THE PHILIPPINES will need a free trade agreement (FTA) with the US to sustain the electronics and manufacturing services (EMS) business, the semiconductor industry association said.
On the sidelines of a briefing on a report of the Center for Strategic and International Studies, Semiconductor and Electronics Industries in the Philippines Foundation, Inc. (SEIPI) President Danilo C. Lachica said the need for an FTA is urgent.
“We have actually lost some opportunities in the US because of the absence of an FTA. There is such a thing called the TAA (Trade Agreements Act) and this is more on the EMS side,” Mr. Lachica told reporters on Monday.
“When companies want to export to the US and they are not TAA compliant, then they can’t export,” he added.
He said that since last year, the industry has lost two customers for EMS exports.
“Easily, this is about $5 million to $10 million (worth of lost business) so far … These could further increase if the issues on trade agreement accreditation are not resolved,” he added.
The US Trade Agreements Act limits the countries of origin for products sold through General Services Administration (GSA) schedule contracts to the US or compliant countries.
Thus Philippines, in the absence of an FTA with the US, is not on the list of countries eligible for Federal procurement.
Mr. Lachica said the only way to resolve this issue is to conclude an FTA with the US.
“You cannot circumvent the law. So we have to work on the FTA,” he added, noting that the Indo-Pacific Economic Framework for Prosperity will not solve the problem.
According to the GSA, the TAA-compliant countries in the region are South Korea, Singapore, Laos, and Cambodia.
The Philippine Statistics Authority reported that exports of electronic products amounted to $27.45 billion in the first eight months.
Although year-to-date electronic product exports still show a 1% increase from last year, SEIPI projects a 10% contraction by the end of the year. — Justine Irish D. Tabile