European apparel brand moves out PHL orders, shifts to Vietnam

AMAJOR European apparel brand has pulled out its orders from the Philippines and is transferring the orders to Vietnam because Vietnam has a free trade agreement with the European Union, according to the Confederation of Wearables Exporters of the Philippines (Conwep).

Conwep Executive Director Maritess Jocson-Agoncillo said the resumption of formal negotiations for the free trade agreement (FTA) between the Philippines and the European Union (EU) is “very time- ly” for the local garments sector because a European brand diverted its orders from the Philippines to Vietnam and Cambodia.

“It’s very timely for us...because there’s a brand that pulled out from the Philippines. It’s a European brand that pulled out from the Philippines, and is totally importing all his things. is brand totally diverted the Philippine orders to Vietnam and Cambodia,” Jocson-Agoncillo told reporters on the sidelines of the brie ng of the Department of Trade and Industry (DTI) regarding the resumption of the negotiations on the PH-EU FTA. e Conwep o cial attributed the pullout of orders from the Philippines to the fact that Vietnam has an FTA with Europe and Cambodia, having an “[Everything But Arms] EBA thing.”

Moreover, Jocson-Agoncillo divulged that the diversion of orders from the Philippines to its neighboring countries is a ecting the local garments sector, adding that, “about 4,800 to 6,000 workers are being e ected” by this issue.

“Because this brand, even if it’s a European brand, we ship it all over the world, since it’s a famous brand. It’s not just for Europe,” Jocson-Agoncillo also noted.

In terms of exports, the Conwep o cial said this might result in an annual loss in exports of around US$200 million to US$300 million.

Meanwhile, the Conwep o cial explained how “uncompetitive” the Philippine garments sector is compared to Vietnam’s, pointing out the “limited market access” being experienced by the local sector.

“Technically, my products still have to pay when they import these, I still have 12 percent. European buyers still have to pay the duties from the Philippines so that’s uncompetitive for me compared to Vietnam, who’s also already competing with me on the cost of doing business...Vietnam has an FTA,” Jocson-Agoncillo said.

She illustrated, “So a jacket like yours coming from the Philippines compared to Vietnam will enter Europe [with] 12 percent duty...so my market access really has an issue. I’m not fully there even with the GSP, we have restrictions.” For his part, Trade Undersecretary Ceferino S. Rodolfo said at the same brie ng on Tuesday that once the trade deal is implemented, the garments sector is among the local sectors that will bene t from the FTA.

“ e average tari for wearables is 12 percent. So it’s quite high. at’s why we foresee that under an FTA, with a more liberalized rules of origin, one of the sectors which will have a surge...primary sector would be garments and wearables,” Rodolfo said.