Brussels, 18 March 2024
Today, the EU and the Philippines officially announced the resumption of negotiations for an ambitious, modern and balanced free trade agreement (FTA) – with sustainability at its core. Trade agreements such as these are a cornerstone of the EU’s economic security, opening new opportunities for businesses and consumers, strengthening supply chains and promoting sustainable trade practices. An FTA with the Philippines, a booming economy of 115 million people in the heart of the strategically important Indo-Pacific region, would therefore be a valuable addition to the EU’s network of trade deals.
The EU aims for a comprehensive FTA with the Philippines that includes ambitious market access for goods, services, investment and government procurement; the removal of obstacles to digital trade and trade in energy and raw materials, thereby supporting the digital and green transitions; swift and effective sanitary and phyto-sanitary (SPS) procedures; sustainable food systems (SFS); the protection of intellectual property rights including Geographical Indications (GIs) and robust and enforceable disciplines on trade and sustainable development (TSD) – in line with the Commission’s TSD review Communication of June 2022, supporting high levels of protection for workers’ rights, the environment, and the achievement of ambitious climate goals.
The EU and the Philippines already have well-established trade relations, with clear potential for an even closer relationship:
- trade in goods was worth over €18.4 billion in 2022, while trade in services was worth €4.7 billion in 2021;
- the EU is the Philippines’ 4th largest trade partner;
- the Philippines, the 5th largest economy in the ASEAN region, is the EU’s 7th most important trading partner in the region (and 41st worldwide);
- the Philippines is among the fastest growing emerging economies in the world, projected to see the 2nd highest economic growth in ASEAN with 5.9% GDP growth in 2024;
- the EU is one of the largest investors in the Philippines, with the EU’s foreign direct investment stock in the Philippines reaching €13.7 billion in 2021.
In addition to being a significant and growing economy, the Philippines also has major reserves of critical raw materials, including nickel, copper and chromite, which are vital for the manufacture of green technologies. Combined with the Philippines’ renewed efforts to harvest its renewable energy potential and recent liberalisation for foreign investors in the sector, the Philippines is an important partner in the green transition.
Next steps
The EU and the Philippines will now make their respective technical preparations for the first round of the resumed negotiations, expected to take place later this year.
Background
The EU and the Philippines first launched negotiations for an FTA in 2015. The last negotiating round took place in 2017 and negotiations have since been on hold. On 30 June 2022, the current administration assumed office and has shown willingness to engage with the EU on key issues of importance. In 2023, the EU and the Philippines launched a stocktaking exercise to assess their readiness to resume negotiations for an FTA, which was concluded at the end of 2023, confirming that a resumption of negotiations would be appropriate.
The 2021 EU Indo-Pacific Strategy confirms the EU’s longstanding interest in resuming FTA negotiations with the Philippines. The EU already has state-of-the-art FTAs in place with two ASEAN countries (Singapore and Vietnam), is negotiating FTAs with Indonesia, Thailand, and is carrying out a stocktaking exercise with Malaysia.
The Philippines currently enjoys trade preferences under the EU’s Generalised Scheme of Preferences + (GSP+), a special incentive arrangement for sustainable development and good governance which grants duty-free access to the EU market for two-thirds of tariff lines. This enhanced access is conditional on the Philippines implementing a range of international conventions covering issues such as human and labour rights, good governance, and environmental protection. The EU will continue to monitor the Philippines’ compliance with its international obligations in these areas and pursue its ongoing dialogue to encourage further improvement.
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Quotes
We are one step closer to a prosperous new partnership thanks to the EU and the Philippines resuming trade negotiations. A modern, comprehensive and values-based free trade agreement with this fast-growing economy would open new opportunities for both sides, strengthen our supply chains, and promote sustainable trade. It would also deepen ties with a key partner in the burgeoning Indo-Pacific region.
Press remarks by EU Commission Executive VP Valdis Dombrovskis on the resumption of the EU-Philippines FTA negotiations
Brussels, 18 March 2024
Thank you Secretary Pascual for being with us in Brussels today for the relaunch of negotiations for an EU-Philippines Free Trade Agreement.
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.
But we can do more to realise the full potential of our trade relationship. After concluding an extensive joint stocktaking exercise at the end of last year, we are reassured that we share a commitment to strive for a state-of-the art agreement, with sustainability at its core.
Let me also recall how we got here.
This is not the first time that the EU and the Philippines are getting together to negotiate a trade deal. That moment came already in 2015, when we first launched negotiations for a Free Trade Agreement.
The last round took place back in 2017, after which no further rounds were scheduled due to the EU’s concerns over policies of the former government of the Philippines. We then paused talks, as we are always firm in our conviction that our trade relations cannot be negotiated in a vacuum. Our trade relations must be based on respect for common values and fundamental conventions.
So, we warmly welcome the positive change of direction that your government has induced since it took office in 2022.
At the same time, we would also encourage further progress on the long-standing issues of EU concern related to human rights and labour rights.
I want to now recall that although we are resuming FTA-talks, our trade relations will continue to benefit from the Generalised Scheme of Preferences Plus (GSP+) – including the continuation of its monitoring mechanism.
While continued progress across the board remains important, let me also welcome progress made on some specific issues, notably on the so-called “war on drugs” policies, moving towards prevention and rehabilitation. We also acknowledge progress on the cases related to Maria Ressa and former Senator De Lima. Of course, we look forward to the full resolution of their cases, in line with the highest standards of due process and human rights.
It is thanks to these positive developments that we are now in a position to get the trade talks ball rolling once again.
Let me say a word now on economic case for the FTA, which is now even more compelling. The EU and the Philippines already have close trade ties, and we can go further:
- The Philippines has the potential to be a major market for EU industry, with a GDP of €370 billion and a population of over 115 million people.
- Trade in goods was worth over €18.4 billion in 2022, while trade in services was worth €4.7 billion in 2021.
- The EU is Philippines’s 4th largest trade partner.
- And we are one of the largest investors in the Philippines [EU’s foreign direct investment stock in the Philippines reaching €13.7 billion in 2021].
The FTA is projected to increase trade by up to €6 billion.
The Philippines is also an important producer of a number of critical raw materials, such as nickel, copper, and chromite, all of which are vital for the green transition. A deal with the Philippines will help us to strengthen our supply chains of these critical materials at a time when global supply chains are under increasing pressure.
All that being said, this agreement is about more than just making it easier to ship boxes of goods back-and-forth.
For one thing, our trade agenda must also support the green and digital transitions, which are areas where the Philippines has consistently voiced strong ambitions to be at the forefront. This FTA will allow for high standards for Trade and Sustainable Development.
Let me say one last word on geostrategic aspects. The Philippines is a key partner for the EU in the Indo-Pacific region. With this FTA, along with similar agreements underway with India, Indonesia and Thailand, we are strengthening our strategic engagement with this key region.
I would also like to pay tribute to the Philippines steadfast position in support of international law, through its continued solidarity with Ukraine in the face of illegal Russian aggression. In that light, I was glad that Secretary Pascual joined our Ukraine Solidarity event at the WTO’s 13th Ministerial conference in Abu Dhabi.
To conclude, this agreement will open up new opportunities for businesses and consumers on both sides, promote sustainable trade practices, secure our supply chains and promote the EU’s presence in a strategically important part of the world.