Europe keen on developing ties, trade with Philippines

The European Union is keen on expanding trade and development cooperation with the Philippines, citing the country’s growth prospects for 2012, diplomatic officials told the Inquirer Thursday.

According to Ambassador Guy Ledoux, the EU’s head of delegation, the Philippines stands to gain in terms of goods and labor exported to the world’s top single market.

“If ever there is one, it will be a short, shallow recession in the EU. That means exports may at least be in the same level as last year and there will be products, like innovative electronics products, which can grow even if there is not much happening in the economy. Employment growth in the EU will not be there, but certainly not worse,” Ledoux explained.

In terms of development cooperation, the EU’s overall allocation for the Philippines from 2007 to 2013 is 130 million euros.

“We will talk about further aid, beyond 2013, this year,” Ledoux said.

EU aid to the Philippines is focused more on health, governance and trade, Ledoux said.

Tourism can also be a growth area once the Philippines gets to develop more accommodations, works on air travel security issues with the International Civil Aviation Organization, and promotes a range of travel packages from high-end to backpacker-type options.

In terms of investments, Ledoux stressed that EU as a single market is the largest source of foreign direct investments in the Philippines. Investments may flow in more intensely if the Philippines “opens” its economy further through trade deals, eases foreign ownership issues in “certain sectors,” and advances “fair competition,” Ledoux said.

Politically, EU is committed to the peace process in Mindanao and is pouring in funding for health, security and other projects in the region, EU political counselor Julian Vassallo said.

But local leaders expressed cautious optimism on EU’s prospects.

For one, the electronics group SEIPI [Semiconductor and Electronics Industries in the Philippines Inc.] is counting on better sales prospects in the United States as elections there unfold.

“For the EU, there may be growth. But US (prospects) are better,” SEIPI president Ernesto B. Santiago said via text message.

For Socioeconomic Planning Secretary Cayetano W. Paderanga Jr., the EU ambassador’s comments “stabilize” expectations for that part of the world and become more “encouraging” in conjunction with a positive outlook on the United States.

“The ambassador’s comments are encouraging because we can at least depend on the same level of support as last year although, of course, we would have wished for more. It stabilizes expectations. The US outlook is positive with downside risk, the risk being what will happen to Europe. A short, shallow recession at worst and slightly positive outlook at best is good news for the Philippines,” said Paderanga, who is also director general of the National Economic and Development Authority.

According to Cid L. Terosa of the University of Asia and the Pacific, the ambassador’s statements are meant to signal that the EU is bent on resolving the crisis soon and while this may be tough, at least it is ongoing and may be given a boost this year.

“Consequently the Philippines should expect the same or slightly better level of trade and economic relations with the EU this year. The government should take the statements positively. It should be prepared to take advantage of better market conditions in the EU in the medium term,” Terosa said.

But Filipinos must still anticipate “a negative effect of the slowdown and uncertainties in Europe [on] the Philippine economy,” said National Economic and Development Authority assistant director general Ruperto P. Majuca.

To counter this, Majuca said, “the government must increase and accelerate government expenditures, especially for infrastructure, as well as conduct appropriate trade strategies.”

EU-Philippine trade posted the highest growth rate in over 10 years, rising by 34 percent to 9.1 billion euros in 2010, according to EU data.

Philippine exports to the EU jumped 40 percent to 5.4 billion euros in the same year.

The EU was also the second-largest source of remittances to the Philippines, after the United States, and was Manila’s fifth-largest source of tourists after South Korea, the United States, Japan and the Asean.