Trade between the Philippines and EU declined by 17 percent in 2020 due to the impact of COVID-19, and the former continued to lag behind its neighboring ASEAN countries in its trade performance despite its zero duty privilege on over 6,000 export products to the 27-country member union.
EU Ambassador Luc Véron pointed this point out at the virtual International CEO Web Conference on the topic “Healthy People, Healthy Planet: For a Better Future Together” organized by the Management Association of the Philippines.
“EU-PH trade today is far from its full potential. In 2020, trade between the EU and the Philippines declined by 17 percent,” he said.
In his speech, Veron pointed out that the Philippines enjoys robust trade with EU in recent years, largely due to its zero-duty privilege on over 6,000 list of exports to the 27-nation member union, but it is still way behind neighboring Southeast Asian countries, which do not enjoy zero duty on their exports under the EU-Generalized System of Preferences Plus (GSP+).
Bilateral trade in goods between the EU and the Philippines steadily grew over the last years, which reached before the COVID outbreak the level of 15 billion euros of total trade in 2019.
However, he pointed out that EU-Vietnam total trade surpass EU-PH trade by 3 times, and EU-Thailand by more than 2.5 times. “Surely, there is ample margin to do more and better and to also recover the ground lost during the pandemic,” he said.
The dismal Philippine trade performance with EU is despite the fact that the Philippines is enjoying the benefits of the EU GSP+ trade preference wherein more than 6,000 product lines enter the EU market at zero tariff. The GSP+ utilization rate of the Philippines in 2020 was around 73 percent. “This is an important competitive advantage for the Philippines since it is the only country in ASEAN that is granted GSP+ trade preference, particularly for agriculture, food and fish products, textiles and manufactured goods,” he pointed out.
In terms of investments, the EU is also an important source of foreign direct investments in the Philippines. Historically, the EU contributed more than 25 percent of the total approved foreign direct investments to the Philippines.
The EU27 recorded an FDI stock to the Philippines of €14.4 billion. In terms of FDI flow, the EU27 recorded a €665 million in 2019.
Meanwhile, Veron said that the 27 member states will intensify cooperation with the Philippines on digital connectivity cooperation over the next years.
“Over the next three years, we will also intensify cooperation on digital connectivity, in particular linked to earth observation and its application for key challenges of the Philippines: climate change, natural disasters and green economic development,” he said.
This focus on the green deal and circular economy will also be replicated in EU’s ASEAN cooperation.
Cooperation priorities of the EU with the Philippines under its new 2021-2027 national program would very much reflect these global priorities, he said.
Already, two priority areas of cooperation, have been agreed in close dialogue with the government. These are Green, Resilient Economy & Green Jobs, and Peaceful and Just Society, Good Governance.
Priority area 1 has three mutually reinforcing objectives relating to circular economy and plastic waste management, digital connectivity and green digital transformation, and climate change adaptation and mitigation.
These efforts will be implemented via cooperation with the private sector, civil society and EU member states structures including EU Financial Institutions under the Team Europe Initiatives.
The EU Delegation, he said, is also now in the stage of formulating its first large activity on circular economy.
The idea is to create a strong reinforcing momentum of national and regional actions to support ASEAN in its green recovery, moving on from the crisis.