Philippines-European Free Trade Association (EFTA) Free Trade Agreement (FTA)

 

EFTA (composed of Iceland, Liechtenstein, Norway and Switzerland) first conveyed its interest to have a Free Trade Agreement (FTA) with the Philippines in February 2009. Following a series of high-level contacts, two expert group meetings were convened in June 2013 and November 2013 to discuss ways forward. At the Philippines-EFTA Ministerial Meeting in November 2013, both sides agreed to work towards signing a Joint Declaration as an initial step to FTA negotiations. The Joint Declaration on Cooperation between the Philippines and the EFTA States was signed on 23 June 2014 in Iceland. FTA scoping discussions were held subsequently and concluded during a high-level scoping meeting in November 2014 in Switzerland.

FTA negotiations were launched in Manila in March 2015 and in February 2016, FTA negotiations were concluded after five rounds. Ministers and Representatives of the Philippines and the EFTA Member States signed the Agreement on 28 April 2016 in Bern, Switzerland. The Agreement entered into force on 1 June 2018 for the Philippines, Norway, Liechtenstein and Switzerland and on 1 January 2020 for Iceland.

Upon entry into force of the Agreement, exporters to the EFTA markets are no longer required to secure a Certificate of Origin from the Bureau of Customs (BOC) under the FTA’s self-certification/self-declaration system. All exporters are encouraged to register with the Bureau of Customs as an approved exporter under the FTA. Detailed guidelines on this can be found in Customs Memorandum Order No. 14-2018.

Coverage

The PH-EFTA FTA covers Trade in Goods (TIG), Trade in Services (TIS), Investments, Intellectual Property (IP), Government Procurement (GP), Competition, and Trade and Sustainable Development.

Rationale for Engaging EFTA

The PH-EFTA FTA is part of the country’s strategy to gain stronger foothold in the European market. The Philippines’ Europe Strategy is to: (1) maximize preferences under the European Union (EU) Generalized Scheme of Preferences (GSP+) that provides for duty-free market access to 6,274 EU tariff lines; (2) negotiate Philippines-EU FTA, building on the gains under GSP+ to provide for a framework to increase services trade and investments; and (3) pursue Philippines-EFTA FTA to expand market to non-EU member states. While PH-EFTA economic relations is relatively small, there is large potential to expand trade and investment relations with EFTA.

Key Outcomes/Benefits for the Philippines

The FTA provides the Philippines duty-free market access for ALL industrial and fisheries tariff lines upon entry into force of the FTA. PH also secured tariff concessions on substantially all PH agriculture exports to EFTA (e.g., frozen tuna/mackerel, canned pineapple, crude coconut oil, fresh/dried bananas). In addition, the PH also gained significant concessions on our agricultural exports, particularly those that are currently being exported to the EFTA Members States, or those with high potential export interest, including those that are being sold to its neighboring European countries, which can alternately be exported to the EFTA countries.

The FTA also features liberal rules of origin. For instance, the PH may qualify for zero tariffs for preparations of meat/fish, even if the meat or fish is imported. PH garment exports may also claim preferential tariffs even if textiles used are imported and only cut and sew processing is done in the country.

Philippine service suppliers who want to enter the EFTA market can benefit from the commitments made by EFTA in all modes of supply. Commitments in cross border supply and movement of natural persons present opportunities for both skilled workers and professionals, particularly architects and engineers.  For movement of natural persons, the entry and temporary presence of intra-corporate transferees (covering executives/managers and specialists) and business visitors will be allowed, and in some cases, the application of the economic needs tests will be waived. Switzerland in particular added an additional category of personnel in the form of installers and maintainers and includes the contractual requirement to develop local skills through training in the Philippines.

Important Documents/Links

  1. Philippines-European Free Trade Association Free Trade Agreement (PH-EFTA FTA)
  2. Annexes
  3. Executive Order No. 61 series of 2018 – Modifying the Rates of Import Duty on Certain Imported Articles in Order to Implement the Philippine Tariff Commitments Pursuant to the Free Trade Agreement Between the European Free Trade Association States and the Philippines
  4. Customs Memorandum Order No. 14-2018 – Guidelines on the Implementation of the Free Trade Agreement Between the European Free Trade Association and the Philippines
  5. Tariff Commission’s Tariff Finder
  6. EFTA Website
  7. EFTA member states’ WTO member trade profile
  8. Further information on the EFTA member states’ trade policies

Related Data/Statistics

Sources: EFTA TIRs, EFTA 2019 Annual Report

PH-EFTA Free Trade Agreement Webinar Series

For guidance on understanding the free trade deal’s impact on your business or any export-related concerns, please email us at Exponet@dti.gov.ph.

This webinar series is brought to you by the Department of Trade and Industry, Philippine Trade and Investment Centers in Bern and Stockholm, DTI-Bureau of International Trade Relations, and DTI-Export Marketing Bureau.

EPISODE 1: Overview of the FTA

 

 

The PH-EFTA webinar series graced by DTI Undersecretary Ceferino Rodolfo explains how the Philippines-European Free Trade Association free trade agreement opens new markets for Philippine exporters, MSMEs, and industries. He encourages businesses – big and small – to take advantage of the free trade deal that covers Iceland, Liechtenstein, Norway, and Switzerland.

This webinar series is part of the advocacy and awareness campaign to maximize the utilization of the Free Trade Agreement. Since the signing of the free trade deal in 2018, the trade balance shifted in the Philippines’ favor and exports rose by 8% in 2020 despite the pandemic. Switzerland is consistently one of PH’s top investors with approved investments reaching P1-B.

EPISODE 2: Market Access: Agricultural Goods

 

 

Total agri-fishery trade between the Philippines and EFTA member states (Iceland, Liechtenstein, Norway, and Switzerland) hit USD48 million in 2020, but there’s room for further improvement. Hear it straight from the Department of Agriculture on how we can expand this relationship under the PH-EFTA FTA.

EPISODE 3: Market Access: Industrial Goods

 

 

Did you know that under the PH-EFTA free trade agreement, all industrial products from the Philippines enjoy duty-free market access to Iceland, Liechtenstein, Norway, and Switzerland? But despite the significant advantages of the free trade deal, the Board of Investments notes that utilization by Philippine exporters remains low even if the deal can improve the country’s position as a EFTA’s primary import source in ASEAN.

EPISODE 4: Rules of Origin

 

 

What are the rules of origin (ROO) under the PH-EFTA free trade agreement? Hear it straight from the Board of Investments on what it takes to be eligible for preferential tariffs and get your products to Iceland, Liechtenstein, Norway, and Switzerland.

EPISODE 5: Services

 

 

From 2015 to 2019, Philippine service exports to EFTA member states Iceland, Liechtenstein, Norway, and Switzerland grew at a steady compound annual growth rate of 9%. During the five-year period, the Philippines was a net exporter of services.

In this episode, the National Economic Development Authority details the opportunities for Filipino service suppliers that opened up under the PH-EFTA free trade agreement. For example, skilled Filipino workers and professionals, particularly architects and engineers, can benefit from cross-border supply of services and movement of natural persons to EFTA member states.

EPISODE 6: Sanitary and Phytosanitary Measures

 

 

In this episode, the Department of Agriculture discusses the sanitary and phytosanitary (SPS) measures that seek to guard against the entry and spread of pests, disease-carrying or disease-causing organisms, and food-borne risks that may arise from the free flow of goods and services under the PH-EFTA free trade agreement.

EPISODE 7: Technical Barriers to Trade

 

 

In this episode, the DTI-Bureau of Philippine Standards goes over the fifth chapter of the PH-EFTA free trade deal covering technical barriers to trade.

EPISODE 8: How to Export Coconut Products to EFTA Markets

 

 

In this episode, Marco Reyes of Hancole, a global supplier of coconut and coconut derivatives, walks us through the company’s experience exporting to Iceland, Liechtenstein, Norway, and Switzerland under the PH-EFTA free trade agreement. Instead of trying to compete against coconut producers in the local market, Reyes encourages MSMEs to consider exporting to niche countries, like EFTA, where there is higher demand.

EPISODE 9: How to Export Seaweed and Carrageenan to EFTA Markets

 

 

Home to about 893 species of seaweed, the Philippines is one of the world’s leading suppliers of carrageenan. Most of the cultured carrageenan goes to Europe, US, and China. Learn the exciting opportunities exporting seaweeds to Iceland, Liechtenstein, Norway, and Switzerland under the PH-EFTA free trade agreement from the Seaweed Industry Association of the Philippines.

For more details, contact the Bureau of International Trade Relations-Bilateral Relations Division (BITR-BRD) at brd_efta@dti.gov.ph.