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Sponsorship Speech: Free Trade Agreement Between the European Free Trade Association (EFTA) States and the Philippines

February 26, 2018

Sponsorship Speech of Senator Loren Legarda
Free Trade Agreement Between the
European Free Trade Association (EFTA) States and the Philippines
26 February 2018 | Senate Session Hall

Mr. President, esteemed colleagues,

I wish to seek approval of the proposed Senate Resolution No. 647, under Committee Report No. 243, entitled: Resolution Concurring in the Ratification of the Agreement of the Free Trade Agreement Between the EFTA States and the Philippines.

It is my honor to present this important Agreement with the Switzerland Confederation, the Kingdom of Norway, the Republic of Iceland and the Principality of Liechtenstein, more collectively known as the European Free Trade Association or EFTA, as this marks an important milestone in the overall international trade policy of the Philippines.

This engagement is also of particular significance given that this is only the second bilateral free trade agreement of the Philippines, the Philippines-Japan Economic Partnership Agreement (PJEPA) being the first. Compared to other countries, we are behind in actively engaging other trading partners through FTAs, even as the Philippines has much to gain.

Before I proceed, allow me to provide a brief background on the rationale for our engagement with EFTA.

Entering into an FTA with EFTA is part of the country’s strategy to gain a stronger foothold in the European market, which includes (1) applying and maximizing the benefits arising from the preferences provided by the European Union Generalised System of Preferences-Plus (EU GSP+), (2) negotiating a Philippines-EU FTA, and (3) concluding the Philippines-EFTA FTA to have a wider reach in the region. Considering that EFTA requires the same standards as the EU, this will allow PH exporters to Europe to gain from economies of scale through improved market access in both EU and EFTA.

Specifically with respect to the EFTA, the Philippines aims to:

(1) Secure market access for Philippine agriculture exports, beyond EFTA commitments in its existing FTAs. This will enable the Philippines to significantly improve the country’s market share vis-à-vis the other ASEAN Member States in the EFTA market. Noting the similarities between the products that the Philippines and other ASEAN neighboring countries export to EFTA, the Philippines can take the opportunity to position itself as EFTA’s primary import source of these products.

(2) Attract investments in services and non-services sectors, particularly those which can benefit from additional capital and/or technology transfer (e.g., in the areas of fisheries, seafaring, maritime transport, energy, telecommunications, and financial services to name a few), or spur domestic competition with the view to make the Philippines as EFTA’s hub in ASEAN.

(3) Obtain market access for trade in services, including opportunities for Filipino professionals and skilled workers while providing enhanced levels of protection as well as service companies in the areas of personal services, air transport, construction and related engineering services, and tourism.

Now that the Agreement has been concluded, I share the sentiments of our trading partners in looking forward to the realization of the benefits arising from the FTA.

The Philippines was able to secure duty-free market access for all industrial and fisheries tariff lines, as well as significant concessions on agricultural products, particularly those that are currently being exported to EFTA and those with high potential export interest. Conversely, the Philippines provided EFTA zero tariffs on almost all industrial and fishery products, with transitional periods for select tariff lines. In essence, the commitments undertaken for trade in goods will enable Philippine businesses to participate in EFTA’s value chains by providing intermediate goods and services. The negotiators also took care to exclude from tariff commitments tariff lines identified as highly sensitive products.

The Agreement also entails cooperating in terms of dealing with anti-competitive practices, with the view of ending such practices or its adverse effects on fair trade.

EFTA’s commitments in the cross-border supply of services and movement of natural persons (MNP) present opportunities to Philippine service suppliers, both skilled workers and professionals, particularly for architects and engineers, which are professions where a large number of Filipinos engage in.

On the part of the Philippines, market access commitments were undertaken where additional investments and technical expertise are deemed beneficial to the country, such as renewable energy, IT-BPM, construction, and maritime transport. Both the Philippines and EFTA also shared the commitment to promote and facilitate the inward and outward flow of investments.

Personally, I am pleased with the fact that the Agreement promotes international trade while contributing to the objective of sustainable development, all the while ensuring that labor rights and environment protection will not be sacrificed in the name of trade and investments.

Mr. President, distinguished colleagues,

The PH-EFTA FTA was negotiated only with the promotion of fair economic cooperation in mind—one that will enable a business environment conducive for investments and provide opportunities for producers, consumers, and service suppliers alike.

The Philippine government ensured that all relevant stakeholders, exporters, producers, laborers, the academe, and civil society were sufficiently consulted during the course of the negotiations. The Philippine panel entered the negotiating table armed with these inputs from stakeholders, recalibrating negotiating positions when needed to ensure that the Philippines arrived at a balanced outcome for all that will be affected by the FTA.

Likewise, all negotiating positions crafted were consistent to and compliant with the Philippines’ laws, rules, and regulations.

Opening markets through Agreements such as this goes hand-in-hand with all the economic reforms and ease of doing business initiatives of the government to project a clear message that the Philippines is, more than ever, ready and “open for business”. As the President himself mandated, more opportunities abound when we explore and maximize our relations with not only our traditional trading partners, but also our non-traditional and high potential trading partners.

I urge all of you, esteemed colleagues, to see this Agreement as one that will provide for more opportunities for our fellow Filipinos.

Given all the merits, on behalf of the Committee on Foreign Relations, I propose for the Senate’s approval of and concurrence in the Philippines-European Free Trade Association Free Trade Agreement, as thus presented.

Thank you, Mr. President.