THE Department of Trade and Industry (DTI) said preliminary discussions to determine the proposed scope of free trade agreement (FTA) negotiations with the European Union (EU) are expected to start this year.

Trade Secretary Alfredo E. Pascual said at a recent briefing that the FTA talks have moved forward after meetings with European Commission (EC) President Ursula von der Leyen during the DTI’s Europe Investment Roadshow between June 18 and July 6.

The roadshow visited France, the UK, Belgium, the Netherlands, and Germany.

“The initial discussion is scoping. This means comparing notes, meeting of minds… My expectation is that there will be scoping discussions within the year, based on what my counterparts have expressed,” Mr. Pascual said.

There have been two negotiations for the proposed FTA, with the last one taking place in 2017. Negotiations were officially launched in December 2015 but suspended over concerns about the previous administration’s human rights record.

Trade Undersecretary Ceferino S. Rodolfo said in the same briefing that the preliminary discussions will set the terms of reference for the FTA negotiations.

He noted increased interest in industries such as electric vehicles, critical minerals, and renewable energy, which did not feature in previous talks.  

Mr. Pascual said the proposed FTA is vital as the Philippines is expected to graduate to upper-middle income status in a few years, rendering it ineligible for the EU’s Generalized Scheme of Preferences Plus (GSP+) trade incentive scheme.

“Our expectation is that by 2025, we will become an upper-middle income country, in which case we will not be able to avail of the benefits under GSP+. If that happens and the FTA is not finalized, our exports will be disrupted. That is why we need to negotiate the FTA,” Mr. Pascual said.

GSP+ allows the Philippines to avail of zero tariffs on 6,274 products or 66% of all EU tariff lines. Some of the top Philippine exports to the EU are crude coconut oil, tuna, pineapple, and other agricultural products.

The DTI estimates that €2.93 billion worth of Philippine products were exported to the EU under GSP+ last year, equivalent to a 77% utilization rate. The EC recently proposed to extend the GSP+ to 2027. The scheme is set to expire by year’s end. 

In 2022, the EU was the Philippines’ fifth-largest trading partner, accounting for €15.23 billion. It was the sixth-largest export market at €7.96 billion, and sixth-leading source of imports at €7.14 billion. — Revin Mikhael D. Ochave