THE PHILIPPINES will need to continue negotiating more free trade agreements (FTAs) to diversify its export markets in the face of the uncertainty posed by the US reciprocal tariffs, a former Finance Secretary said.
Margarito B. Teves said that the Philippines, despite being in a “relatively favorable position” due to its 17% reciprocal tariff, should not be complacent and needs to build resilience against external headwinds.
“We should deepen negotiations for FTAs with countries such as India, the United Arab Emirates, and the European Union and fast-track our application to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership,” he said at a forum last week.
He added that the Philippines must “continuously support stronger regional integration within ASEAN, accelerating reduction of trade and regulatory barriers.”
Industry groups have noted that even current FTAs are plagued by low utilization, a concern shared by Mr. Teves.
Citing a 2022 discussion paper of the Philippine Institute for Development Studies, he said that only 8.3% of Philippine exporters used FTAs in 2019, while 54.8% of importers did so over the same period.
“This underscores the need for the Department of Trade and Industry to intensify its free trade information roadshows to increase awareness and understanding among firms, especially the micro, small, and medium enterprises (MSMEs), about how to utilize the country’s FTAs,” he said.
“Likewise, there is also a need to streamline the requirements and procedures in utilizing FTAs to further encourage firms,” he added.
Despite the low utilization, he stressed that the Philippines should still deepen negotiations on FTAs with other countries or regional blocs to further expand its options.
“Signing an FTA takes years of discussions among the parties involved because of the complexity of economic and political issues involved. So we need to start early and keep the momentum of the talks going,” he added.
Aside from diversifying export markets, he also called for improved ease of doing business, lower cost of doing business, and prudent fiscal management.
“The recent tariff war is not something that we should be extremely worried about if we keep the fiscal and other portions of our economy in order. We would be very attractive if we can make those conditions really conducive for investment,” he said. — Justine Irish D. Tabile