The Philippines continues to broaden its trade engagement amid a challenging global environment.&nbsp;
During the Industry-Trade Policy Dialogue on 26 January 2026, Undersecretary Allan Gepty of the Department of industry’s International Trade Group discussed developments on the PH-UAE Comprehensive Economic Partnership Agreement (CEPA), the PH–EU Free Trade Agreement (FTA), the PH–Chile CEPA, and the implications of US tariff measures.

Current Trade Context
•	The Philippines recorded a USD 45 billion trade deficit in goods in 2025, underscoring the need to strengthen domestic manufacturing and export capacity.
•	Trade in services remained in surplus at USD 9.8 billion, highlighting the importance of services and professional exports in the country’s trade strategy.

Key Developments in Trade Negotiations
•	PH–UAE CEPA. The country’s first FTA in the Middle East eliminates tariffs on 95% of Philippine exports to the UAE and expands market access for Filipino professionals, particularly in healthcare, engineering, and architecture.
•	PH–EU FTA (under negotiation). With an estimated USD 12 billion in unrealized trade potential, the agreement covers not only tariffs but also government procurement, digital trade, sustainability, and labor standards.
•	PH–Chile CEPA (under negotiation). The Philippines’ first prospective FTA in Latin America, strategically important for securing copper supplies vital to EVs, data centers, and AI-related industries.
•	US Tariffs. The Philippines faces a 19% reciprocal tariff rate, with additional Section 232 tariffs affecting steel, auto parts, and a limited number of semiconductor tariff lines.

Key Concerns Raised by the Business Sector
Business stakeholders welcomed the expansion of trade agreements but highlighted several practical concerns that will determine whether these translate into real gains:
•	Compliance Costs and Standards. Firms, especially SMEs, expressed concern over their capacity to comply with SPS, technical, sustainability, and labor standards, particularly under the proposed PH–EU FTA.
•	Government Procurement Commitments. Questions were raised on the potential impact of opening government procurement markets, balancing the protection of local industries under the Tatak Pinoy strategy with the need to access advanced technology and equipment not produced locally.
•	Automotive and Manufacturing Sensitivities. Industry participants flagged concerns over tariff concessions on motor vehicles and automotive parts, noting that impacts differ depending on whether firms are import-dependent or engaged in local production.
•	Competitive Disadvantage in Key Markets. Businesses pointed to zero-tariff access enjoyed by competitors such as Vietnam in certain markets, including Mexico. Undersecretary Gepty clarified that accession to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) targeted by 2027, could help address this gap.
•	Awareness and Utilization Gaps. Many firms remain unaware of existing FTA opportunities, while others lack the institutional capacity to take advantage of them even when tariffs are reduced to zero.

Moving Forward
Undersecretary Gepty emphasized that FTAs alone are not sufficient. Targeted technical assistance, exporter education, and support for SPS and standards compliance, particularly for SMEs, are critical to unlocking the Philippines’ unrealized export potential. Stakeholder input will remain essential as negotiations progress, especially in sensitive areas such as government procurement and digital trade.
Bottom line: Trade agreements offer significant opportunities, but addressing business concerns and implementation challenges will be key to ensuring that Philippine enterprises can compete and succeed in global markets.

TRADE POLICY UPDATE: OPPORTUNITIES EXPAND, BUSINESS CONCERNS REMAIN