Philippines, EU eye FTA signing in 2027

By Beatriz Marie D. Cruz, Senior Reporter

THE PHILIPPINES and the European Union (EU) have reached a “substantial agreement” on a free trade agreement (FTA) targeted for signing in 2027, as both sides seek fairer trade rules and more resilient supply chains amid heightened trade tensions and higher US tariffs.

European Commission (EC) President Ursula von der Leyen said in a post on X on Tuesday that she spoke with Philippine President Ferdinand R. Marcos, Jr. and that they have agreed on the free trade deal.

“Given the challenging geopolitical and geoeconomic context, the two leaders also underlined the importance of working with likeminded partners across the world to ensure open, fair and predictable trade,” according to a readout of the call between Ms. von der Leyen and Mr. Marcos that was posted on the EC website.

This milestone comes three years after the EC president visited Manila in 2023 when both leaders agreed to relaunch the FTA negotiations.

Ms. von der Leyen will be in Manila next year for the signing of the Philippines-EU FTA, the EC said in a separate statement.

In a joint statement on Tuesday, Philippine Trade Secretary Ma. Cristina A. Roque and European Commissioner for Trade and Economic Security Maroš Šefčovič said both sides reached a “substantial agreement” on an FTA, which will pave the way for its formal conclusion in the next few months.

Ms. Roque and Mr. Šefčovič welcomed the milestone, saying the deal will “deepen bilateral trade and investment ties, making them more diversified and resilient.”

“The agreement also sends a clear signal of reinforced engagement between the EU and the Philippines, anchored in their common interest in an open, inclusive, and rules-based international order in the current volatile context,” they said.

Ms. Roque and Mr. Šefčovič said the trade deal is expected to create new opportunities for Philippine and European businesses, including micro, small and medium enterprises, farmers, manufacturers, and consumers.

The deal is also expected to strengthen and diversify supply chains, as well as ensure fair rules and real predictability, both sides said.

The EC said the FTA would eliminate tariffs and improve market access on both sides.

“With 113 million people, the Philippines represents a major market for EU exporters. The FTA will liberalize over 94% of tariff lines, covering more than 97% of bilateral trade,” it said.

The Philippines and EU member states are under growing pressure to diversify their trade ties as uncertain US tariff policies and the Middle East war are disrupting global trade.

Massimo Santoro, ambassador of the EU delegation to the Philippines, said the FTA negotiations are “essentially concluded.”

Both sides are looking to ratify the FTA before the Philippines’ tariff perks under the Generalised Scheme of Preferences Plus (GSP+) expire next year, Mr. Santoro said.

“We wish to be quick in putting this into force, because we also [took into] consideration the GSP+ mechanism ending in 2027,” he told reporters on the sidelines of the ASEAN-EU Business Summit on Tuesday.

Prior to the FTA, the Philippines and the EU’s trade relationship was anchored on the GSP+, which allows the duty-free entry of over 6,000 products to Europe.

The Philippines is the third country among Association of Southeast Asian Nations (ASEAN) members to have concluded a bilateral FTA with the EU, after Singapore and Vietnam.

SWIFT RATIFICATION URGED
The European Chamber of Commerce of the Philippines (ECCP) said the new trade deal provides a clear framework for Philippine and European businesses.

“After years of rigorous dialogue, we now have a world-class framework that establishes a predictable foundation for trade and investment,” ECCP President Diana M. Edralin said in a statement.

She urged legislators and government officials in the Philippines and EU to ensure the speedy ratification of the trade deal.

“Ensuring an expedited legislative approval in both the Philippine Congress and the European Parliament will allow our business communities, workforce, and consumers to realize the full economic dividends of this historic pact without delay,” she said.

A trade deal with the EU provides an opportunity for the Philippines to bolster its competitiveness as a destination for European investment and as a player in regional value chains, the EU-ASEAN Business Council (EU-ABC) said.

“The challenge now is to translate the country’s strong fundamentals into a competitive operating environment, making it easier for companies to invest, produce and integrate the Philippines into regional supply chains,” EU-ABC Executive Director Chris Humphrey said in a statement.

Former Tariff Commissioner George N. Manzano said the Philippines’ FTA with the EU aligns with the need to strengthen economic resilience amid global trade risks.

“Such diversification is especially important amid geopolitical tensions and uncertainties involving the United States and China, and could help strengthen the resilience of the Philippine economy,” he said in a Viber message.

To attract European partners, Philippine businesses must invest in boosting its capacity to produce and export higher-value-added goods, Mr. Manzano added.

Federation of Philippine Industries Chairperson Elizabeth H. Lee said the FTA could help local industries to align with European standards.

“Meeting higher European standards in quality, safety, traceability, and sustainability will help local firms improve productivity, strengthen competitiveness, and participate more deeply in global value chains,” she said in a statement.

The Philippines’ FTA with the EU could also help attract foreign direct investments to modernize local industries and expand production capacity, Ms. Lee added.

Jonathan L. Ravelas, a senior adviser at Reyes Tacandong & Co., said the success of the FTA will depend on how well it is utilized.

“The FTA should be seen not just as a trade deal, but as a platform to improve the country’s competitiveness and long-term economic resilience,” he said via Viber.

To maximize its potential, the government and private sector must help ensure exporter awareness; simplify compliance requirements; upgrade logistics and infrastructure; and maintain a stable and predictable business environment, Mr. Ravelas added.

Philippine Chamber of Commerce and Industry President Ferdinand A. Ferrer said in a statement that the EU FTA can unlock new growth areas for Philippine firms, especially small and medium enterprises that plan to expand to international markets.

In a statement, Philippine Exporters Confederation, Inc. President Sergio R. Ortiz-Luis, Jr. said the FTA can give local exporters greater access to a high-value market like the EU.

The Philippines and EU first launched negotiations for a bilateral FTA in 2015.

FTA talks were stalled in 2017 after the EU raised concerns on human rights issues linked to former President Rodrigo R. Duterte’s drug war. Negotiations were formally resumed in March 2024.

The Philippines’ new trade pact with the EU is expected to unlock around $12 billion in export potential, the Department of Trade and Industry earlier said.

The EU was the Philippines’ fifth-largest trading partner in 2025, with total trade valued at $18.1 billion, according to data from the local statistics agency.

Philippine exports to the EU stood at $9.77 billion, while its imports from the bloc was valued at $8.34 billion last year.