THE Philippines and the European Union on Tuesday agreed to start negotiations for a free trade agreement (FTA) that would include the elimination of customs duties and other barriers to trade, services and investment.
The first round of talks will be held in the country in the first half of 2016.
The move to launch negotiations was made between Philippine Department of Trade and Industry (DTI) Secretary Gregory Domingo and European Union (EU) Trade Commissioner Cecilia Malmström.
Negotiations will also include access to public procurement markets as well as additional disciplines in the area of competition and protection of intellectual property rights.
In addition, the prospective FTA will include a comprehensive chapter that will ensure that closer economic relations between the Philippines and the EU go hand in hand with environmental protection and social development.
“EU is one of the country’s largest trading partners and investment sources. We would like to lock in the duty-free market access we obtained through the EU GSP-plus last year and expand this preferential access to substantially all the traded products to EU. As with our recent experience with GSP-plus, we are optimistic that investments will start to come in with improvements in market access,” Domingo said.
“With improved market access and greater opportunity for investments, supported by commitments on sustainable development, we are confident that this FTA will contribute to the country’s objective of creating decent jobs,” he added.
The Philippines is one of the 10 members of the Association of Southeast Asian Nations (Asean) as well as the fifth largest economy in the region and the second biggest market in Asean. It is also the fifth Asean country to start negotiations for a bilateral free trade agreement with the EU.
Taken as a whole, Asean ranks as the eighth largest economy in the world and the EU’s third largest trading partner outside Europe, after the United States and China. Bilateral trade in goods and services between the EU and Asean reached P13 trillion ($275.2 billion) in 2013.
Negotiations for a region-to-region FTA with Asean were launched in 2007 and paused in 2009 to give way to a bilateral format of negotiation. These bilateral FTAs were conceived as building blocks towards a future region-to-region agreement. So far, the EU has completed bilateral agreements with Singapore (2014) and Vietnam (2015).
The EU is the Philippines’ fourth largest trading partner with bilateral trade amounting to P738 billion. On the other hand, the Philippines is the EU’s sixth largest trading partner in Asean and 44th worldwide.
The Philippines’ main exports to the EU a office and telecommunication equipment, machinery, food products, and optical and photographic instruments. Its main imports from the EU are transport equipment, machinery, food products, chemicals, and electronic components. Trade in services between the EU and the Philippines was worth P169 billion in 2013.
The EU is also the largest foreign investor in the Philippines, with a foreign direct investment stock in the country of over P366 billion.
Relations between the Philippines and EU are governed today by the Partnership and Cooperation Agreement signed in July 2012. The Philippines has also been benefitting since the end of 2014 from the enhanced trade preferences granted by the EU under the Generalised Scheme of Preferences (GSP)-plus.