Keen to continue capitalizing on global trade agreements, it has just been announced that the European Union (EU) and the Philippines have agreed on the first-ever Free Trade Agreement (FTA) between both entities. It was in a report by Business World Online that the agreement was confirmed by European Commission President Ursula von der Leyen after a phone call with Philippine President Ferdinand Marcos Jr.

A joint statement was issued by European Commissioner for Trade and Economic Security Maroš Šefčovič and Philippine Trade Secretary Ma. Cristina Roque. The joint statement explained that the deal puts a clear path towards its formal ratification in the coming months. Both parties have also told their respective negotiators to finalize the deal as soon as possible.

The new FTA aims to open new business and trade opportunities between the EU and the Philippines in terms of MSMEs, as well as farmers, manufacturers and consumers. In ASEAN, the Philippines is only the third nation to agree to an FTA with the EU, behind Singapore and Vietnam.

While there are no specific mentions of import tariffs, that will likely be a major point as the FTA gets finalized. The Philippine automotive industry has a steady presence of European brands like BMW, Audi, Porsche, Lamborghini, Bentley, Jaguar Land Rover, and Mercedes-Benz, just to name a few. The current crop sells cars at a premium rate, considering the existing import tariffs of 30 percent and the luxury segment the European brands normally compete in.

However, this new FTA could significantly lower tariffs enough to entice the entry of more mass-market brands. We recently lost Volkswagen locally, with nobody taking a liking to the Chinese-sourced VWs; under the new FTA, VW could possibly relaunch and sell European-made models in the Philippines. Apart from them, Renault, Fiat, and maybe even Peugeot could make significant gains locally at more competitive prices.