US, Philippines Officials Meet to Hash Out Worker Rights Concerns

Officials from the U.S. and the Philippines this week held the first meeting of a labor working group designed to establish a more robust, mutually beneficial trade relationship between the two countries.

Established by President Joe Biden and President Ferdinand Marcos in May, the labor working group was created to “promote enduring economic growth and prosperity in the United States, the Philippines, and the broader Indo-Pacific region” under the U.S-Philippines Trade and Investment Framework Agreement (TIFA). The group’s job is to bolster bilateral economic cooperation, supporting businesses and promoting trade and supply chain resilience in the southeast Asian country.

More from Sourcing Journal

• Chinese Official Calls for Closer Supply Chain Partnerships 'With All Countries'

• Biden's Supply Chain Resilience Council 'Long Overdue'

• Policy Experts Discuss What's 'Missing' from US Trade Tools

Tuesday’s meeting in Washington, D.C., led by assistant U.S. Trade Representative for Labor Affairs Josh Kagan and  Benedicto Ernesto R. Bitonio Jr., undersecretary for Labor Relations, Policy and International Affairs at the Department of Labor and Employment of the Philippines, aimed to address worker rights issues, which have come to a head in recent months. In October, Human Rights Watch reported the killing of labor leader Jude Thaddeus Fernandez by state police—the latest in a string of crimes against labor organizers that the International Labor Organization (ILO) said numbers in the dozens. U.S. officials urged the Philippines to take concrete action to protect union organizers from being harassed or threatened with violence, and preserve workers’ rights to collective bargaining.

The same day, the Philippines established itself as the first Asian nation to sign the ILO Convention No. 190. A unanimous vote in the country’s Senate codified the “Convention Concerning the Elimination of Violence and Harassment in the World of Work,” designed to protect all workers from violence and harassment regardless of employment status or gender.

The Philippines has been making moves to position itself favorably with potential trade partners like the U.S. since June, when President Marcos announced the Philippine Export Development Plan (PEDP). Developed by the country’s exporting community and its Export Development Council, among other government agencies, the plan aims to help the country overcome a muted global economic recovery and sluggish international trade post-Covid—and help it compete with its neighbors. The Philippines lags far behind countries like Vietnam, Indonesia, Malaysia and Thailand in generating foreign exchange as a share of GDP.

“The Philippine export landscape has undergone significant changes and advancements over the past few years,” the plan said. “With new opportunities in emerging markets and sectors, exploring the evolving Philippine export landscape and its implications for the country’s economy and its role in the global marketplace is essential.”

Under the plan, exporters are eligible for support that will enable them to develop new infrastructure for power, transportation, logistics and connectivity, and foster investment in advanced digital technologies and automated manufacturing to drive down labor costs. Upon the PEDP’s release, Robert Young, president of the Foreign Buyers Association of the Philippines and trustee of the Philippine Exporters Confederation Inc. for textile, yarn and fabric, said the government should work quickly to implement its plans to boost competitiveness across industries.

Despite the fact that Philippines congressional records show that garment and textile exports saw a negative compound annual growth rate (CAGR) of 7 percent from 2017 to 2021, manifold opportunities exist for the country’s apparel manufacturing sector, he said. Young projected in February that domestic garment exports could rise by 50 percent this year from $1 billion in 2022 to $1.5 billion in 2023, on the back of a number of small projects transferred from Vietnam and China to the Philippines. According to the trade group leader, the two sourcing juggernauts are looking to make room for more substantial orders from global brands. Additionally, U.S. brands continue to look for ways to diversify apparel sourcing away from China, as tensions between the two countries continue to simmer.

But in June, Young sounded the alarm about the trend toward nearshoring, which he said could dampen the Philippines’ chances of capturing new business from western markets. “The government and the private sector must realize the negative impact of these reshoring scheme plans and should join hands in seriously implementing solutions urgently as per the PEDP report for the survival and competitive advantage of the Philippine clothing and apparel manufacturing, thus saving it from extinction,” he said.

The sustained high cost of labor, power and logistics could deter foreign investment in the country—”a big red flag for the Philippine apparel and clothing industry,” Young added. Philippines congressional records show that the country’s market share of the global apparel sector is one-tenth of 1 percent of the industry’s $995 billion trade value.

The country is currently lobbying for the renewal of the Generalized System of Preferences (GSP), America’s oldest trade preference program that promotes economic development in the world’s poorest economies by eliminating duties on thousands of products like travel goods, handbags and small leather goods. The Philippines exports 2,094 products to the U.S. that are GSP eligible, with a utilization rate of 74 percent before the program lapsed three years ago, suspending those duty-free privileges.

Despite these challenges, “there is wide scope for further growth in Philippine exports,” the PEDP said. The country’s Asian neighbors “have long shown that export potentials are vast,” and their performance “indicates room for much greater ambition, aggressiveness, and creativity in plotting and pursuing future directions for Philippine exports.”

The U.S. and the Philippines will co-host the 2024 Indo-Pacific Business Forum, described by the White House as America’s “marquee commercial event in the region,” in Manila next year.