Philippines

On 25 December 2014, the Philippines were granted GSP+ status and can since then benefit from duty reductions and suspensions granted under the regulation. The Philippines are considered a lower-middle income economy with a per-capita income of $3,850 in 2019. The EU imported a cumulative value of €7.65 billion worth of goods in 2019, of which approximately €1.97 billion made use of benefits under the GSP+ arrangement. This makes the Philippines the second largest beneficiary of the GSP+ arrangement.

What is the GSP+?

The GSP+ is a special incentive arrangement for Sustainable Development and Good Governance that supports vulnerable developing countries. Next to fulfilling the eligibility requirements of the Standard GSP, GSP+ countries are required to ratify 27 international conventions on human rights, labour rights, environmental protection and climate change, and good governance. In order to ensure effective implementation of the conventions as well as compliance with reporting obligations, the EU engages in monitoring activities with the GSP+ countries. GSP+ beneficiaries can benefit from complete duty suspensions for products across approximately 66% of all EU tariff lines.

At a glance: GSP+ beneficiaries' preferential imports to the EU

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106.65 million

Population

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Presidential Republic

Government

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5.9%

GDP Growth

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2.5%

Inflation

money

$ 376.79 bn

GDP

Facts about the Philippines' economy

Island Economy

The Philippines is a vulnerable island economy, which is strategically well located in close proximity to major regional markets. The location comes with a downside as the country is struck by five to six cyclonic storms every year. Landslides, recurring earthquakes, active volcanoes, and tsunamis pose additional risks to the Philippines.

Export Products

The Philippines' most important export products are electronic integrated circuits, storage units and other electronic parts. Bananas and crude coconut oil are the most important agricultural export products.

Trade Partners

A share of over 30% of the Philippines' trade is accounted for by regional trading partners, China, and Japan. The US, followed by Japan and Hong Kong are the most important export destinations for products from the Philippines.

Economic Structure

Services account for 60% of the GDP, followed by the industrial sector (30%). Agriculture contributes less than 10% to the GDP while the sector employs a quarter of the Philippines' population. The industrial sector focusses on the assembly of semiconductors and electronics, food processing, construction, textile, and garments, as well as basic metallic industries.

Coconut Production

The Philippines is the world's second largest coconut producer with a production volume of about 14 million metric tonnes per year.

Trade with the EU

Total trade with the Philippines summed up to € 14,861 million in 2019. With a share of 9% of the Philippines' overall trade, the EU is the fourth most important trading partner.

The Philippines and the EU

Imports from the Philippines by product section

Imports from the Philippines over time (in € m)

THE PHILIPPINES AND THE EU’s GSP

Economic Impact

The Philippines have the highest degree of economic diversification among all GSP+ countries. The country's percentage stood at 79.9% in 2019 and, thus, approaches the threshold of 75%. Nonetheless, the Philippines can still be considered a vulnerable economy and the vulnerability score of 3.1% (2019) is still noticeably below the threshold of 7.4%.

35%

A little more than one third of the Philippines' current exports to the EU are eligible for tariff reductions under the GSP.

73%

The Philippines currently make use of the tariff reductions granted under the GSP+ for about 73% of their eligible exports.

Preference utilisation and export diversification

The Philippines' imports to the EU

Preference Utilisation vs. total eligible imports

The transition to GSP+ status in January 2015 marked the start for an increase in the Philippines' preference utilisation rate, which since then stands at an average of about 72%. Particularly products like coconut oil, preserved tuna, bicycles, pineapple products as well as garment and footwear benefitted from the transition to GSP+. Total imports from the Philippines increased by almost 20% between 2016 and 2018. Over this period, the Philippines substantially increased their imports of prepared meat and fish, footwear, machinery, furniture, and toys. In most of the major product groups, including animal and vegetable fats, food and beverages and processed meat and fish, reduced duties are consistently used for more than 96% of imports.

The largest product sections under the GSP+

EU preferential imports from the Philippines are relatively diversified. Animal and vegetable oils, electrical equipment as well as preparations of meat and fish are the dominant product sections which make use of the reduced duties. Machinery and appliance imports make up the largest share (64%) in overall imports but lack significantly behind regarding their preference utilisation rate. Preferences in this section are currently only used for less than half of the eligible imports. Some product sections increased their preference utilisation rate over the regarded period significantly, most notably the base metal and equipment for the transportation sectors.

SUSTAINABLE DEVELOPMENT AND MONITORING PRIORITIES

The Philippines ratified 27 core conventions on human rights, labour rights, environmental protection, and good governance. The Philippines maintained ratification of all relevant conventions over the reporting period 2018-2019. A number of reports will be due later in 2020. In the past, the Philippines had problems with the timely delivery of the reports and a number of reports on human rights and environmental conventions are still outstanding.

Monitoring priorities during the reporting period 2018-2019

War on drugs and extrajudicial killings

Possible reintroduction of the death penalty

Human Rights defenders

Minimum age of criminal responsibility

End of contractualisation and security of tenure bill

Child trafficking

Collective bargaining and freedom of association

The EU identified seven priority areas for its monitoring activities in the Philippines over the reporting period 2018-2019. While progress can be registered for some issue areas, notable challenges remain related to the adherence to fundamental civil and political rights.

1. HUMAN RIGHTS

The Philippines have ratified all seven core human rights treaties which are covered under the GSP+ regulation. In addition, the Philippines have ratified two additional UN human rights conventions on the rights of migrant workers and people with disabilities, which are not included in GSP+ obligations. Over the reporting period, the government introduced legislation which aims at further reducing poverty as well as a number of regulations to better protect children, for example the national plan to address child trafficking. Contrary to these positive efforts in protecting the rights of the child, the government drafted a law which would reduce the age of criminal responsibility from 15 to 12 years. Furthermore, public discussions on a possible reinstatement of the death penalty for drug-related crimes concern international organisations and related monitoring bodies and would be a direct violation of the UN Covenant on Civil and Political Rights (ICCPR). The government's continuous tough stance on drug offences is also reflected in reports on extra-judicial killings of people allegedly involved in drug trade. Furthermore, the human rights situation for indigenous people remains problematic as they continue to face social discrimination, economic marginalisation, and political disempowerment.

Ratified

2. LABOUR RIGHTS

The Philippines maintained ratification of all eight fundamental ILO conventions which are covered under GSP+. Additionally, the Philippines have ratified two of the four ILO priority conventions, namely the Employment Policy Convention and the Tripartite Consultation Convention. A number of bills which would translate the ILO conventions into national law still await legislative adoption. Therefore, problems with anti-union discrimination and the practice of contractualisation currently persist. In addition, President Duterte vetoed the security of tenure bill which could have been able to bring progress in addressing the abuse of labour contractualisation. A strong commitment by the government to introduce strong legislation is of particular importance given the high share of informal employment, which is estimated to affect about 38% of the workforce. Regarding child labour, more efforts are needed including a systematic analysis of the current situation and the establishment of a National Child Labour Committee.

Ratified

3. ENVIRONMENTAL PROTECTION

The Philippines currently face a number of environmental problems including pollution, deforestation, soil erosion and wildlife extinction. The government has made progress in better protecting the country's biodiversity and endangered species and adopted additional policies. Furthermore, efforts have been made to address problems that come with the shipments of hazardous waste and the government was able to achieve some successes.

Ratified

4. GOOD GOVERNANCE

The Philippines are strongly committed to its "war on drugs" which is observed closely by the International Drug Control Board. The body has expressed concern about the developments in this area and particularly the reports on extra-judicial killings and the debate on the reinstatement of the death penalty for drug offenses, which are not in line with the objectives under the Drug Control Conventions. The fight against corruption is one of the focal points of Duterte's presidency and the government has taken stricter measures to address corrupt individuals. However, a legal basis for effectively implementing targeted policies still needs to be introduced.

Ratified

EU-Philippines Bilateral Development Assistance

€260 million

The EU assisted the Philippines with approximately €260 million for the period 2014-2020, which made the EU one of the country's most important donors. The engagement focussed in particularl on strengthening the rule of law, supporting inclusive growth, enhancing the population's access to energy, as well as peacebuilding activities in Mindanao.

Opportunities in Philippines

  • Strong economic growth, one of the most dynamic economies in the region
  • Comparatively young (50% of the population is under 25), well-trained and English-speaking labour force
  • The country has substantial unexploited mineral reserves which have been estimated to about $840 billion

Most recent events

Date Event
2020‑01‑28 The 1st Joint Committee under the new European Union - Philippines Partnership and Cooperation Agreement (PCA) takes place in Brussels
2018‑09‑27 Last GSP+ monitoring mission to the Philippines

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