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EU Includes Philippines In GSP+ Scheme

Laws & Regulations

BRUSSELS, Belgium – On 18 December the European Parliament voted in favour of the European Commission’s proposal to include the Philippines in the EU’s Generalized System of Preferences Plus (GSP+). This will make all imports from the Philippines to the EU duty free including bicycles, parts and accessories.

EU Includes Philippines In GSP+ Scheme
The GSP+ status will create a new dynamic in the market as the Philippine production for EU market concentrated mainly on kid bikes so far. - Photo Jo Beckendorff

According to the European Sporting Goods Industry (FESI) the new regulation will be published on 24 December in the Official Journal of the European Union. The Philippines GSP+ status will be in force as of 25 December.

The Philippines already benefitted from the standard GSP scheme, which gives exporters from developing country vital access to EU markets by reducing or eliminating tariffs on a broad range of products exported to the EU. In the standard GSP scheme exports from the Philippines to the EU are taxed at 10.5 %, versus 14 % for those from countries not included in the regime.

Boost for the Philippines’ economy

FESI notes that, “The decision to grant the ‘plus’ status to the country will mean the complete elimination of import duties on virtually all remaining export products which are part of the scheme. In this case it includes some 6,274 products representing a tremendous boost for the Philippines’ economy. Granting the GSP+ status by the European Union often comes after a country’s ratification and successful implementation of core international conventions relating to human and labour rights, the environment and good governance.”

In reply to the European Parliament plenary vote last December 18th FESI Secretary General Alberto Bichi states, “The European Parliament has taken the right step in granting GSP+ status to the Philippines.”

“This decision will create thousands of jobs and help the Philippines continue down the path of sustainable growth and development while building on its international commitments. The enhanced trade relationship will also facilitate the European sporting goods industry’s access to quality sourcing options, boosting our industry’s competitiveness and reduce manufacturing costs to the benefit of European consumers.”

Benefit for bicycle producers

In recent years bicycle export from the Philippines to the EU markets was already growing rapidly. In the first six months of 2014 it expanded by 28% from 338,000 units in the same period in 2013 to 433,000 this year. GPS+ will also have a very positive effect on the bicycle producers in the Philippines.

In August 2014 Bike Europe published a detailed report on the Philippines bicycle industry and bicycle market. Today there two larger bike producers with three factories in the Philippines. They are all located on the island of Luzon. Procycle Industrial Inc. has two Philippines factories and is a subsidiary of Taiwanese trader Jumbo Brico Associated Co. Ltd. Collie Cycle Inc. is a subsidiary of Taiwanese trader Dumar International.

Shifting markets

The GSP+ status will create a new dynamic in the market as the Philippines production for EU markets concentrated mainly on kid bikes so far. They could not compete with the competition out of neighbouring countries that were already enjoying the GSP+ scheme. In Cambodia for example six Taiwanese owned bike factories are already producing and exporting duty free to EU markets. The Philippine’s new GSP+ status will change this situation drastically.

Shimano invests in the Philippines

Supported by the GSP+ status the Philippines position as bicycle producer might change rapidly. Especially when eyeing Shimano’s activities in this country. Based on Luzon Shimano invested 3.5 billion yen (at the time of investing 25 million euro) in a new factory on a 106,000 square metre plot in the FPIP Industrial Park near the city of Bantangas. This factory will be opened officially end of this year or beginning next year.

The Japanese bicycle component market leader says it eyes the growth in demand from the BRICS countries, where the rising living standards results in greater disposable income. According to Shimano these markets are ripe for entry-level components for sports bicycles.

Of course Shimano will also be able to serve the Philippines producers with components for entry-level bicycles for adults being imported into the EU market. The GSP+ status will present the “Made in the Philippines” products a competitive edgee.

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