PH, EU eye relaunch of free trade agreement talks

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PH, EU eye relaunch of free trade agreement talks
European Commission President Ursula von der Leyen is on official visit to the Philippines from July 31 to August 1. Photo from the Presidential Communications Office.
  • The Philippines and the European Union will start a bilateral process to gauge how far their mutual understanding goes on a free trade agreement
  • If the “scoping process” is successful, the EU and the Philippines could resume FTA negotiations after consulting EU member states
  • The EU targets a comprehensive FTA that includes ambitious market access commitments, swift and effective sanitary and phyto-sanitary procedures, and protection of intellectual property rights

The Philippines and the European Union (EU) are eyeing the relaunch of negotiations for a free trade agreement (FTA).

The European Commission in a statement said the EU and the Philippines will begin shortly a bilateral “scoping process” to assess the extent of their mutual understanding on the future FTA.

If the process is successful – and after consulting EU member states – the EU and the Philippines would be in a position to resume FTA negotiations, the EC 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 taking our partnership to the next level,” EC president Ursula von der Leyen, who is on official visit to Philippines from July 31 to August 1, said. She is the first European Commission President to ever pay an official visit to the Philippines in almost six decades of diplomatic relations.

“Together, we will realize the full potential of our relationship, creating new opportunities for our companies and consumers while also supporting the green transition and fostering a just economy.”

In a statement following a bilateral meeting with President Ferdinand Marcos Jr. on July 31, Von der Leyen said she is “very glad that we have decided to relaunch negotiations for [a] free trade agreement.”

“Our teams will get to work right now on setting the right conditions so that we can get back to the negotiations. A free trade agreement has huge potential for both of us in terms of growth and in terms of jobs. Whether it is on the European continent or here in Southeast Asia, we have all learned the hard way the cost of economic dependencies. We need to diversify our supply lines and make them resilient.”

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The EU aims for a comprehensive FTA with the Philippines that includes ambitious market access commitments, swift and effective sanitary and phyto-sanitary procedures, as well as the protection of intellectual property rights, including geographical indications.

The EC said sustainability will also be at the heart of the agreement, with robust and enforceable disciplines on Trade and Sustainable Development (TSD). These will be in line with the EC’s TSD review communication of June 2022, supporting high levels of protection for workers’ rights, for 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 (P1.11 trillion) in 2022, while trade in services was worth €4.7 billion in 2021.

The EU is also the Philippines’ fourth largest trading partner while the Philippines is the EU’s seventh most important trading partner in the region (and 41st worldwide).

Further, 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.

The Philippines has been pushing for the resumption of negotiations for an FTA with the EU. Exploratory talks for a Philippines-EU FTA started in 2013 and EU officially launched negotiations with the Philippines in December 2015. The second round of negotiations took place in February 2017 and negotiations have since been on hold.

The 2021 EU Indo-Pacific Strategy further confirmed 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 an FTA with Indonesia, will soon resume FTA negotiations with Thailand, and is currently carrying out a scoping exercise with Malaysia.

The Philippines enjoys trade preferences under the EU’s Generalized 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 GSP+ coverage of the Philippines will expire at the end of this year and discussions for its renewal are going on.

The EC said 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.