EU hints resumption of trade negotiations with PH

Published September 18, 2021, 11:43 AM

by Bernie Cahiles-Magkilat

EU hints resumption of trade negotiations with PH

The EU said it is currently assessing the possible resumption of bilateral trade negotiations with the Philippines as the 27-European country union steps up its strategic engagement with the Indo-Pacific region.

European Union (EU)

In its Joint Communication on the EU Strategy for Cooperation in the Indo-Pacific, EU cited the Indo-Pacific region’s increasing in strategic importance for Europe. Its growing economic, demographic, and political weight makes it a key player in shaping the rules-based international order and in addressing global challenges. Based on this, the EU aims to contribute to the region’s stability, security, prosperity and sustainable development, in line with the principles of democracy, rule of law, human rights and international law. The Joint Communication contains concrete actions to reinforce the strategic engagement with the region, as tasked by the Council on 19 April 2021.

Part of the EU Strategy is to accelerate ongoing trade negotiations with various countries. The implementation of the EU Strategy will include particular actions.

Under the strategy, the Philippines is among two other countries (Malaysia and Thailand) in ASEAN where EU is assessing the possible resumption of trade negotiations. EU is also looking at eventual negotiation of a region-to-region trade agreement with ASEAN.

EU is also completing EU trade negotiations with Australia, Indonesia and New Zealand; resuming trade negotiations and starting investment negotiations with India; and completing an Economic Partnership Agreement with the East Africa Community.

Negotiations for an EU-Philippines trade and investment agreement were launched on 22 December 2015. The aim is to conclude an agreement that covers a broad range of issues, including tariffs, non-tariff barriers to trade, trade in services and investment, as well as trade aspects of public procurement, intellectual property, competition and sustainable development.

The first round of talks was held in Brussels in May 2016 and a second in Cebu City in the Philippines in February 2017. In March 2018, the EU-Philippines Framework Agreement on Partnership and Cooperation (PCA) entered into force.

While both parties seek to start trade negotiations beyond the PCA and hopefully into a free trade deal, there were kinks along the way. The Duterte administration also clashed with the EU on human rights issue following the former’s bloody war on drugs. Duterte, however, is scheduled to step down as president by June next year.

In the meantime, both parties are still in the implementation phase of the PCA. The EU-GSP (Generalized System of Preference) Plus as the platform that will govern its cooperation and trade relationship with the Duterte administration.

The EU-GSP Plus, which grants zero tariffs on the exports of its beneficiary countries, is unilateral on the part of EU. The EU-GSP Plus is expected to lapse in 2023-2024 .

Trade in goods between the two partners equaled €12.2 billion in 2020 while bilateral trade in services between the EU and the Philippines reached €4.3 billion in 2019.

The EU foreign direct investment stock in the Philippines reached €14.4 billion in the same year, making the EU the largest foreign investor in the Philippines.

The EU is the Philippines’ fourth largest trading partner, accounting for the 8.4 percent of the country’s total trade in 2020 (after China, the US and Japan). The Philippines is the EU’s 37th largest trading partner globally, accounting for 0.3 percent of the EU’s total trade.

EU exports to the Philippines are dominated by machinery, transport equipment, chemicals and food products while the Philippines’ main exports to the EU are office and telecommunication equipment, machinery, food products, and optical and photographic instruments.

Meanwhile, negotiations for a region-to-region trade agreement between the EU and ASEAN were launched in 2007 and paused in 2009 to give way to bilateral negotiations. The aim is for bilateral FTAs with individual ASEAN countries to serve as building blocks towards a future region-to-region agreement.

 
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