MANILA, Philippines — The Philippines continues to push for the renewal of the EU Generalized Scheme of Preferences Plus (GSP+), as well as the resumption of negotiations for a Philippines-EU free trade agreement (FTA) as Trade Secretary Alfredo Pascual is set to visit Brussels, Belgium later this month to follow up on the matter.
“I’ll be going to Brussels towards the end of June to follow up on the EU GSP+ and also potentially a free trade agreement with the EU,” Pascual said in a press briefing with the Malacanang Press Corp Tuesday.
The EU GSP+ is an incentive arrangement that grants the Philippines zero tariffs on 6,274 products or 66 percent of all EU tariff lines. This preferential trade is maintained, while the country upholds its commitments under the GSP+ select 27 international conventions on human rights, labor, good governance, and environment.
He explained that the GSP+, which is set to expire at the end of the year, is only available to the Philippines now as it is a lower middle income country.
“When the Philippines becomes an upper middle income country, we will no longer be eligible for the GSP Plus,” he said.
For this reason, Pascual stressed that it is now time to negotiate for a free trade agreement.
“We have the support from of course the businesses from Europe that are operating in the Philippines and also some members of parliament of the EU,”he said.
Last month, the EU- ASEAN Business Council (EU-ABC) expressed hope for the resumption of negotiations for an EU- Philippines FTA this year, emphasizing that the country has the greatest potential to secure an FTA the fastest compared to its neighboring countries.
“Europe is lagging behind other partners of Southeast Asia in terms of FTAs. We need to do more negotiations. There’s an issue of bandwidth within the European Commission, But that issue [will] start to ease. [We] are about [to] finalize the deal with Australia for instance. And I think when that happens, they do have more bandwidth to take on more negotiations,” he added.
Humphrey noted that the Philippines has the greatest potential to secure an FTA with the EU compared to neighbors Indonesia and Thailand, emphasizing that discussions with the two other countries are going to be more problematic compared with the Philippines.
“There are a lot of vested interests in those countries. Those countries are already saying that a lot of policies from Europe, particularly around sustainability, that need to be included in FTAs are too problematic for them,” Humphrey said.
“The discussions I’ve had previously, with the administration here (Philippines), and from the comments that the President made in Brussels in December, it is quite clear that some of those obstacles for the Philippines are not that big,” he said.
Humphrey said the ambition gap between Europe and the Philippines is much closer than it is between Europe and Indonesia and Thailand.
“When the talks were running a few years ago, progress has been made. If you talk to the negotiators on the EU side like I have done, their view is we think we can move quite briskly with the Philippines,” he said.
Based on the Department of Trade and Industry (DTI)’s website, the launch of Philippines-EU FTA negotiation was announced in December 2015. The first round of negotiations was held on May 23 to 27 in Brussels, Belgium, while the second round of negotiations was held on Feb. 13 to 17 in Cebu.
While a formal announcement still needs to be made for the resumption of FTA negotiations, Humphrey emphasized that there is a lot of pressure being applied on the European Commission to recommence the negotiations, noting that Sweden, which currently holds the rotating presidency of the EU, is saying that negotionals for the EU-FTA should be recommenced.
Pascual said earlier that Swedish Minister of Trade and International Development Cooperation Johan Forssell expressed support for the resumption of the PH-EU FTA negotiations.
“We are grateful for this support from the Swedish government and the EU-ABC, especially on the re-starting of the PH-EU FTA negotiations as we prepare to respond to the ongoing trend in economic growth and as we aim to make the Philippines a middle-income economy in the next few years,” Pascual said.
The DTI stressed that through the PH-EU FTA, the country will be better positioned to be a regional hub for sustainable, connected, and innovative manufacturing and services industries.
“Ultimately, what we are focusing on is an enhanced market access for Philippine goods and services to the EU as this will allow Philippine exporters to diversify their markets, reach a broader consumer base, and increase their export volumes,” Pascual said.
According to the DTI, the reduction or elimination of tariffs imposed on Philippine goods entering the EU, which is part of the PH-EU FTA, will enhance the competitiveness of Philippine products, making them more attractive to European consumers and therefore enabling micro, small, and medium enterprises (MSMEs) and Filipino exporters to earn more profit.
Aside from the benefits it brings to the export sector, the PH-EU FTA will facilitate the influx of foreign direct investments from EU countries, which the DTI sees as a huge contributor to knowledge transfer, job generation, and local industry development.