DTI stresses FTA with EU needed if Philippines graduates from lower-income status

MANILA, Philippines — The Department of Trade and Industry stressed that a free trade agreement with the European Union is needed if the Philippines graduates to an upper-middle income country.

That was the assessment made by Trade Sec. Alfredo Pascual on Wednesday, after the DTI recently concluded its trip to the EU. After all, FTAs bolster trade relations between two or more nations easing barriers surrounding rules on exports and imports. 

The Philippines and the EU are set to resume talks surrounding a free trade agreement this year. 

“Our eligibility with respect to the GSP+ will not be there anymore the moment we become an upper-middle income country,” Pascual said.

Negotiations began in 2015. The second round of talks were held in November 2017 but was put on hold in November 2020.

That said, The current Generalized Scheme of Preferences Plus will expire by the end of 2023 if the EU does not renew it. The European Commission expressed willingness to renew the scheme for four more years, but approval from the European Parliament and the European Council is pending.

Pascual indicated that Philippine exporters depend on these tariff concessions which will be at risk if the Philippines becomes an upper-middle-income country within three years.

The EU’s GSP+ benefits Philippine businesses by allowing tariff-free exports of some 6,000 locally-made products.

“By that time, we will no longer be eligible for coverage under the GSP plus, in order not to disrupt the preferential trade arrangements available to our exporters, we need to shift to a more permanent platform for trade, that is the FTA,” Pascual added. — Ramon Royandoyan