Resumption of Philippines, EU free trade talks seen before end of 2023 — DTI

The resumption of free trade agreement (FTA) discussions between the Philippines and the European Union (EU) is targeted to begin before the year ends as both parties are set to identify the scope of the deal, Trade Secretary Alfredo Pascual said Wednesday.

At a Palace briefing, Pascual, who was in Europe for an investment roadshow last week, said he had an opportunity to meet EU officials to discuss the recommencement of talks for FTA between the country and the trading bloc.

“Most likely the resumption of the discussion will be by way of scoping…My expectation is that will happen before the end of the year, before the end of this year,” the Trade chief said.

“By way of scoping, [means] we will see if we have potential complementarities… we will share our expectations with the EU and they will share their expectations with us. Then, we will see whether there is a meeting of minds,” he said.

Pascual emphasized the importance of recommencing discussions on the FTA “because our eligibility with respect to the GSP+ will not be there anymore the moment we become an upper-middle income country.”

The EU’s Generalized System of Preference Plus (GSP+) is a preferential trade arrangement that grants developing countries, including the Philippines, reduced or zero tariffs on exports to the EU market.

For the Philippines, the arrangement grants the country zero duties on 6,274 locally-made products, as long as the country meets the requirements regarding human and labor rights, the environment, and good governance

“Right now, we’re classified as a lower-middle income [country]. Our expectation, based on our growth trajectory, we will become an upper-middle income country within three years or so that means 2025. By that time we will no longer be eligible for coverage under GSP+,” Pascual said.

“In order not to disrupt the preferential trade arrangements for our exporters, we need to shift to a more permanent platform for trade and that is the free trade agreement,” he added.

The exploratory FTA talks between the Philippines and the EU began in 2013, while the launching of negotiations was announced in December 2015.

The first FTA negotiations were held in Brussels, Belgium in 2016, followed by second round negotiations in Cebu, Philippines in 2017. FTA talks have been idle since.

As to the GSP+ renewal, which will expire in December, the EU Commission has proposed to extend the trade arrangements for another four years. 

In March, Pascual floated the possibility of resuming FTA talks with the EU as the government is working towards making the country an upper-middle income economy. 

The World Bank still classifies the Philippines as an lower-middle income country as its gross national income (GNI) per capita in of $3,950 in 2022 fell within the bracket for lower-middle income economies of $1,136 to $4,465.

Despite this, Philippines remains on track to move up to upper-middle income economy status by 2025, according to National Economic and Development Authority (NEDA) Secretary Arsenio Balisacan. — RSJ, GMA Integrated News