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.
Mary
Swire
Business & Investment Opportunities
Saigon Business Corporation Pte Ltd (SBC) is incorporated
in Singapore since 1994.
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