Following the formal signing of a Joint Declaration on Cooperation (JDC) in Reykjavik, Iceland, the Philippines and the European Free Trade Association (EFTA) are expected to commence free trade agreement (FTA) negotiations before the end of this year.
The JDC between the Philippines and EFTA – comprising Iceland, Norway, Switzerland and Liechtenstein – is being looked upon as paving the way to an enhanced relationship between the two sides. Trade and Industry Secretary Gregory L. Domingo confirmed that the Philippines would now like to explore ways to increase the market share of Philippine trade and investments from EFTA member countries in similar fashion to its Association of Southeast Asian Nations (ASEAN) co-members.
Based upon EFTA's total imports from 2008-2012, Vietnam was EFTA's largest import source from ASEAN with a 30 percent market share. While Singapore and EFTA already share an FTA, Vietnam, Thailand, Malaysia, and Indonesia are all at various stages in trade talks.
Philippine Trade Undersecretary Adrian Cristobal noted "the vast potential in our bilateral relations. The Philippines has been reaching out more to EFTA, just as our ASEAN neighbors are doing. We have studied the possibilities and potential benefits of entering into a more active relationship with EFTA states and we believe that there are strong complementarities."
He particularly mentioned EFTA's shipbuilding, iron and steel, aerospace, IT, and pharmaceutical industries as areas where the two sides could explore cooperation initiatives, while financial, tourism, educational, maritime transport, and energy services could also be further developed.
While there is an opportunity to reduce tariffs significantly within a trade treaty, it is also seen in the Philippines that an FTA could increase foreign direct investment from the four countries. The countries within EFTA had first expressed an interest in an FTA with the Philippines in 2012, before the idea was resurrected in June 2013, when both parties confirmed their strong interest in exploring such an agreement.
A chief negotiator meeting of the Philippines and EFTA member states followed the JDC signing. It discussed the process towards free trade negotiations between the two sides, and noted that a report, containing the principal terms of reference for the scope of the proposed FTA and process of future negotiations, is due for consideration in September by both sides with a view to launching formal talks before the end of 2014.
Total trade between EFTA and the Philippines amounted to USD633m in 2013. The EFTA countries exported goods to the Philippines worth USD440m, while their imports from the Philippines were USD193m.
The Philippines has FTAs with Japan and, as an ASEAN member, with China, South Korea, India, Japan, Australia and New Zealand. EFTA, outside the European Union, has 25 FTAs with 35 countries and territories, together with a further six JDCs.
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