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Phl, EU start FTA scoping process; GSP+ extended until 2027

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The Philippines and the European Union (EU) have announced their intention to explore the re-launch of negotiations for a new free trade agreement (FTA).

The Philippines and EU will shortly kick off a bilateral “scoping process” to assess to which extent they share a mutual understanding on the future FTA.

This calls for meetings between the Philippine and EU governments’ technical experts in the coming months to cover a range of topics, including market access of goods and services, investment liberalization, trade and sustainable development, government procurement, and dispute settlement, according to the Department of Trade and Industry (DTI) in a July 31, 2023 release.

The scoping exercise is also in response to the strong call of the business sector to resume the FTA negotiations, DTI said.

If this process concludes successfully, and after consultations with the member states, the two parties will then proceed to resume FTA negotiations.

Philippine Trade Secretary Alfredo Pascual said the FTA will serve as a more permanent basis for the Philippines’ economic relations with the EU than the time-bound Generalised Scheme of Preferences Plus (GSP+) coverage currently enjoyed by the Philippines as a lower middle-income country.

This comes as the EU has decided to extend until 2027 the Philippines’ inclusion in the GSP+, European Commission President Ursula von der Leyen said on August 1.

“We evaluated the situation, and we found that we can extend the status quo, that is good news… till 2027,” she said in an interview with CNN Philippines.

The EU’s GSP+ scheme, which is extended to developing countries like the Philippines, grants duty-free access for almost 6,000 tariff lines, helping to facilitate and expand Philippine exports to the lucrative region.

However, it is well known that there remains a big room for opportunity in the EU market that remains untapped by Philippine exporters and small enterprises.

A 2021 export potential analysis by the International Trade Centre (ITC) identified US$13 billion in export potential for the EU market, of which $7.15 billion or 54% is untapped potential.

In view of this, the EU, DTI and ITC recently also launched in the country the first of a series of business guides that will serve as tools and resources for MSMEs and would-be exporters to understand the key requirements for exporting to the EU.

“Business Guide: Exporting to the EU Market” was officially launched on July 25, 2023. It is a general guide on the EU market and part of a series of business guides developed and tailored for the Philippines.

The general business guide provides information on access to the EU market, technical and regulatory requirements to be complied with in the Philippines to export to the EU, and measures to meet to be able to cross the EU border.

It is complemented by sector-specific guides covering five sectors: raw agricultural products, processed food products, garments and textiles, machinery, and electrical equipment.

The six books were developed in response to the challenges faced particularly by Philippine MSMEs in leveraging opportunities in the EU market due to lack of knowledge and understanding of market access regulatory requirements and compliance capacities.

According to the European Commission, the EU and the Philippines first launched negotiations for an FTA in 2015. The last negotiating round took place in 2017 and negotiations have since been on hold.

On June 30, 2022, the new administration assumed office and has shown willingness to engage with the EU on key issues of importance.

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