By: ASEAN Briefing, Dezan Shira & Associates
The Philippines and members of the European Free Trade Association (EFTA) have begun their first round of free trade agreement (FTA) negotiations in Makati, Philippines. The EFTA is made up of four countries: Iceland, Liechtenstein, Norway, and Switzerland. A completed FTA could have profound effects on businesses in both regions.
According to Philippine Trade Undersecretary Adrian Cristobal Jr., the country is working hard to finalize the FTA by the end of 2015 or early 2016. He continued, “It’s an ambitious goal but we’re targeting that. We want to make our country attractive to these small but wealthy countries with highly developed economies, which include high value-added products and modern advanced technology. We want to use that complementation.”
In particular, EFTA countries are especially interested in importing Philippine agricultural produce as well as other finished products, such as furniture.
Prior to the beginning of formal negotiations, on June 23, 2014 in Iceland, the Philippines and the EFTA signed a Joint Declaration on Cooperation, which signified their intention to begin free trade talks.
During this first round of negotiations, a variety of working groups were created in order to discuss such issues as:
- Goods and services
- Intellectual property rights
- Government procurement
- Trade and sustainable development
- Legal and institutional issues
Trade between the Philippines and the EFTA has steadily grown over the recent years. In 2013, total trade stood at US$633 million. The Philippines exported US$193 million worth of goods to the EFTA countries, while the EFTA exported US$440 million.
The Philippine government is hopeful that the country’s recent membership in the European Union Generalized System of Preferences Plus (GSP+) will be an added impetus for the conclusion of the FTA negotiations with the EFTA. The Philippines was the first ASEAN country to join GSP+, which will allow the country to export, tariff-free, over 6,200 products (66 percent of all product tariff lines) to the EU, including processed fruit, coconut oil, footwear, fish, and textiles.
Trade Undersecretary Cristobal expounded on the issue, “We’re anticipating the EU-GSP+ will further boost our attractiveness as an investment destination for European firms and other foreign investors for products [intended] to be exported to the EU market.”
The Philippines is also exploring the possibility of forming similar FTAs, such as the one currently under negotiation with the EFTA, with a range of South American countries. In mid-2015 Philippine officials will travel on an official and business mission to the region in order to promote the country as an attractive investment destination. Countries that will be visited include Brazil, Chile, Mexico, and Peru.
The second round of Philippine-EFTA FTA negotiations has been scheduled for June 2015.
A full list of the Philippines’ trade agreements can be found here. The country’s membership in the ASEAN organization also places it in a prime trade position vis-à-vis a number of countries and regions, to see a full list of ASEAN related trade agreements, please see here. It is highly suggested that investors consult a professional services firm so that they can take full advantage of any FTAs or other beneficial agreements that the country they are operating in has signed.
This article was first published ASEAN Briefing.
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