European firms are seen tapping Philippine investment and trade potentials through the Philippines-EU free trade agreement (FTA), which negotiations are set to resume in October this year, according to top EU officials.
This was raised by European Union (EU) Ambassador Luc Véron and European Chamber of Commerce of the Philippines (ECCP) President Paulo Duarte during a fireside chat session at the 11th European-Philippine Business Dialogue in Makati City on May 6.
For his part, the EU Ambassador emphasized that the 150 million-strong market in the Philippines and the population comprising of a majority young labor force provide "the most promising prospect for growth in the entire region."
"When the conditions are right for investments, there is definitely a weight in the cause for European operators to invest in the Philippines. That in itself is very promising and should work as a point for the future. What Secretary Alfredo E. Pascual and our trade team will do in the next month and years is to definitely find the ways to improve trade, investments, and cross-investments of the Philippines with the EU. The fundamentals are here in terms of market size, dynamism, educational level, [but] of course more can be done," he said.
He described the national government's hope of increasing total trade with the EU by another P6 billion with the FTA, as said by Secretary Pascual, as a demonstration of "common ambition."
This is aligned with the EU's aim to improve trade with the Philippines, since the EU trades three times less in the country compared to Vietnam, and 2.5 times less than with Thailand, which he said should serve as a wake up call to both parties.
According to data from the European Commission (EC), trade in goods between the EU and Philippines was recorded at €18.4 billion in 2022, while trade in services reached €4.7 billion in 2021.
"At the same time, it shows the potential in easing some of the difficulties we have in investing," Véron noted.
Meanwhile, Duarte said the FTA is an opportunity for European companies to engage and open more businesses in the country, especially in agriculture, RE, garments, minerals, digital software, healthcare, information technology - business processing management (IT-BPM), and semiconductors.
"We conducted a survey in 2022 related to the FTA with our members. With over 200 participants attending this survey, 81 percent highlighted that the FTA will have a positive impact on their businesses," he said.
"We expect more trade and investments opportunities in the company, and opportunties for the economic policies for e-commerce, digital transformation, industrial transformation, Industry 4.0, intellectual property (IP), and procurement," he added.
While the outlook is mostly positive, Duarte noted that some critical issues will need to be addressed such as long customs and administrative procedures, charge for importation, licensing requirements, and ease of doing business (EODB).
Non-core trade issues such as climate action and sustainability, labor rights and human rights, which prompted the pause of negotiations back in 2017, also remain, but Véron said he believes these are not significant impediments in the upcoming negotiations.
"We have in place (Generalized System of Preferences) GSP+ trade program which is beneficial to the Philippines. Actually, the Philippines enjoys a trade surplus with the EU of about €1 billion per year. Thanks to the trade preferences, together manage to keep in place. Some of the non-core trade issues are part and parcel with the GSP+. The Philippines has signed up to a number of international conventions or the conditions for GSP+. We are maintaining the reputation of those conventions," said the Ambassador.
The Philippines and EU announced the resumption of FTA talks in March 18. They will officially restart FTA negotiations by the third quarter of this year, marking the third round of talks. Prior to this, initial meetings with the chief negotiators will be held in June to lay the groundwork for the agreement.
Pascual said the government aims to conclude the FTA talks by 2027, in time for the end of the extension of the EU GSP+.
"The growth is there so long as we are open-minded, there is complementary and exchange and not head-on competition. That's the beauty with trade, all countries can grow by trading with each other. We'd like to be able to avail of those benefits," said Pascual.