Negotiations for a Philippines-European Union Free Trade Agreement (FTA) are proceeding at a very slow pace and must be speeded up. The European Chambers of Commerce of the Philippines (ECCP) has warned that unless the talks accelerate, the FTA may not be concluded by 2027, the expiry year of the current Generalized System of Preferences Plus (GSP+) that covers the Philippines’ current trade privileges.

The message is clear. The Philippines must act with urgency, or risk losing one of its most valuable footholds in the global market.

Under the GSP+, more than 6,200 Philippine products including coconut oil, tuna and pineapples, enter the European market with zero or reduced tariffs. In 2024, utilization of these privileges reached an impressive 80 percent. This shows that Filipino exporters have adapted well to EU demand. Yet, this success story may soon unravel of a comprehensive FTA is not in place. Without one, Philippine products will face higher tariffs and lose preferential access to the EU’s 450 million-strong consumer base — a market defined by high purchasing power and growing demand for sustainable goods.

The difference between the GSP+ and an FTA is fundamental. The former is a unilateral preference extended by the EU to developing countries that comply with certain governance and human rights norms. It can be withdrawn or revised unilaterally, and the current scheme expires in 2027.

An FTA, by contrast, establishes a mutual, legally binding framework that ensures continuity and predictability for both sides. It provides reciprocal market access and boosts investors’ confidence that trade rules will not shift with political tides. For a country seeking to attract long-term investment and strengthen its integration into global supply chains, this assurance of stability is essential.

Indeed, current EU foreign direct investment in the Philippines amounts to only 14.2 billion Euros, or about four percent of total FDI. This figure reflects untapped potential rather than lack of interest. European investors remain eager to expand into Southeast Asia’s fastest growing markets, including the Philippines. But they seek a rules-based environment that guarantees transparency, labor protection, and environmental responsibility.

The proposed FTA is not just about lowering tariffs. It is about raising standards that are benchmarked against global international conventions on human rights, labor rights, environmental protection, climate change mitigation, and good governance.

By demonstrating its adherence to these principles, the PH stands to strengthen its reputation as a credible and values-driven trading partner. This alignment with Euro norms could also spill over into domestic reforms in terms of improving governance, labor conditions and environmental stewardship while unlocking new avenues to green technology transfer and innovation.

Time, however, is running short. Negotiating an FTA is a complex process that typically takes years of technical consultations and legal vetting. The Philippines must, therefore, ramp up its diplomatic and economic engagement to prod trade officials, industry stakeholders, and legislators to work in concert and comply with the 2027 deadline.

Delays would be costly in terms of lost competitiveness, especially for small and medium enterprises (SMEs) that could be priced out of the EU market.

Investors may also opt to divert capital to neighboring ASEAN countries that already enjoy FTAs such as Vietnam and Singapore.

Indeed, attainment of this long hoped-for agreement is a strategic outcome that will shape the Philippines’ economic future. It offers a path to deeper integration into global supply chains, high-value exports, and an enduring partnership grounded in shared values.

As the ECCP aptly cautions, the clock is ticking. The government must seize the opportunity — not in 2027, but now — to move from preference to permanence, from privilege to partnership, and from promise to prosperity.