Trade, Investment and Financial Links
The EU and the Philippines work closely together, a cooperation that will be further strengthened once the Partnership and Cooperation Agreement – signed in 2012 [228 KB] – will come into force (currently under ratification)
The Philippines is a beneficiary of trade preferences granted by the EU under standard Generalised Scheme of Preferences (GSP) and was recently (December 2014) granted further preferences under GSP+ - the special incentive arrangement for sustainable development and good governance.
Both parties agreed to undertake preparatory work to explore the possibility to further deepen EU-Philippines trade relations through a bilateral free-trade agreement, following the pause of EU-ASEAN FTA negotiations in 2009.
Issues of mutual interest and concerns are being discussed through regular meetings, "Trade and Investment Working Groups" – the 9th of which most recently held in Manila in June 2014.
Trade and Economic picture
• In 2013, EU-Philippines trade in goods was worth roughly € 11 billion, with over € 5.7 billion in exports from the EU to the Philippines. This makes the EU the 4th largest trading partner of the Philippines. After the Philippines consistently enjoying a comfortable trade surplus vis-à-vis the EU for more than a decade, in 2013 the EU for the first time obtained a small € 0.6 billion trade surplus to its advantage.
• The EU key exports to the Philippines include electronics, chemical products, industrial equipment, transport equipment, metal products, paper products, cereals, meat, dairy, and animal feeds, while the Philippines main exports to the EU are electronics, coconut oil, transport equipment, clothing and textiles, fishery products, metal products, industrial equipment, and fruit products.
• The EU is also the largest investment partner of the Philippines, with an FDI stock of around €8 billion (2013), or about 30% of total FDI stock in the Philippines.
• European companies are estimated to employ around 450,000 Filipinos, a great contribution to the economy. EU FDI flows to the Philippines went up by more than 150% in the first half of 2014. Likewise, Philippine investors have invested some €1.4 billion in the EU
• Filipino migrants living and working in the EU as well as Filipino seafarers manning European ships sent $3.1 billion (€2.3 billion) back to the Philippines in 2013, making the EU the second largest source of remittances to the Philippines and the largest employer of Filipino seafarers.
• Lastly, Europeans do believe it is more fun in the Philippines with a historic record of 376,000 visitors in 2013, an increase of 8%. With the European recovery and the lifting of the air ban for Philippines Airlines and Cebu Pacific, this growth is expected to strengthen in the coming years.
Foreign Direct Investment
EU and the Philippines
ASEAN as a whole would rank as the 8th economy in the world and is the EU's 3rd largest trading partner outside Europe, after the United States and China. Bilateral trade in goods and services between the EU and ASEAN reached over €238 billion in 2013.
When completed, the ASEAN Economic Community will constitute the third largest market in the world, with over 600 million potential consumers. Ensuring a better access for EU exporters to the dynamic ASEAN market is a priority for the EU.
Philippines is one of the 10 members of the Association of Southeast Asian Nations (ASEAN), as well as the 5th largest economy in the region and the 2nd biggest market in ASEAN, with some 100 million consumers.
Following the Global Europe Communication, where ASEAN was identified as a priority region, the EU launched negotiations for a region-to-region free-trade agreement (FTA) with ASEAN. Negotiations proved difficult and in 2009 both sides agreed to pause regional negotiations and continue bilaterally, understanding bilateral FTAs could serve as stepping stones towards a future agreement at regional level, which remains the ultimate goal.
EU's bilateral trade agenda with the region has moved forward, with the conclusion of the FTA with Singapore and negotiations underway with Malaysia, Vietnam and Thailand. Meanwhile, preparatory work to explore the possibility to further deepen EU-Philippines trade relations through a bilateral free-trade agreement ('scoping') is ongoing.
GSP and GSP+
The Philippines is a beneficiary to EU's Generalized Scheme of Preferences. Total exports to the EU that were eligible in 2013 amounted to €1.69 billion or 33% of total exports to the EU. Actual utilization was around 64% or €1.08 billion - figures that can be expected to go up in the near future.
In addition, GSP+ was granted to the Philippines on 25 December, bringing further tariff cuts to over 6200 tariff lines.
The European Union ('EU') has granted trade preferences to developing countries through the Generalised Scheme of Tariff Preferences (GSP scheme) since 1971. It is part of its common commercial policy in accordance with the general provisions governing the EU's external action. The special incentive arrangement for sustainable development and good governance ('GSP+') provides additional tariff preferences when exporting to the European Union to developing countries which are vulnerable due to a lack of diversification and insufficient integration within the international trading system. The GSP+ scheme supports these countries to assume the special burdens and responsibilities resulting from the ratification of 27 core international conventions on human and labour rights, environmental protection and good governance as well as from their effective implementation.
This is done in the form of partly or entirely reduced tariffs (3.5 percentage points [20% in case of textiles and clothing] on ad valorem duties and 30% on specific duties) for over 6,000 products.
updated January 2015