Trust, Trade, and Values: The deepening EU-Philippine economic partnership

This week, representatives of select European companies are in Manila for the annual EU-ASEAN Business Mission. They will hold high-level meetings with National Government leaders to discuss ways to further strengthen business and economic ties with the Philippines.

The Business Mission is happening just three months after the Philippines and the European Union concluded the third round of Free Trade Agreement (FTA) negotiations, which reaffirm their shared commitment to modern and inclusive trade. That round covered digital trade, energy, sustainable development, and government procurement — marking one of the most comprehensive trade efforts undertaken by the Philippines.

The FTA is seen as a key pillar of the Philippine trade agenda. It is expected to build on the gains of the EU GSP+ scheme, which allows the Philippines to export over 6,200 products to the EU market tariff-free. The GSP+ also supports broader development goals by encouraging progress on 27 international conventions covering human rights, labor standards, environmental protection, and good governance. By moving toward an FTA, the Philippines aims to deepen this partnership and create a more stable, forward-looking trade environment that supports inclusive growth and long-term investment.

And indeed, Asia and the larger Indo-Pacific region are a key point of interest in European trade. Asia remains the world’s leading maritime area, its ports handling around 4.6 billion tons of goods, accounting for about 42% of global trade. A significant portion of this trade passes through the Malacca Strait, the South China Sea, and the West Philippine Sea. Hence, these waterways are vital to the Indo-Pacific economy.

Meanwhile, about 40% of EU imports and 22% of EU exports transit through the South China Sea including the West Philippine Sea. This underscores Europe’s deep economic stake in regional stability and in open trade routes.

TRADING PARTNERS
The narrative that China is the Philippines’ top trading partner may be common, but it often lacks context and does not reflect the full picture of economic or strategic value.

It is, in fact, with the European Union with which our country shares the more balanced and beneficial trade relationship. According to the Philippine Statistics Authority, total exports from the Philippines to the EU reached $8.07 billion last year, while imports amounted to $7.46 billion. This yielded a trade surplus of $610.07 million.

Meanwhile, our trade with China resulted in a deficit of $23.39 billion in the same period.

The EU is the Philippines’ fifth-largest trading partner according to data from the Department of Trade and Industry, accounting for 7.7% of our economy’s total trade. Other bigger trading partners are the United States, Japan, and South Korea.

Aside from trade, significant investments in the Philippine economy come from European countries. For example, even while it is no longer a member of the EU, the United Kingdom accounted for 35% of total foreign direct investments in the Philippines last year, according to the Bangko Sentral. This was second only to Japan’s 38%.

As an example on a sectoral level, the Philippines’ aggressive push for renewable energy has proven to be an attractive point for European investments. We have drawn interest from Denmark, the UK, the Netherlands, Germany, and Spain.

A notable example is Danish firm Copenhagen Infrastructure Partners’ partnership with ACEN Corp. to build the Philippines’ first large-scale offshore wind project off the coasts of Camarines Sur and Camarines Norte. Once operational, the project is expected to significantly boost the Luzon grid and help meet rising power demand through renewable energy.

In addition, several European companies including Acciona and Unilever have maintained long-standing operations in the Philippines, with investments in manufacturing, consumer goods, and infrastructure. Such investments bring capital, technology, jobs, and sustainability practices, reinforcing Europe’s role in the industrial and economic development of the Philippines.

PARTNERSHIPS
The Filipino people are aware of who our significant and enduring economic partners truly are. A Pulse Asia survey in September 2024 showed that Filipinos view the European Union as one of our most beneficial economic partners. Indeed, there is confidence in the partnership, bolstered by recent trade and investment activities.

This is not to say that the partnership is at its peak. To further cement the economic partnership and to show our good faith, the Philippines — even as it is beset by governance challenges — must prove to the world that it is earnest in pursuing transparency and accountability. These primordial principles will provide an even greater assurance to our economic partners that we are serious about welcoming foreign capital into our country and that investors can be assured that their stakes will be protected, the business conditions fair and predictable.

Nonetheless, we deeply value the trust, shared commitments, and the long-term potential of the economic relationship between the EU and the Philippines, for the mutual benefit of our nations and our peoples.