Time of the essence in forging RP-EU trade deal?

THE INCOMING government should initiate talks for a free trade agreement (FTA) with the European Union or else risk being left behind by Southeast Asian neighbors which are negotiating similar pacts, a private think tank yesterday said.

Such talks would be timely as both economies are already poised to sign a framework agreement that will be the foundation for the trade deal, the Universal Access to Competitiveness and Trade (U-ACT) said.

Philippine officials, however, were mum on when negotiations could start while the EU delegation to Manila said it was just waiting for Manila to officially signal its interest.

“Philippine business must consider the danger of being crowded out of the EU and other markets by the more preferential access of its ASEAN neighbors — particularly Thailand and Vietnam, and probably Malaysia and Indonesia — given their greater number of concluded FTAs and EU initiatives,” the U-ACT said in a 12-chapter study made available to BusinessWorld.

“A RP-EU FTA will guard against nascent protectionism in EU, protect Philippine preferential margins against further erosion by EU FTAs with other developing countries, and help attract more EU investors to the Philippines,” it further stated.

The group went cited the following exports as expected to enjoy greater sales to the EU, the Philippines’ largest export market in 2009: marine products, fresh and processed fruits, coffee, oleochemicals, coco-based goods, natural rubber, biofuel products, metals, furniture, and jewelry.

Philippine exports to the Western bloc amounted to $7.883 billion last year or roughly a fifth of total export sales to the world.

“[But] losses are expected for leather and rice [while] possibilities must be validated for poultry and pork…,” the group clarified.

The local service sector, particularly tourism and information and communication technology services, will benefit from a deal, the U-ACT added.

It warned, however, that negotiators should watch out for a possible detriment to Philippine ties with the rest of the Association of Southeast Asian Nations (ASEAN), adding they should careful in signing on to a stricter dispute settlement mechanism.

The Philippines would also do well to negotiate for easier product safety standards so that more exports can enter the EU.

“[We should] initiate talks for a RP-EU free trade agreement given that the Philippines and the EU have concluded their talks for a Partnership Cooperation Agreement (PCA),” the group said.

Negotiations for the broad-spectrum deal that will govern economic and political ties were concluded in Brussels this month. The EU requires that a PCA be laid down before a free trade pact can be brokered.

Trade Secretary Jesli A. Lapus has said the PCA could be inked in October at the Asia-Europe Meeting, after which talks for a free trade pact could follow.

The EU delegation to Manila noted that the Philippines had yet to officially signal interest in a free trade deal.

“This would depend on whether [and when] the Philippines would officially signify intention to engage bilaterally with the EU, and to do it for an ambitious FTA,” EU Commercial Counsellor Gabriel Munuera Vinals said in an e-mail yesterday.

Sought for comment, University of the Philippines economist Benjamin E. Diokno said in a text message: “the matter is better left to the incoming administration and Senate.”

The EU trade pact, if signed, will be the Philippines’ second bilateral deal after the Japan-Philippines Economic Partnership Agreement.

The country also maintains regional trade agreements with ASEAN, which in turn has pacts with China, Japan, Australia, New Zealand and India.

There have been attempts to forge an ASEAN-EU pact but talks bogged down as the EU refused to engage with ASEAN member and military state Myanmar. –JESSICA ANNE D. HERMOSA, Reporter, Businessworld