Trade officials of the Philippines and the European Union on Tuesday agreed to start negotiations for a free trade agreement in the first half of 2016.
Trade Secretary Gregory Domingo said he and EU Trade Commissioner Cecilia Malmström reached an agreement to launch the first round of negotiations for the Philippines-EU free trade agreement next year.
Domingo said a free trade agreement with EU would expand the trade privileges enjoyed by the country under the current Generalized System of Preferences Plus.
“EU is one of the country’s largest trading partner and investment source. 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,” he said.
“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.
Domingo said the FTA would help improve market access and greater opportunity for investments and contribute to the country’s objective of creating decent jobs.
The first round of negotiations is expected to take place in the first half of 2016 in the Philippines, he said.
Both sides share the ambition to conclude an agreement that covers a broad range of issues, including elimination of customs duties and other barriers to trade, services and investment, access to public procurement markets as well as additional disciplines in the area of competition and protection of intellectual property rights.
The prospective agreement will also 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.
The Philippines is the second largest market in the 10-member Association of Southeast Asian Nations. It is the fifth country in Asean to start negotiations for a bilateral free trade agreement with the EU.
Asean as a group ranks as the 8th 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 in 2013.
Negotiations for a region-to-region FTA with Asean was launched in 2007 but was halted 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. The EU signed an FTA with Singapore in 2014 and with Vietnam in 2015.
The EU is the Philippines’ fourth largest trading partner with bilateral trade amounting to P738 billion while the Philippines is EU’s sixth largest trading partner in Asean and 44th worldwide.
The Philippines’ main exports to the EU include office and telecommunication equipment, machinery, food products and optical and photographic instruments while it imports transport equipment, machinery, food products, chemicals and electronic components.
The EU is also the largest foreign investor in the Philippines, with a foreign direct investment of over P366 billion.