2012 Feb 13
February 13, 2012

EU assures openness in future FTA talks

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MANILA, Philippines – The European Union has acknowledged concerns of civil society about free trade agreements (FTAs) in the Philippines based on previous negative experiences in negotiations as it assured openness in trade policy if the Philippines decided to engage in discussions for FTA with the EU.

EU Ambassador Guy Ledoux said they are aware that the Philippines is interested in an FTA with the EU.

He reiterated that the EU is willing to engage in discussions when the Philippines is ready.

“We have heard about civil society concerns about FTAs in the Philippines, which are said to be based on previous negative experiences in FTA negotiations. Maybe there are issues and misunderstandings needing clarification. But as regards the EU position we think that all issues of concern can be addressed by dialogue and exchange of information,” Ledoux said during an FTA forum “New Age FTAs: Is the Philippines mature enough?” organized by F.Nauman Stiftung.

“The EU supports the government’s commitment to transparency and stakeholder consultations with view to any future bilateral FTA negotiations,” he said.

Trade, he said, must be inclusive so that everyone can share the benefits.

He noted that trade is not just about opening markets but is also about helping people, and countries, adjusting to open markets as well, noting that setting a broad trade agenda is so important, by not ignoring environmental and social implications.

“It is Europe’s own experience that trade policy based on openness works. It is the key to unlocking competitiveness and growth. We realise this is not an easy process and constant vigilance is called for. But it is the right course for growth,” he added.

Ledoux pointed that foreign direct investments and trade will pick up and make their contribution, once the business-, trade- and investment climate is conducive, as characterized by IPR protection through legal certainty and efficient courts, a level playing field for companies, transparent rules and procedures for public procurement, legal certainty and protection for domestic and for foreign direct investment and conducive customs procedure.

A level playing field for companies through effective, transparent competition policies and legislation will attract ?efficient and innovative businesses.

Transparent rules and procedures for public procurement will ensure that tenders and contracts are in line with international best practice and provide best value for tax payers’ money invested in publicly procured goods and services.

Legal certainty and protection for domestic and for foreign direct investment alike, where the increase in FDI inflows nowadays is a good indicator for economic dynamism and growth.

Conducive customs procedure, he said, will ensure smooth flow of goods.

“The issue today is not whether or not these framework conditions are needed for a favourable business and trade environment, but rather how quickly they can be established and effectively implemented,” Ledoux said.

“FTAs need to take these issues into account to be worth the effort of negotiations. The EU has been always quite open about that. Of course we are aware that there is no one-size-fits-all approach,” he said.

Countries, with which the EU is negotiating FTAs, may differ in their economic profile and characteristics, with sensitive economic or political issues often owed to their political or institutional legacies.

The ambassador stressed that the EU is aware of that and able to respond with a tailor-made approach.

“This means the EU may be flexible in how sensitive issues may be eventually implemented. What it does not mean is that they can be excluded.”

The EU is currently negotiating several FTAs, including with Singapore and Malaysia. Two other ASEAN members, Indonesia and Vietnam, are also interested in FTA with EU.

Bilateral trade between the EU and the Philippines in 2010 had bounced back and was back to pre-crisis levels; with Philippine exports to the EU up by 40% in 2010.

According to Philippines statistics, Philippines exports to the world declined last year by 5% and by around 2% to the EU. The strong decline in the electronic sector related to product cycle in this industry probably explains this situation.

Europe is a major market for Filipino agriculture and fishery products.

He said 75 percent of all coconut oil imported by the EU comes from the Philippines, worth P21 billion. But also fisheries, notably tuna (total of P7.5 billion) and fruits (total of P4.8 billion) are major contributors to the Philippines’ strong export performance.

According to Ledoux, there are many other sectors which could expand their exports to the EU.

“ASEAN as a trade bloc looks set to grow and the ongoing FTA negotiations with Singapore and Malaysia, once finalized, will be pulling in investment and trade. They are also setting the ASEAN region more prominently on the radar screen in Europe. Trade between the EU and the Philippines could profit from that,” he said. –Pia Lee-Brago (The Philippine Star)