Phl eyes free trade deal with EU in 4-5 years

MANILA, Philippines - The Philippines is hoping to complete a free trade agreement (FTA) with the European Union (EU) within four to five years to be able to allow greater access for exports to the bloc even after it graduates as a beneficiary of Generalized System of Preferences Plus (GSP+), the Department of Trade and Industry said.

Trade Undersecretary Adrian Cristobal Jr. said while the country’s EU GSP+ status which took effect on Dec. 25 will be valid for 10 years, the country may not be able to enjoy the trade preferences that long.

The EU GSP+ scheme’s benefits can only be provided to low middle income countries and the Philippines, which has a per capita income of $3,000 is expected to reach the middle income category or $4,000 per capita income level in the next few years.

 “The GSP+ system provides benefit for 10 years. For us, that is probably just four, five or six years because at the rate our economy is growing, at the rate our per capita GDP (gross domestic product) is growing, we will probably reach $4,000 sooner than later. That 10-year window we believe is shorter,” he said.

As such, it is important for exporters to take advantage of the program which allows the duty-free entry of 6,274 products to the bloc immediately.

 “We have four to five years to really take advantage of the preference. In the meantime, we hope that during that time the government would be able to conclude a free trade agreement with the EU, which then becomes a more permanent arrangement so that Philippine products can benefit,” Cristobal said.

The Philippines and EU are currently in the early scoping stage to define the parameters for the planned FTA.

While the scoping has yet to be concluded, Cristobal said the FTA would likely cover goods, services, investments, intellectual property as well as trade facilitation.

For now, the DTI is focused on raising awareness on the GSP+ to allow Philippines businesses to take advantage of the scheme.

 “The strategic value of GSP+ in addition to market access is really the investment dimension, that there will be companies, not just European companies who would want to set-up shop here to produce products for export to the EU, knowing that there is now competitive advantage, the duty preference, specifically duty-free…We become now an attractive destination for investments for products to be exported,” Cristobal said.

Walter van Hattum, head of economic and trade section of the EU delegation in Manila, the EU is set to launch with the Philippine government a campaign which would involve organizing events aimed at increasing awareness on GSP+ and on business opportunities offered by both parties.

The first of these events is a visit of EU ambassadors to a manufacturing plant here.

 “We hope to plan that within the coming weeks,” Hattum said.

Earlier, the Philippines was a beneficiary of the regular GSP program covering 6,209 products, with 2,442 products subject to zero duty and the rest slapped with lower tariffs.