable lobby group in the name of Sandler, Travis & Rosenberg P.A. who have secured similar successful FTAs for countries like Australia, Bahrain, Egypt, Jordan, Israel, Singapore and South Africa.

The US lobby group is currently working on Thailand’s bid for an FTA.

The requested subsidy, according to CONGEP, is based on government to shoulder the entire cost of the 15-month retainers fee of Sandler, Travis & Rosenberg in Washington, the success fee and a provision for a US congressional lobby budget.

The bulk of the negotiation to be done in Washington, according to CONGEP, is expected to be heavy on lobby work with members of the US Congress, US National Security Council and the United States Trade Representative (USTR) office.

The CONGEP would put up the local funding of $100,000 or P5.6 million to cover the required counterpart effort in the Philippines and provide ample provision for the Philippine negotiating team to conduct local research, data analysis and the private sector counterpart costs during the required negotiating trips to the US.

According to the CONGEP, a sectoral preferential treatment guarantees an increase in the garment and textile export revenue, wherein major US buyers would shoulder an average 17 percent import duty for products manufactured outside the US territory.

US import duties for finished garments and textiles range from a low of eight percent to a high of 32 percent, CONGEP said.

Following an industry consultation meeting during which 101 garment-exporting companies attended, 79 companies agreed that the industry should engage in negotiating for duty-free access to the US.

US buyers have also urged the local garments and textile industry to initiate a RP-US sectoral preferential treatment so that an agreement could be reached within the next six months.