The Philippines has successfully turned around its trade deficit with the European Free Trade Association (EFTA) and hopes to further increase the utilization of preferential tariff rates by Filipino exporters under the Philippine-EFTA free trade agreement (FTA).
According to a new release from the Department of Trade and Industry (DTI), Philippine trade with EFTA has only grown stronger with the entry into force of the PH-EFTA FTA five years ago.
The Philippines’ trade accord with the EFTA states, comprised of Iceland, Liechtenstein, Norway, and Switzerland, was signed on April 28, 2016, and came into force on June 1, 2018.
After the FTA was implemented, the Philippines was able to turn around its perennial trade deficit with the European group. In 2019, the Philippines posted a trade surplus of US$47.12 million. This surplus further grew to $101.49 million in 2020 and $129.89 million in 2021 despite the COVID-19 pandemic, said DTI.
Total bilateral trade increased by 2.40% from $802.150 million in 2018 to $821.407 million in 2019. This further improved by 16% from $821.81 million in 2020 to $953.58 million in 2021.
The Philippines has successfully secured duty-free market access for all industrial and fisheries exports to EFTA and significant concessions for major agricultural products, particularly products such as desiccated coconut, prepared or preserved pineapple, and raw cane sugar as well as those with high potential export interest.
Under the FTA, around EUR24.84 million worth of Philippine agricultural and industrial products were able to enter the EFTA market with reduced or zero tariff rates in 2020.
These products included tuna, desiccated coconut, fruits and nuts, processed foods and other food preparations, pasta, malt products, vacuum cleaners, new pneumatic tires, and hairdressing apparatus.
DTI said implementation of the FTA was officially assessed on January 10, 2023, during the inaugural Joint Committee Meeting (JCM) hosted by the EFTA.
Both sides confirmed that the FTA has been working well and has had no critical implementation issues since the deal was implemented.
It was further noted that in 2020, the preferential utilization rates of the Philippines stood at 31% and those of EFTA member states were 30%.
Preferential utilization rates measure the extent to which tariff preferences provided by a particular trade agreement are being used by imports and exports of either side.
Both sides are determined to further improve their preferential utilization rates, said DTI.
A key highlight of the JCM was the official preview of the PH-EFTA FTA online interactive web tool, which is expected to help Filipino and EFTA exporters maximize their preferences under the FTA.
DTI Undersecretary Ceferino Rodolfo, who co-chaired the JCM, said, “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.”
Asked for an update on the online web tool, the DTI Bureau of International Trade Relations in an exclusive email to PHILEXPORT said: “The online interactive tool for the PH-EFTA FTA is currently being developed by the EFTA Secretariat.
“Per EFTA, the first phase of this interactive web tool is expected to be launched in the first half of this year. This web tool will include information on appropriate tariff rates, applicable rules of origin, and other additional requirements, among others.”
The FTA is part of the Philippine government’s efforts to tap non-traditional markets with high potential for growth in trade and investments, and forms part of the broader strategy to gain a stronger foothold in the European market.
It covers trade in goods, trade in services, investment, competition, the protection of intellectual property rights, government procurement, and trade and sustainable development.
Under this trade agreement, Filipino companies can export to EFTA member countries under more liberal rules of origin requirements.
According to EFTA, the Philippines is its 43rd largest export partner and 39th import partner for goods.