A new billion-dollar market is opening up for Finland – “Deal good news”

The European Union and the Philippines have reached a political agreement on a free trade agreement between the two countries.

EU trade commissioner Maroš Šefčovič and the Secretary of Trade and Industry of the Philippines Maria Cristina Aldeguer-Roque announced a “breakthrough” in trade negotiations on Tuesday.

With over 115 million inhabitants, the Philippines is one of the fastest growing economies in Southeast Asia and a strategically important market for the EU.

The purpose of the free trade agreement is to exempt more than 94 percent of customs items and cover more than 97 percent of the trade between the parties.

According to the Commission, the agreement only needs to be officially finalized in the coming months.

The EU and the Philippines describe the achievement as a historic milestone, which is expected to deepen trade and investment relations and strengthen economic cooperation between the parties in the long term.

“Both the EU and the Philippines can be proud of this result,” Trade Commissioner Šefčovič said on Tuesday in Brussels.

According to the commissioner, the agreement not only removes barriers to trade and investment, but builds a forward-looking partnership between the EU and the Philippines.

The agreement is also a political message that the EU and the Philippines are committed to an open, rules-based trade system at a time when the global economy is subject to geopolitical tensions.

Important natural resources

The EU is the fourth largest trading partner of the Philippines. Last year, the value of trade in goods between the parties was around 17.6 billion euros.

The EU’s most important industrial export products to the Philippines are machinery and equipment, transport equipment, medicines and medical equipment.

The agreement, which is nearing completion, contains a broad entity, the goal of which is to remove customs fees and other trade barriers, facilitate trade in services and investments, and open the market for public procurement. In addition, it includes binding norms regarding working life and the environment.

The goal is also to strengthen the sustainability of supply chains, as security of supply has become an increasingly important strategic issue.

The Philippines is also of interest to Europe because of its natural resources. The country has significant reserves of key minerals for the green transition, such as nickel, copper and chromite. They are needed, for example, in the manufacture of batteries, electric vehicles and renewable energy technologies.

Significance for Finland

Last year, Finland’s exports to the Philippines were around 140 million euros. The free trade agreement between the EU and the Philippines is believed to have a positive impact on Finland as well.

“The deal is good news for Finland as well, because our exports to the Philippines are now only about 0.2 percent of our total exports,” says EK’s director responsible for international trade and trade policy Timo Vuori.

New potential is seen especially in energy and environmental technology, as the Philippines invests heavily in renewable energy, energy efficiency, waste management and the circular economy. Infrastructure projects are also expected to increase demand for Finnish technology.

Another significant opportunity is related to digitization, as the free trade agreement’s provisions on digital trade can facilitate market access for Finnish software, telecommunications and cyber security companies.

The agreement could also benefit the forest industry, as Finland already exports paper, cardboard and timber to the Philippines.

In addition, the Philippines is seen as a promising destination for Finnish health and education technology.

The economic growth of the Philippines is almost six percent, which promises growing demand for Finland’s top export products, according to Vuori.

According to Vuori, there are currently around 30–50 Finnish companies on its market, among others Nokia, Kone, Wärtsilä, Ponsse and Lindstrom.

“The trade deal facilitates trade and lowers customs duties, but it is now up to the companies to take advantage of the deals,” says Vuori.