Members of the Tuna Canners Association of the Philippines (TCAP) are expecting a $5-6 million profit increase this year after the European Union (EU) council granted a reduction of tariff on tuna coming from the Philippines effective July 1.
Philippine Department Trade and Industry (DTI) chief Merly Cruz said the tariff cut would put the country's exported tuna in better footing with the rest of the countries supplying tuna to the EU market.
The estimated profit gain was computed based on the current 2.8 million cases of canned tuna export entering the EU market and the expected 10 percent production increase spurred by the tariff cut. Each of the tuna cases is priced $18 or $19.
The EU used to impose a 24 percent tariff rate for tuna products from non-preferred countries, comprised of the Philippines, Thailand and Indonesia.
With the recent move, the three non-preferred countries will have to comply the approved tariff quota rate (TRQ), pegged at 25,000 metric tons per annum, to avail of the 12 percent tariff cut.
Of these, 9,000 metric tons of tuna is expected to come from the Philippines, while Thailand and Indonesia are expected to supply 13,000 and 2,750 metric tons, respectively. Other countries are also allowed to contribute 250 metric tons of canned tuna.
Cruz estimates at least 10 percent growth of tuna imports to the EU market and a further expansion of the Philippine tuna to a larger share of the EU retail market.
The EU tariff reduction will last five years, ending on June 30, 2008.
Cruz said a monitoring mechanism have been created to monitor the volume of tuna being sent to the European countries and ensure that Philippine's TRQ rate is achieved.
A team from the DTI, Tuna Congress of the Philippines and Bureau of Customs was assigned to prepare the monitoring mechanism, which will be presented to the European Commission for approval.
The Philippine exports about $100 million worth of canned tuna to Europe, the US and other countries combined. The DTI regional official said the US has yet to agree on a similar request to cut tariffs.
The Philippines estimates some $50 million in foregone revenues from canned tuna as a result of high tariff imposed by the US.
Sources: Philippine Press