Overview of EU-RP Economic Relations

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Overview of EU-RP Economic Relations
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EU negotiating mandate for the ASEAN-EU FTA

• Main principle most comprehensive and ambitious
  degree of liberalization in goods, services and
  investments
• FTA as venue to tackle provisions not ready for
  multilateral discussion and consensus (e.g.
  competition policies,government procurement,
  investments, trade facilitation)
• Recognizes divergent characteristics of parties
  (EU and ASEAN, and within ASEAN)

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EU negotiating mandate for the ASEAN-EU FTA

• Nature and Scope of Agreement
• Trade in goods
• Services
• Public procurement
• Trade and Competition
• Intellectual, Industrial and Commercial Property
  Rights
• Capital payments and movement
• Customs and trade facilitation
• Trade and Sustainable Development
• Transparency in trade regulations
• Institutional Framework and Final Provisions

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Nature and scope of EU mandate on ASEAN-EU FTA

• Trade in goods
• Removal of import duties and charges for both
  sides within ten years (with transitional period
  for ASEAN Members)
• Longer time period for minimal number of
  sensitive products
• Removal of all NTBS, Harmonization of SPS
• Rules of origin, penalties for violation
• With provisions for for possible safeguard
  measures and other trade remedies such as
  anti-dumping and countervailing measures
• Key features principle of frontloading of
  liberalization commitments and parity with other
  ASEAN trade partners

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Nature and scope of EU mandate on ASEAN-EU FTA

• Services
• Progressive and reciprocal liberalization of
  trade in services, with possible flexibilities
  for ASEAN members
• FTA NOT to include
• National marine cabotage law
• Air services including domestic and
  international transportation
• EC to have parity with other countries that have
  FTAs with ASEAN

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Nature and scope of EU mandate on ASEAN-EU FTA

• Trade and Competition
• Address anti-competitive behaviour
• Legal framework, transparency and enforcement of
  competition rules
• Customs and Trade Facilitation
• Rules, requirements, formalities, procedures for
  exports, imports and goods in transit
• To cover customs enforcement of IPR protection

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Nature and scope of EU mandate on ASEAN-EU FTA

• Intellectual, Industrial and Commercial Property
• Rules to protect and enforce IPR, especially
  geographical indications
• Capital Movement and Payments
• Full liberalization of current payment and
  capital movement (with exceptions for domestic
  sensitivities and in cases of serious monetary
  and forex difficulties, supervision of tax)

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Nature and scope of EU mandate on ASEAN-EU FTA

• Public Procurement
• Transparency in procurement procedures
• Inclusion of challenge procedures
• Progressive liberalization of procurement markets
  at the national, regional and local level,
  including in public utilities in priority sectors
  

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Nature and scope of EU mandate on ASEAN-EU FTA

• Trade and sustainable development
• Standards based on principles of sustainable
  development (e.g. labor standards, environmental
  considerations)
• Provides for monitoring of social and
  environmental impact of the agreement
• Transparency in regulations
• Consultations with stakeholders in advance of
  the introduction of regulations with an impact on
  trade
• Publication and public consultations on rules
  with impact on international trade in goods and
  services

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Nature and scope of EU mandate on ASEAN-EU FTA

• Institutional Framework
• Creation of Trade Commission to monitor FTA
• Conclusion of FTA subject to the conclusion of
  the Partnership Cooperation Agreement of the EU
  with ASEAN Members.

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EU Country Strategy Paper for the Philippines

• 2002-2006
• Focus on health sector
• Trade and Investment
• Good governance
• 2007-2013
• Delivery of basic services, meeting the MDG
• Improved trade and investments flow
• Good governance and reforms
• Peace in Mindanao

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Overview of RP-EU Relations Trade in Goods

• The EU is one of the Philippines major trading
  partners. It accounts for 14 of the market for
  Philippine exports in 2004 (EU Webpage)
• Philippine exports to EU represents only .7 of
  EU market. Philippine imports represents only .5
  of EU to the world exports.
• More than two thirds (76.43) of Philippine
  exports to EU are electronic products. Other
  exports include clothing and textiles, coconut
  oil, woodcraft and furniture, among others.
  (NSCB)

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Overview of RP-EU Relations Trade in Goods

• In 2006, Philippine merchandise exports to EU
  countries were at US 8.55 billion, while
  imports were at US 4.28 billion. Hence, the
  Philippines has a positive trade balance of US
  4.26 billion with EU.
• Among EU countries, the Philippines has a
  negative trade balance with Denmark, Finland,
  Ireland, Sweden, Spain, Austria and France.

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Overview of RP-EU Relations Trade in Goods
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Overview of RP-EU Relations Trade in Goods
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EU-RP Trade Relations GSP

• GSP - products of interest to the Philippines
• pineapples, bananas, papayas, coffee, coconut,
  essential oils, articles of apparel and clothing
  accessories, textile fibers, ceramic products,
  glass and glassware, furniture, musical
  instruments, toys and games, electrical machinery
  and parts, and motor vehicles. 8715 00 Baby
  carriages and parts thereof NS 8716 Trailers and
  semi-trailers, other vehicles not mechanically
  propelled
• Value of GSP exports to EU is 584 million Euro.
  The Philippines GSP utilization rate is only 47.
  

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Overview of RP-EU Relations Trade in Goods
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Overview of RP-EU Relations Trade in Goods

• Meanwhile, the most important sources of imports
  from the EU are Germany, Ireland, United Kingdom,
  France and Belgium
• The Philippines imports electronic products,
  industrial machinery and equipment, medicinal and
  pharmaceutical products, transport equipment,
  telecommunication equipment and electrical
  machinery from the EU.

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Overview of RP-EU Relations Trade in Goods
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Philippines Top Exports to EU

• Crude and Refined Coconut oil - Netherlands,
  Italy
• Skipjack and bonito - Germany, UK and North
  Ireland
• Tuna - Germany, Netherlands, Sweden, Finland, UK
  and North Ireland
• Dessicated Coconut - UK and North Ireland,
  Belgium, Frace
• Pineapple (juice, prepared) - Netherlands,
  Belgium, UK and North Ireland, Italy, Spain,
• Banana chips and crackers - Germany
• Seaweeds - Belgium, France, Spain,
• Abaca - UK and North Ireland

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RP Top Agricultural Imports from EU

• Based on value from 1994-2006
• Food preparations
• Sugar
• Whey
• Fungicide
• Malt
• Preparations for the manufacture of lemonades or
  other beverages
• Unmanufactured tobacco
• Prawn feeds
• Pig fat

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Overview of RP-EU Relations Investments

• The EU has been increasing its investments in the
  Philippines over the last decade (1990-2003)
• EU FDI accounts for 27 of total FDI in the
  Philippines
• EU portfolio investment accounts for 41 of total
  portfolio investments in the country .
• Latest average yearly EU investment in the
  country is at EU 389 million (1998-2003)
• EU members with big aggregate FDIs in the
  Philippines from 1996-2007 (cumulative) are the
  Netherlands, France, Italy, Germany and Sweden.

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Overview of RP-EU Relations Investments
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Overview of RP-EU Relations Investments

• EU investments are in a broad range of economic
  interests such as information technology and
  services, processed foods and beverages, tourism,
  infrastructure and utilities, chemical based
  consumer products, agriculture products and
  allied services, among others

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Overview of RP-EU Relations Labor Markets

• In 2006, Europe accounted for
• 7.5 of total deployed OFW around the world
• .15 of total OFW remittances
• The United Kingdom and Italy are two of the top
  ten OFW destinations, absorbing 3.2 and 2.1 of
  total rehires and newly hired OFW also in 2006.

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Overview of RP-EU Relations Labor Markets
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What are the motivations for forming an FTA?
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What are the expectations for forming an FTA?

• Philippines
• Greater market access?
• But EU tariff rates are already low for many of
  RP exports
• Possible market access through GSP, which the
  Philippines now already enjoys
• Greatest block to market access are subsidy
  protection to EU agricultural producers, which
  will most likely not be covered by the FTA

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What are the expectations for forming an FTA?
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What are the expectations for forming an FTA?

• Philippines
• Harmonization of SPS and NTBs?
• SPS and NTBs, and not tariffs, are the biggest
  block to RP exports to EU
• Harmonization requires substantial investment in
  RP capability to adopt and implement SPS and NTBs

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What are the expectations for forming an FTA?

• Philippines
• Increased EU investments in the Philippines?
• Some of the requirements to create an
  investment friendly Philippines ?
• Liberalization of services industry
• Liberalization of restrictions on foreign
  ownership of lands and corporations
• Laws to protect interest of foreign investors
  (concerns over judicial decisions over Fraport
  case, Manila Hotel, etc)

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What are the expectations for forming an FTA?

• Europe
• Part of objective of consolidating commercial
  presence in Asia, especially in the services
  sector
• More stable and predictable policy and economic
  environment for its investment interest,
  especially since EU is increasing its
  investments in the country
• A way to address important obstacles to trade and
  investments in the Philippines such as
  regulations on foreign ownership, restrictions in
  services sector, policies supporting and
  protecting some sectors and industries
• Support to trade and investment flows is a key
  feature of EU country strategy for the
  Philippines

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FTA Areas

• The ASEAN EU Vision group identified the
  following areas of focus for the FTA
• Trade and investment facilitation and cooperation
• Standards and conformity assessment
• Development of efficient services sector
• Institutional cooperation

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FTA Areas

• Specific sectoral cooperation
• Agriculture, fisheries, forestry,
• sustainable tourism, science and technology,
  information and communication, intellectual
  property rights, finance cooperation, mining and
  energy, transport, manufacturing, cooperation
  development, competition policy, education

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Summary of findings

• Potential gains of increased market access to EU
  goods market is limited due to the fact that
  tariffs on RP exports are already generally very
  low, and is contingent on Philippine sector
  level of competitiveness
• Problem of domestic subsidy , which is one of the
  most important blocks to RP exports, will not
  likely be comprehensively addressed by ASEAN-EU
  FTA
• Most important focus of ASEAN EU is promoting and
  protecting its investments in the region
• For RP, this implies the need for (1)
  liberalization of services sector, (2) removal of
  restrictions to investment, particularly on
  foreign ownership and (3) creation a policy
  environment that safeguards interest of foreign
  investors

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Areas of work and intervention for CSOs in
ASEAN-EU FTASubstance and Process

• Substance
• Monitoring and impact assessment of EU
  investments and interest in the Philippines
• Policy advocacy to safeguard national capability
  to regulate foreign investments. This will
  involve involve advocacy to protect economic
  provision in the Philippine Constitution,
  monitoring of related proposed legislation and
  adminsitrative issuances etc.
• Monitoring and impact assessment of EU-RP trade
  in goods
• Monitoring and engagement on ASEAN-EU FTA
  provisions related to trade facilitation,
  competition policy, government procurement,
  intellectual property rights protection

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Areas of work and intervention for CSOs in
ASEAN-EU FTASubstance and Process

• Process
• Advocacy for stakeholder awareness on the
  proposed provisions/modalities of ASEAN-EU FTA.
• ASEAN EU is programmed to start discussion
  on modalities this year (at least four meetings
  are scheduled from now until December, two of
  which will be held in Bangkok and Manila, in
  April and June, respectively)
• 2. Advocacy for Philippine government to consult
  with stakeholders on need and decisions to be
  part of ASEAN-EU before participating in
  modalities discussion and negotiations

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Thank you!