Permanent Mission of the European Union to
the World Trade Organization (WTO)

 

EU Statement at the Trade Policy Review of the Philippines, 26 March 2018

Geneva, 26/03/2018 - 00:00, UNIQUE ID: 180326_5
Local Statements

On behalf of the European Union I would like to welcome the Philippine Delegation, led by Dr. Ceferino S. Rodolfo (Undersecretary and Head of the Delegation, Department of Trade and Industry) and the discussant, H.E. Mr Stephen C. de Boer (Canada), for his introductory words.

Mr Chairman, the EU would like to start by commending the Philippines for its significant progress during the period under review as showed by its continued strong GDP growth since 2012, with an average of 6.7% - including in 2017. This growth has had an impact on poverty (down from 25.2% to 21.6%) and unemployment (down to 5.7%) and it has been partly thanks to the economic reforms the country has undertaken during the past years and which are still ongoing, including its 10 point socio-economic plan.

Among the reforms that have taken place during the period under review, the EU particularly appreciates the Philippine Competition Act which is fully implemented since August 2017; the Cabotage Law amendment adopted in July 2015; the Republic Act 10641 allowing full entry of foreign banks in the Philippines adopted in July 2014 and, last but not least, the Customs Modernisation and Tariff Act adopted in May 2016.

The relationship between the EU and the Philippines is a longstanding one, which has broadened in recent years, both bilaterally and regionally, through the EU cooperation with ASEAN. Just to mention some figures: bilateral trade in goods has increased strongly, reaching €14.1 billion in 2017, thanks also to trade preferences offered by the EU to the Philippines under the GSP+ programme. The EU FDI stock in the Philippines also increased in these last years and reached €10.5 billion in 2016, with the EU being the largest investor in the country in relevant sectors, notably energy, technology, manufacturing and services.

A major development in our bilateral relationship was reached on 1 March 2018 with the entry into force of the Framework Agreement on Partnership and Cooperation between the EU and the Philippines. It will provide the legal framework for further engagement and cooperation between the EU and the Philippines on a broad range of areas, going beyond trade matters and including notably development cooperation, political dialogue, energy, transport, labour and human rights, science and technology. Currently, the Philippines benefits from enhanced market access to the EU through the GSP+ programme and, in this context, we maintain a good dialogue with the Philippines on its commitment to implement international conventions on labour rights, human rights, environment and good governance.

Mr Chairman, while the Philippine’s positive economic performance has been highlighted important concerns remain. Economic reforms must accelerate and several measures remain to be implemented to achieve its 2022 upper middle income level goal.

As a general remark, while the EU welcomes the reforms announced by the President of the Philippines in his Memorandum Order 16 of 21 November 2017 – highlighting upcoming liberalisation in, among others, practice of professions, public works, public services, retail, domestic market, and teaching – the EU would welcome more concrete information on how the Government intends to go about these reforms and how it will ensure that they are in line with international rules and best practices.

Turning now to some key areas of concern, which have been also raised during previous reviews, I would like to draw your attention to the following issues:

First, the EU would like to encourage the Philippines to speed up the ongoing revision process to improve non-discriminatory access for foreign bidders and to lift restrictions on foreigners´ participation in the public procurement of goods. For this, the EU would also suggest an easing of licensing requirements for foreign operators, in particular amending the Philippine Contractors Accreditation Board (PCAB) requirements as well as local content requirements.

The EU would also encourage the Philippines to join the GPA as an observer to attract more FDIs.

Second, restrictions to foreign direct investments. In the EU's view, trade and investment remain below potential and could benefit of a liberalisation of restrictions currently applied to foreign investments. Domestic market-oriented firms are generally limited to 40% foreign equity, and specific foreign equity limits apply in several sectors, notably telecommunications, electricity, water, logistic services, media and agriculture. The EU encourages Government and Congress to continue the efforts for the final approval of the Amendment of the Public Services Act, approved by the House last September, which would allow more foreign ownership in sectors like transportation and telecommunication. The EU also encourage continuing the revision of the Retail Trade Act, doing away with the relatively high capital requirements as well as a further revision of the Investment Negative List.

Third, the EU would like to raise some concerns on standards, particularly on sanitary and phytosanitary standards (SPS). While the EU welcomes a number of positive steps that have been taken in recent years in the SPS area, further efforts are necessary. The EU encourages the Philippines to adopt international standards as Philippines National Standards (PNS) to further increase transparency.

In closing, the EU notes the Philippines has shown commitment to the WTO as an important element of its economic growth strategy. We note that the Philippines is fulfilling almost all its notification's obligations, with a few exceptions limited to the agriculture sector and the still missing 2017 annual notification of its import licensing procedures. We also praise the Philippines for having submitted its notifications of Categories A, B and C under the Trade Facilitation Agreement. In this regard, we commend the Philippines for having a rate of Category A commitments over 93% and we hope the National Single Window – also as part of the ASEAN regional integration – will be fully operational in 2018 as announced.

On behalf of the EU, I wish The Philippines delegation the utmost success during its Trade Policy Review. 

 

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