MANILA - Rather than wait for the Association of Southeast Asian Nations (Asean) to decide on whether to pursue a free trade agreement (FTA) with the European Union (EU), the Philippines should commence negotiations for a bilateral FTA with the EU, a study commissioned by the Universal Access to Competitiveness and Trade (U-ACT), the think tank of the Philippine Chamber of Commerce and Industry (PCCI), said.

Since the Asean-EU FTA was stalled in May 2009, some of the Asean countries have undertaken bilateral talks with the EU.

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In July 2009, Indonesia signed a partnership and cooperation agreement (PCA); Singapore, Thailand and Vietnam are in advanced stages of negotiations, while Malaysia and Brunei are scheduled to begin talks with the EU.

“Philippine business must consider the danger of being crowded out of the EU and other markets by the more preferential access of its competitors, given their greater number of concluded FTAs and ongoing FTA initiatives,” the study reveals.

EU has been the largest or second largest exporter, importer and investor in the world in recent years, accounting for 17 percent of world trade in goods, 25 percent of services, and half of global foreign direct investments.

In 2006, EU tariffs on Philippine exports averaged 5.5 percent for agriculture and 1.4 percent for non-agriculture.

A 400-page paper titled “Merits to Philippine Business of Having a Bilateral Philippines-EU Free Trade Agreement (FTA)” indicated that pursuing a bilateral track with the EU would be beneficial to Philippine industries.

It further said that “Philippine business cannot continue losing out on trade and investment opportunities with the EU, especially when projections indicate substantial Philippine gains from an FTA are forthcoming.”

Some of the sectors that would likely benefit from the pact include vegetable, oils and fats, textiles/apparel and motor vehicle parts. Other potential sectors are financial services and insurance, chemical products, communication, construction/dwellings, energy and water supply, paper and publishing, leather, machinery and electrical appliances.

On the other hand, the Philippines’ offensive interest to EU are fishery, seafood and marine products (Mindanao tuna), broilers, agricultural products (Mindanao), fresh fruits (bananas), muscovado, processed fruits (mango, pomelo, banana chips), processed or semi-processed coffee products, chemicals (oleochemicals), coco-based products (virgin coconut oil and beauty byproducts, e.g. soap and perfume), natural rubber, biofuel products, mining products, furniture, jewelry, handmade paper, cameras, health and tourism, information and communication technology services and services sector (skilled labor).

The study also found that should an FTA be undertaken with the EU, existing EU companies in the country will be encouraged to expand their businesses and put in more investments. (Philexport News)