The Philippines and the European Union restarted free trade agreement (FTA) talks, with the potential to grow bilateral trade by an additional 6 billion euros.
“Strengthening economic engagement with the EU remains a priority for the Philippines. As one of the country’s largest trading partners and sources of investment, we have worked diligently to enhance our ties with the EU, including high-level exchanges over the past two years between President Ferdinand Marcos Jr. and EU Commission President Ursula Von der Leyen,” said Department of Trade and Industry Secretary Alfredo Pascual.
“We aim for an ambitious, balanced, and comprehensive FTA with the EU. Our approach is guided by the Philippine Development Plan 2023-2028, directing us to advance purposive, assertive, and forward-looking FTAs,” said Pascual.
The proposed PH-EU FTA aims to provide enhanced market access for goods, services and investments, going beyond the benefits of the EU’s Generalized System of Preferences Plus (GSP+). By committing to rules and higher standards, the FTA will enhance competitiveness and foster sustainable, inclusive growth and development in the Philippines.
“The conditions are right to take our trade relations to the next level. Trade between the EU and the Philippines is already strong and has been growing at an impressive pace over the past decade,” said European Commission executive vice-president Valdis Dombrovskis.
Dombrovskis noted the Philippines’ importance in diversifying the EU’s sources of critical minerals, adding this perspective to the FTA discussions alongside the need for specific agricultural and fisheries products.
“The Philippines is also a significant producer of critical raw materials like nickel, copper and chromite, all vital for the green transition,” Dombrovskis said. “A deal with the Philippines will help strengthen our supply chains in these critical minerals at a time of pressure on global supply chains.”
The EU said the proposed FTA would not only support bilateral trade but also the Philippines’ ambition to be a leader in the green and digital transition.
Following the historic critical minerals agreement between Japan and the United States, the Philippines has been proactive in seeking a similar deal with the US government.
The potential strategic cooperation for critical minerals under the Philippines-EU FTA could be another historic milestone.
“We seek technology and partnerships with EU companies to create more value from our mineral ores, particularly green metals like nickel, cobalt and copper,” said Pascual. “We believe this will allow us to achieve value creation within our shores rather than simply exporting raw ores.”
Dombrovskis said the EU is actively engaging partners worldwide on critical minerals through FTAs, and the Philippines is a trade partner with high growth potential.
The EU is extending similar FTA proposals to India, Indonesia and Thailand to strengthen regional engagement, appreciating the Philippines’ steadfast support for international law. It also noted a strong interest in including intellectual property rights (IPR) as a key agenda item in the FTA renegotiations.
Pascual cited the need for diversification beyond just critical minerals. He said diversification of food and non-food items is a major focus of the FTA, given the impact of the pandemic and global political disruptions.
He said the continued access to the GSP+ is important for the Philippines to help small businesses grow.
“We want to lock in the benefits of the GSP+ because the ambition for tariff reduction is much greater under the FTA negotiations,” Pascual said, noting the Philippines’ potential graduation to upper-middle-income status, which would make it ineligible for GSP benefits.
The Philippines, with a GDP of 370 billion euros and a population of over 150 million, has the potential to be a major market for EU industry. Goods trade exceeded 18.4 billion euros in 2022, while trade in services reached 4.7 billion euros in 2021. The EU is the Philippines’ fourth-largest trading partner and one of its largest investors, with foreign direct investments of 13.7 billion euros in 2021.