The country’s free trade agreement (FTA) with the European Free Trade Association (Efta) is seen to boost exports to the economic bloc by 20 percent in 2019, a trade official said on Tuesday night.
In an interview with reporters, Trade Undersecretary Ceferino S. Rodolfo Jr. said the Philippines aims to expand by 20 percent its trade, particularly exports, with Efta economies under the Philippines-Efta FTA. The Efta is an economic bloc consisting of four European states, namely, Iceland, Liechtenstein, Norway and Switzerland.
“Our objective really for this [FTA] is to promote more of our exports. First [objective is] to increase our bilateral trade, both imports and exports by—let’s be modest—increase it by 20 percent first for the first year,” Rodolfo said.
The trade deal, signed in 2016, covers trade in goods, services, investments, competition, intellectual property rights protection, government procurement and sustainable development. It entered into force for all parties in June this year.
“Moving forward, maybe we will be able to double it or triple it as we move toward [the] third year [on] the trade part, both the imports and the exports,” Rodolfo added. Since the FTA only entered into force middle of the year, the first full year of its implementation will be next year.
Data from the Philippine Statistics Authority showed total merchandise trade with Efta economies amounted to $816.76 million last year.
The Philippines, however, recorded trade deficits with Norway ($38.66 million), Iceland ($146,944) and Switzerland ($28.55 million). On the other hand, it has a trade surplus of $6.67 million with Liechtenstein.
Rodolfo said the FTA could be an avenue for the country to reduce its trade deficits with Efta economies. He added the trade deal’s reduced tariff regime, as well as its liberalized rules of origin, can help Philippine exports “gain a stronger foothold in the European market.”
“Right now, our trade with Norway and with Switzerland, we are trading with a deficit because we import a lot from [these countries]. Of course, [our imports from Switzerland are] very important: pharmaceutical products. From Norway, [we mostly import] Norwegian salmon and, very important also, fertilizers,” the trade official said.
“We would like to continue on importing these strategic products, but, at the same time, be able to export key Philippine products, taking advantage of preferential tariffs,” he added.
Last year, top exports to Norway included pineapples ($1.37 million), desiccated coconuts ($434,542) and carrageenan and seaweeds ($410,305), while to Iceland carrageenan and seaweeds ($78,900), articles of precious metals ($63,140) and semiconductor devices ($33,956).
The country mostly exported manufactured products ($8.06 million), semiconductor devices ($692,819) and artificial teeth ($462,485) to Liechtenstein. Switzerland, for its part, imported nonmonetary gold ($273.12 million), aircraft parts ($18.42 million) and digital monolithic integrated circuits ($13.06 million) from the Philippines.
Norwegian Ambassador to the Philippines Bjorn Jahnsen described the FTA as “the basis for future growth of trade between our countries.” He added the governments have done their role in sealing the trade deal, “now it is up to the private sectors, in both the Philippines and the Efta states, to take advantage of this agreement.”
Under the FTA, the Efta economies abolished all tariffs on industrial goods, including fish and other marine products, originating from the Philippines. Manila, for its part, committed to gradually eliminate import duties on industrial products originating from Efta states.