Trade and Industry Secretary Ramon M. Lopez cited the need to elevate the Philippine-EU trade and investment relations to new heights via a bilateral free trade agreement (FTA) to give the two parties’ bilateral relations more stability.
In his speech at the closing of the second day virtual Pilipinas Conference 2021 organized by Stratbase ADR Institute, the trade secretary noted that the current trade relation between the two parties is largely governed by the EU-Generalized Scheme of Preferences (GSP) Plus, a scheme that grants zero duty to exports by its trading partner.
However, the EU-GSP Plus being a unilateral on the part of EU does not provide much stability. To stabilize this engagement, Lopez said, it may be well to consider now a more secure and predictable business environment through an FTA with the EU.
“In line with this, the Philippines looks forward to working more closely with the EU to bring the Philippine-EU trade and investment relations to new heights, strongly promoting sustainable and inclusive growth,” he said.
Lopez explained that the Philippines also views sustainable development as an overarching agenda in all trade engagements. This is because of the need to address not only scarce resources but the evolving challenges both in production and consumption.
“We are pleased to note that the EU is also a leader on this front, and we would also welcome closer engagement with the EU in this area, possibly through the resumption of the Philippines-EU FTA negotiations,” he said.
The current economic priorities of the Philippines and efforts towards establishing the country as a hub for manufacturing, innovation, research and development, and a center for training and education in the region, Lopez said “there is a compelling reason for the EU to strengthen ties with the Philippines through a Free Trade Agreement.”
Notwithstanding discussions for a possible FTA, he reiterated that both parties core feature of their trade relations is the EU-GSP+.
Since the successful application of the Philippines to the GSP+ in 2014, the Philippines has enjoyed greater market access to the EU that led to a significant increase in exports.
For 2020, total exports to the EU amounted to EUR6.2 billion. In terms of eligible exports, EUR2.1 billion worth of PH exports are covered by GSP+, of which EUR1.6 billion availed of GSP+ preferences (or 26% of PH’s total exports).
Likewise, GSP+ utilization grew from 72 percent in 2019 to an all-time high of 75 percent in 2020. GSP+ gives an impetus for foreign companies to invest in the Philippines, thereby contributing to employment generation and the developmental goals of the country. These operations cut across a range of industries including electronics, agriculture, processed foods, apparel, craft goods, travel goods, and home appliances.
The scheme has been benefiting EU firms as well, as they invest in production facilities in the Philippines not only to export products to EU under GSP+ rates, but also to take advantage of the large and growing Philippine domestic market, which is one of the fastest growing in Asia.
EU firms also have FTA access to ASEAN and ASEAN partners as well as the US Market (under the US GSP). Not to mention of course, the goods entering the EU would come in at a lower price.