United States Of America : Options For Philippino Garments Under Review

The US government has vowed to reevaluate the petition of the Philippines for greater market access for its garments and textile exports before the lifting of the quota regime under the World Trade Organization (WTO) by 2005.

Trade Secretary Manuel Roxas II said in a statement that US Trade Representative Robert Zoellick vowed to look for ways to effectively engage the government and the private sector in satisfying mutual requirements that would sustain the growth of the customer base of the Philippine garments exporters in the US.

“The most important result of the meeting is that we agreed that the door remains open. We continue the dialogue and are raising the level of involvement of our private sector and their US customers to find more ways of helping each other grow our mutual business,” Roxas stressed.

He added that there is a need to make sure that Philippine exporters are able to maintain their current buyers and at the same time create more business opportunities over the next two years as the quota regime is scheduled to be lifted by 2005.

According to him, one of the options being studied is the possibility of “quota-swapping” of unutilized categories between Asian countries that are exporting garments and textile to the US.

Before the US trip, Confederation of Garment Exporters of the Philippines (CONGEP)chairman Donald Dee urged Roxas to push for an increased quota allocation from the US after the American government extended 24 million dozen shirts and pant quota to Vietnam that is a nonally country.

CONGEP contested the decision of the US government to extend generous quota allocation to Vietnam. US allocated 17 million dozens of cotton T-shirts and seven million dozens of pants to Vietnam, while the Philippines only got 3.6 million dozens for T-shirts and 3.6 million for pant.

Early this year, the US government threw out the request of the Philippines for a two-year extension of an expired compensation package that would result to about $460 million worth of additional export earnings for the local garments and textile industry.

The US government approved a compensation package in 1997 where it gave quota flexibilities to Philippine garments and textile exporters. The package allowed the Philippines to transfer the quota allocations of garments segments that are underutilized to fully utilized categories.

The package was an offshoot of the decision of the American government to amend its rules of origin way back in 1996. The new rules implemented by the US affected the Philippine garments and textile exporters as it credits the quota to the country where the fabric has been sourced and not where the finished products comes from.

Developing countries including the Philippines opposed the new rule and complained to the WTO as it largely dependent on imported fabrics that are being processed and reexported to major markets including the US. This forced the US government to compensate the Philippines through quota flexibilities.

However, the package expired last year and was not extended by the US government. The Philippines was hoping that the package would be extended until next year as the quota regime on garment and textile exports would be lifted starting 2005.

The US remains as the country’s major export market for garments and textile as it continued to account for about 80 percent of the total exports. Besides the US, other quota countries include Europe and Canada. Nonquota markets include Japan, Hong Kong, among others.

Export earnings of local garments and textile producers went up by 19.25 percent to $714.74 million in the first quarter of the year from $599.35 million in the same period last year. Under its “Garment Export Industry Transformation Package,” the Garments and Textile Export Board expects the dollar earnings of the local garments and textile sector to hit $4 billion by 2005.