The Department of Trade and Industry (DTI) is currently assessing export opportunities for all products of interest as the Philippines and the European Union (EU) recently agreed to resume negotiations on a free trade agreement (FTA).

“We’re evaluating all products of interest, including those where the Philippines can be a player if we are able to attract investments,” said DTI Undersecretary Ceferino Rodolfo in an ambush interview with the press on Wednesday, Aug. 2 at the International Tobacco Agriculture Summit.

He emphasized that the DTI is aiming for zero tariff for all products of interest, including investment-driven products within the prospective FTA.

According to the DTI, the PH and EU launched the FTA negotiations in late 2015, and continued from 2016 to 2017. However, the talks were stalled due to contentions with the EU’s intellectual property rights (IPR) provisions and other related issues.

Rodolfo noted that the Philippines can now look into certain tariff categories or products for the PH-EU market that were not yet considered during the 2015 to 2017 talks. Some of those include electric vehicles (EVs), heated tobacco products (HTPs) in terms of tobacco-related products, and renewable energy (RE) sources like offshore wind platforms.

“We are reviewing tariff lines and what are the tariff rates in Europe plus our capability also to produce these. I think, by and large, in these new product categories, the Philippines has a good chance of being able to develop the industries for this,” Rodolfo said.

The undersecretary shared that for him, the country’s garment products, batteries for EVs, and HTPs are at the top of the list of potential export goods that can be pushed in the FTA.

He mentioned that the Philippines may have the opportunity and advantage to export tobacco products like HTPs to the EU, given the country’s broad tobacco industry. Currently, the EU’s tariff rate for HTPs is 16.6 percent (Most Favored Nation [MFN]). Under the United States’ Generalized System of Preferences (GSP), the tariff rate is zero.

The country does not have investments in that sector yet, he said, noting that if there are investments, they would have the opportunity to export.

“Basta wag niyo kakalimutan na kailangan fair, kasi nakikita niyo naman, ang layo ng MFN rate. For the tobacco farmers naman natin ginagawa ito. Yung substituting, may legal framework naman tayo that encourages the shift from tobacco to HTP (Don’t forget that it needs to be fair because as you can see, the gap of the MFN rate is wide. We do this for our tobacco farmers. In terms of substituting, we have a legal framework that encourages the shift from tobacco to HTP),” Rodolfo said.

The scoping process for the FTA is expected to be conducted soon, as announced by the national government after President Ferdinand “Bongbong” Marcos Jr.’s meeting with European Commission President Ursula von der Leyen last July 31.

"The EU aims for a comprehensive FTA with the Philippines that includes ambitious market access commitments, swift and effective sanitary and phyto-sanitary procedures, as well as the protection of intellectual property rights, including Geographical Indications," said the EU in a statement.

PH-UAE, PH-South Korea FTAs

Aside from the FTA with the EU, the Philippines is also continuing its discussions with the United Arab Emirates (UAE), and South Korea on their respective FTAs.

Rodolfo said the terms of reference (TOR) in the Comprehensive Economic Partnership Agreement (CEPA) between the Philippines and the UAE is being finalized. Once the TOR is approved, negotiations will be convened, hopefully sometime within the year.

Some of the products that the country plans to include in the FTA are consumer and consumer-durables, particularly premium goods, halal-related products, garments, leather goods, and tropical fruits. The DTI also sees UAE as more of an investor to the country’s RE projects.

Given that UAE is more of a service-driven industry, the DTI collaborates with the Department of Labor and Employment (DOLE) in the bilateral labor agreements (BLA) that would enable the national government to focus its mechanisms to aid overseas workers in certain countries.

In terms of labor within the FTA, it would focus on “movement of natural persons including those that are in fulfillment of contracts.” This pertains to Filipino workers hired by UAE-based companies to work in their companies operations abroad on a contractual basis.

The FTA does not cover Filipinos who are seeking jobs in the UAE; instead the BLA would be the basis of protection for those kinds of migrant workers.

While the Philippines currently enjoys zero tariffs for some categories under the Association of Southeast Asian Nations (ASEAN) - Korea Free Trade Agreement (AKFTA), negotiations between the Philippines and South Korea were still conducted for a bilateral FTA from 2019 to 2021.

Rodolfo said their South Korean counterpart has submitted a letter stating they have finished their domestic process and are ready to sign.

“We are completing the certificates of concurrence (COC) in order for us to get the signing authority,” he said.

He explained that the rules have changed wherein previously, the signing authority was given to the agency to be signed by the DTI Secretary, then passed to the Office of the President (OP) for ratification. After that, the agency will get a COC. At present, the OP, for prudence, is asking for the COC before giving the signing authority.

Rodolfo said the signing authority may be given to them by the end of the month, since there are only four agencies left to process the COC. The FTA is expected to be signed within the next two months.

PH-India PTA

Meanwhile, the undersecretary said there is a need to reconnect with India on the bilateral preferential trade agreement (PTA) since talks were paused due to the Covid-19 pandemic.

Rodolfo said the scoping and TOR for the PTA may be done within the year.

Since it is a PTA, it will focus on trade of goods, particularly from the agriculture (ie. tropical fruits) and industry sectors, and include some provisions to “ensure that we have access to critical Indian products,” said Rodolfo.