Press Release
March 5, 2018

Senate concurs with Phl, EFTA states free trade deal

The Senate adopted today a resolution expressing its concurrence to the ratification of the free trade agreement (FTA) between the Philippines and the European Free Trade Association (EFTA) states.

Senate Resolution No. 647, concurring with the ratification of the free trade agreement between the Philippines and the EFTA states, was sponsored by Senator Loren Legarda, chair of the Senate Committee on Foreign Relations, and was approved with 19 affirmative votes, zero negative vote and no abstention.

"Entering into an FTA with EFTA is part of the country's strategy to gain a stronger foothold in the European market. 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," Legarda said.

The agreement was ratified by President Rodrigo Duterte on December 8, 2017. The Department of Trade and Industry (DTI) led the negotiations on behalf of the Philippines together with other government agencies. Then DTI Secretary Adrian S. Cristobal Jr. signed the agreement in Bern, Switzerland on April 28, 2016.

The agreement with the EFTA member states: Republic of Iceland; Principality of Liechtenstein; Kingdom of Norway; and the Swiss Confederation, covers trade in goods, services, investment, government procurement, intellectual property rights, competition and sustainable development, the resolution said.

"It incorporates the existing World Trade Organization rules and obligations with respect to areas governing trade in goods and services with additional disciplines agreed upon by both parties," the resolution added.

The Agreement allows for a secure market access for Philippine agriculture exports, beyond EFTA commitments in its existing FTAs, which would enable the Philippines to significantly improve the country's market share vis-à-vis the other ASEAN Member States in the EFTA market.

According to Legarda, opening markets through Agreements such as the PH-EFTA FTA 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".

The Philippines can also attract investments in services and non-services sectors, particularly those which can benefit from additional capital and/or technology transfer, or spur domestic competition with the view to make the Philippines as EFTA's hub in ASEAN, and 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.

"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," Legarda said.

Upon entry into the force, the PH-EFTA FTA will provide the Philippines duty-free market access for all industrial and fisheries products to the EFTA member states with the Philippines benefiting from liberal rules of origin requirements to qualify for preferential treatment, the resolution also said.

"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," Legarda said.

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, information technology and business process management, construction, and maritime transport. Both the Philippines and EFTA also shared the commitment to promote and facilitate the inward and outward flow of investments.

"The Philippines also 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," Legarda also said.

"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," Legarda added. (Yvonne Almirañez)

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