THE POTENTIAL for a free trade agreement (FTA) with the United Kingdom (UK) is “quite strong” after its exit from the European Union (EU), the UK trade envoy to the Philippines said.

UK Prime Minister’s Trade Envoy to the Philippines Richard Graham told reporters on Tuesday that the country is prioritizing Singapore and Malaysia among Southeast Asian countries prior to possible negotiations with the Philippines.

“I think the potential for a free trade agreement is quite strong in the future,” he said.

The UK officially exited the EU on Jan. 31, and its transition period will continue until Dec. 31, 2020.

Mr. Graham said trade between the Philippines and the UK is complementary, as the Philippines exports agricultural products and imports aerospace, consumer goods, and high-tech products from the UK.

While FTA talks have not yet begun, Mr. Graham said the UK is looking to open up the UK market further to the Philippines by tailoring its existing preferential trade agreements.

The Philippines currently has preferential market access to the EU through the Generalized Scheme of Preferences (GSP+) for the duty-free entry of up to 6,274 products into countries in the union.

“Because we have trading arrangements under what’s called GSP+… we will roll that over on the 31st of December. It’s rebranded as a UK GSP, but it will be exactly the same,” Mr. Graham said.

“Over time, the ambassador and his team will be able to review this with (Trade Secretary) Ramon Lopez and his team, and see if there are opportunities to improve this and to tailor the existing arrangements for the UK-Philippines.”

The UK trade envoy said some other countries in Europe are protective of their agriculture industries as they locally produce similar products with Philippine exports.

“But we don’t. So it may be easier for us to be more open to the Philippines on that side, and we might want a bit more access on the services side and in other sectors,” Mr. Graham added.

Beyond what he calls the medium-term GSP plan, there is an opportunity for an FTA and further investments.

“I think there is some very good opportunities to build on existing investment, particularly in the BPO (business process outsourcing) sector, but also some manufacturing,” he said, noting that tax rules should be clear and favorable.

Central bank Governor Benjamin E. Diokno last week said dollar remittances, outsourcing and tourism receipts would probably shield the Philippine economy from the short-term effects of Brexit.

“Uncertainty that may arise from the post-Brexit transition may contribute to a short-term spike in market volatility and risk aversion, which could lead to a temporary flight to safe-haven assets,” Mr. Diokno has said.

Mr. Diokno said gross placements from the UK accounted for 0.7% of the country’s foreign direct investments from January to August last year, while foreign portfolio investments from the UK accounted for 29.7% of the total. — Jenina P. Ibañez