2023-08-01 21:54:10
The European Union (EU) and the Philippines have announced their intention to explore re-launching negotiations towards an ambitious, modern and balanced free trade agreement (FTA) focused on sustainability. The EU and the Philippines will shortly begin a “bilateral scoping process” to assess the extent to which they share a mutual understanding on the future FTA. If this process is successfully completed, and after consultations with Member States, the EU and the Philippines will be in a position to resume FTA negotiations.
Ursula von der Leyen, President of the Commission, said: “The Philippines is a key partner for us in the Indo-Pacific region and, with the launch of this scoping process, we are paving the way to take our partnership to a new level. Together, we will unlock the full potential of our relationships, creating opportunities for our businesses and consumers, while supporting the green transition and promoting a just economy.”
Following the resumption of FTA talks with Thailand earlier this year, this announcement confirms the key importance of the Indo-Pacific region to the EU’s trade agenda, paving the way for closer trade ties with another dynamic economy in Southeast Asia. and further strengthening the EU’s strategic engagement with this expanding region.
The EU envisages a comprehensive FTA with the Philippines, which includes ambitious commitments on market access, rapid and effective sanitary and phytosanitary procedures, as well as the protection of intellectual property rights, including geographical indications.
Sustainability will also be at the heart of this agreement, with strong implementing rules on trade and sustainable development. These measures will be in line with the Commission Communication on the Trade and Sustainable Development Review of June 2022, which supports high levels of protection of labor rights and the environment and the achievement of ambitious climate targets.
The EU and the Philippines already have well-established trade relations, with clear potential for an even closer relationship:
• trade in goods represented more than 18.4 billion euros in 2022, while trade in services amounted to more than 4.7 billion euros in 2021;
• the EU is the 4th largest trading partner of the Philippines;
• the Philippines, the fifth largest economy in the ASEAN region, is the EU’s 7th most important trading partner in the region (and 41st globally);
• the EU is one of the largest investors in the Philippines, with foreign direct investment in the Philippines reaching €13.7 billion in 2021.
Context
The Philippines currently benefits from trade preferences under the EU’s Generalized System of Preferences + (GSP+), a special incentive scheme for sustainable development and good governance, which grants duty-free access to the EU market for two-thirds of the tariff lines. This enhanced access depends on the Philippines’ application of a range of international conventions covering issues such as human and labor rights, good governance and environmental protection. The EU will continue to monitor the Philippines’ compliance with its international obligations in these areas and will continue the ongoing dialogue to encourage further improvements.
The Philippines is among the fastest growing emerging economies in the world, recording the 2nd highest economic growth in ASEAN with 7.6% GDP growth in 2022. This high economic growth illustrates a promising growth trajectory and a greater economic potential for the Philippines as a major trading partner. In addition, the Philippines has substantial reserves of essential raw materials, including nickel, copper and chromite, which are vital for manufacturing green technologies. Along with the Philippines’ renewed efforts to tap into its renewable energy potential and the recent liberalization of foreign investors in the sector, the Philippines is an important partner in the green transition.
The EU and the Philippines started FTA negotiations in 2015. The last round of negotiations took place in 2017 and meanwhile the negotiations were on hold. On 30 June 2022, the new administration took office and showed its willingness to engage with the EU on key issues.
Furthermore, the EU’s 2021 Indo-Pacific Strategy confirmed the EU’s longstanding interest in resuming FTA negotiations with the Philippines. The EU already has state-of-the-art FTAs with two ASEAN countries (Singapore and Vietnam), is negotiating an FTA with Indonesia, will shortly resume FTA negotiations with Thailand and is currently undertaking a pre-scrutiny exercise with Malaysia.
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