BusinessWorld Online, Manila

Philippines risks being left behind in free trade with Europe — think tank

18 November 2009

A private sector think tank yesterday pressed the Trade department to move faster on a free trade pact with the European Union (EU), citing research which points to gains awaiting several Philippine industries.

The Universal Access to Competitiveness and Trade (U-ACT) said in a statement yesterday that a study it conducted also found that the Philippines will be left behind by its Southeast Asian neighbors if a trade deal with the Western bloc is not forged.

The recommendation comes as talks between the Association of Southeast Asian Nations and the EU stalled back in May 2009 due to differences on how comprehensive the pact should be and whether military-ruled Myanmar should be included.

Since then, several ASEAN countries - Singapore, Vietnam and Thailand — have begun initial talks with the EU for bilateral pacts.

"Philippine business must consider the danger of being crowded out of the EU and other markets by the more preferential access of its competitors, given their greater number of concluded FTAs and ongoing FTA initiatives," U-ACT, which is affiliated with the Philippine Chamber of Commerce and Industry, said.

Those that would benefit from the trade pact, the think tank said, include exporters of marine goods, fresh and processed fruit, oleochemicals, coconut-based goods, biofuels, minerals, furniture, jewelry and handmade paper. The service sector, particularly the tourism and outsourcing industries, stand to gain from the pact as well, U-ACT said.

"[And] should an FTA be successfully entered with EU, existing EU companies in the country will be encouraged to expand their business and fuse in more investments in the country," it said.

"[Trade] Secretary Peter B. Favila [should initiate] communication with EU Trade Commissioner Catherine Ashton indicating Philippine interest for an FTA," it added.

Trade officials could not immediately be reached for comment. But Trade Assistant Secretary Ramon Vicente T. Kabigting had said back in September that the Philippines will indeed need the deal to keep up with its neighbors.

So far, the Philippines and the EU have been negotiating a partnership and cooperation agreement, a prerequisite that provides a general framework before delving into more specific fields like trade agreements.

The EU was the Philippines’ second largest export market in 2008 after China, accounting for $8.487 billion or 17.3% of total export sales, central bank data show. — JADH