Trade and Industry Secretary Alfredo E. Pascual warned that EU exports to the Philippines will be “competitively disadvantaged” due to the continuing delays in the EU-Philippines bilateral free trade agreement (FTA).
Pascual tried to drive home this point during the European Chamber of Commerce of the Philippines (ECCP) Membership Luncheon meeting Thursday, Feb. 16 in Makati that EU exports could face against exports from competitors as the Philippines implements new FTA deals, even as it is concluding new ones, and aggressively forging new comprehensive economic partnerships with other countries.
“It can be argued that as the Philippines implements existing FTAs and concludes new agreements, products from Europe will be competitively disadvantaged as they enter the Philippine market,” he warned.
In its drive to further expand the country’s market reach, Pascual told the European business community that the Marcos administration has adopted a more deliberate approach toward FTAs, both bilateral and regional.
For instance, the trade chief cited the strong push for immediate ratification of the mega trade deal Regional Comprehensive Economic Partnership Agreement (RCEP) at the Senate. The Senate is expected to concur the RCEP following the sponsorship of Philippine Senate President Migz Zubiri.
He said the Philippines has already concluded FTA negotiations with South Korea and will launch negotiations for a comprehensive economic partnership agreement with the United Arab Emirates and a potential preferential trade agreement with India.
Similarly, the Philippines has expressed interest in acceding to the Comprehensive and Progressive Agreement for the Trans-Pacific Partnership. Moreover, the Philippines is an active partner in the US-led Indo-Pacific Economic Framework.
In addition, Pascual said that while the Philippines engages the EU for regional FTA, it is also forging bilateral engagements and mechanisms with individual member EU states.
“The timely conclusion of the PH-EU FTA negotiations will further expand the scope of market access for goods, services, and investments. To be included are other fields that would facilitate trade between our economies. Most importantly, this will increase and facilitate commercial exchanges among our economies’ business sectors,” he emphasized.
In fact, he cited a survey conducted by the German Philippine Chamber of Commerce in 2020 which showed that 83 percent of German companies deemed the resumption of the Philippine-EU FTA talks highly important. Many are set to expand their current investment, he added.
“The DTI would appreciate ECCP’s unified effort in pushing for the resumption of the FTA negotiations by conducting similar surveys supporting the PH-EU FTA negotiations. We request that you assist us in disseminating information to key European companies because we need their support to push for the conclusion of the FTA,” he said.
Aside from the bilateral FTA, the Philippines has been pushing for its re-application for the next EU GSP+ scheme to ensure its continued zero duty access for its exports.
He urged EU to take advantage of the opportunities in the Philippines by concluding the proposed FTA, which has been facing long delays on the side of the EU.
For instance, Pascual cited the launch of the Philippine Development Plan 2023-2028, which serves as a blueprint for the country’s economic and social transformation.
“Looking ahead, the Philippines is poised to join the ranks of countries in the Asia-Pacific region with a GDP exceeding one trillion US dollars. This will transform the structure of the Philippine economy, substantially expanding the size of the domestic consumer market,” he boasted.
As European businesses build up their local presence in a wide range of manufacturing and service industries, this graduation to the trillion-dollar league will also help attract more foreign direct investment flows into the Philippines.
At present, EU ranked as the 4th largest trading partner of the country. Over the years, the EU has been one of the largest foreign investors to the Philippines, putting in over P102 billion or around EUR 2 billion.
Apart from strengthening bilateral relations with individual EU member states through the Joint Economic Cooperation (JEC), DTI has enhanced dialogue with the EU through the Partnership Cooperation Agreement.
To date, the Philippines has established JECs and cooperation mechanisms with Austria, Czech R, Hungary, Germany, and Turkey. Establishing JECs with Spain, Netherlands, Sweden, and Italy is also part of DTI’s regional priorities.
The Philippines has existing bilateral FTA with EFTA Free Trade Agreement, comprising of small but rich European countries -- Switzerland, Norway, Iceland, and Liechtenstein. “This FTA with EFTA is part of our government's efforts to tap non-traditional markets with high potential for growth in trade and investments. It forms part of the broader strategy to gain a stronger foothold in the European market. We enjoin ECCP members to take advantage of this FTA,” he added.
Since the FTA entered into force on 1 June 2018, he pointed out that the Philippines has been able to turn around its perennial trade deficit with EFTA. In 2019, the Philippines posted a trade surplus of $47 million. This surplus grew to USD 101 million in 2020 and $130 million in 2021 despite the COVID-19 pandemic. Total trade between the Philippines and EFTA also increased by 2.4 percent from $802 million in 2018 to $821 million in 2019.
This improved by 16 percent from $822 million in 2020 to $954 million in 2021. With the PH-EFTA FTA in place, in 2020, around EUR25 million worth of Philippine agricultural and industrial products were able to enter the EFTA market with reduced or zero tariff rates.