Philippines-EFTA member states reaffirm economic cooperation

MANILA, Philippines — The Philippines and European Free Trade Association (EFTA) member states – Switzerland, Norway, Liechtenstein, and Iceland – have reaffirmed their economic cooperation as they reviewed the implementation of the Philippines-EFTA free trade agreement (FTA).

In a statement, the Department of Trade and Industry (DTI) said the Philippines and the EFTA states officially assessed the implementation of the FTA, which was enforced in 2018, during the recent inaugural joint committee meeting hosted by EFTA member states.

The joint committee meeting was co-chaired, on behalf of the EFTA member states, by Swiss State Secretariat for Economic Affairs Minister Karin Buechel and Trade Undersecretary Ceferino Rodolfo.

“Over the five years of implementation, both sides have confirmed that the FTA is working well and has no critical implementation issues to date. The preferential utilization rates for the Philippines and EFTA member states were reported at 31 percent and 30 percent for 2020, respectively,” the DTI said.

It said both sides are determined to further improve their respective utilization rates.

The DTI said a key highlight of the meeting was the official preview of the PH-EFTA FTA online interactive web tool that will help the Philippines and EFTA exporters maximize their preferences under the FTA.

“We are privileged to be the EFTA’s first recipient partner of this online web tool to promote the PH-EFTA FTA. This will really benefit the Philippines and EFTA business community,” Rodolfo said.

At the same meeting, both parties had a constructive dialogue on trade and sustainable development, during which we had the opportunity to highlight the Philippine government’s initiatives on the implementation of international labor and environmental conventions, including the Philippines’ domestic policies on freedom of association, gender equality, sustainable management of forests and climate change.

“This FTA certainly promotes international trade while contributing to the objective of sustainable development, all the while ensuring that labor rights and environmental protection will not be sacrificed in the name of trade and investments,” Rodolfo said.

Prior to the convening of the Joint Committee, the sub-committee on Trade in Goods (TIG) met to discuss the technical operationalization of the TIG Chapter of the FTA, including market access, customs, rules of origin, and trade facilitation.

The Philippine side was led by Bureau of International Trade Relations director Angelo Benedictos and the EFTA side was represented by Swiss Federal Office for Customs and Border Security deputy head Meinrad Muller on behalf of the EFTA member states.

The DTI highlighted that since the FTA entered into force on June 1, 2018, the Philippines was able to turn around its trade deficit with EFTA, emphasizing that the Philippines posted a trade surplus of $47.1 million in 2019.

It said this surplus further grew to $101.49 million in 2020 and $129.89 million in 2021 despite the COVID-19 pandemic.

Similarly, total trade between the Philippines and EFTA increased by 2.4 percent from $802.150 million in 2018 to $821.407 million in 2019. This further improved by 16 percent to $953.58 million in 2021.

“The Philippine market does not compete and is complementary in nature to the EFTA market. As such, the Philippines was able to secure duty-free market access for all industrial and fisheries exports to EFTA and significant concessions on major agricultural products through the FTA, particularly those: Philippine products to the EFTA member states, such as desiccated coconut, prepared or preserved pineapples, and raw cane sugar; and with high potential export interest,” Rodolfo said.

With the FTA in place, around 24.84 million euro worth of Philippine agricultural and industrial products were able to enter the EFTA market with

reduced or zero tariff rates in 2020. These Philippine products include tunas, desiccated coconuts, fruits and nuts, processed foods and other food preparations, pasta, malt products, vacuum cleaners, new pneumatic tires, and hairdressing apparatus.

On the investment front, Switzerland has been the country’s major partner in EFTA and a regular source of foreign investments in the European Region, the DTI said.

It said that from 2018 to the third quarter of 2022, Swiss investments approved by investment promotion agencies (IPAs) totaled P1.4 billion in the manufacturing, real estate activities, administrative and support activities sectors.

From 2018 to the second quarter of 2022, investments from Norway, Iceland, and Liechtenstein amounted to P229.4 million in the country’s financial and insurance, manufacturing, administrative, transportation, and storage sectors.

DTI said that along with the PH-EFTA FTA, recent economic reforms, such as the opening of 100 percent foreign capital in renewable energy projects, will pave the way for more investments from EFTA to the Philippines, particularly in the energy sector.