By Justine Irish D. Tabile, Reporter
THE PHILIPPINES has been on a free-trade agreement (FTA) negotiating spree in anticipation of shifting trade patterns in the wake of the disruption brought by the US tariff regime.
Getting exporters to fully utilize the advantages on offer from FTA partners is another matter.
Since 2022, the Philippines has signed on to two major FTAs: the Regional Comprehensive Economic Partnership (RCEP) and the Philippines-South Korea trade agreement. The two deals brought the Philippines’ active FTAs to 11, according to the Department of Trade and Industry’s (DTI) FTA portal.
Nevertheless, exports continue to lag those of the other ASEAN economies, like Indonesia, Thailand, Myanmar, and Vietnam.
According to ASEANstats, the Philippines posted the sixth-most merchandise exports in 2023 within the bloc at $72.9 billion. That was the year RCEP entered into force for the Philippines.
The top exporter in the region was Singapore with $475.9 billion in 2023, followed by Vietnam ($353.1 billion), Myanmar ($312.6 billion), Thailand ($284.6 billion), and Indonesia ($258.9 billion).
Enunina V. Mangio, outgoing president of the Philippine Chamber of Commerce and Industry (PCCI), said that “while the country has an extensive network of FTAs, utilization on the export side remains low.”
Based on recent research commissioned by the PCCI, many exporters face persistent challenges such as limited awareness of FTA benefits, complex rules of origin and certification procedures, and high domestic costs related to production, logistics, and regulatory compliance, she said via Viber.
“These constraints reduce the ability of Philippine firms, particularly micro, small and medium enterprises (MSMEs), to fully take advantage of preferential market access, including in key markets such as Korea,” she added.
Citing DTI Undersecretary Allan B. Gepty, the PCCI said the Philippines’ utilization rate for RCEP is around 20%.
“The country continues to face a significant trade deficit with our trading partners, prompting the government to proactively strengthen its information and awareness campaigns to educate businesses on how to avail of and maximize the benefits of these FTAs,” Mr. Gepty said.
According to a report seen by the PCCI, many companies that are not using RCEP cited “not knowing where to start” as a reason for not utilizing the FTA.
To address this, Ms. Mangio called for stronger public–private collaboration, streamlined procedures, and a more comprehensive FTA support program.
“These are to ensure that our trade agreements translate into real export growth and competitiveness,” she added.
Associate Professor of the University of Asia and the Pacific George N. Manzano, a former tariff commissioner, said that the low utilization rate might have something to do with where Philippine exports fall under most favored nation (MFN) rates.
In particular, he said exports to South Korea could be declining this year even with an FTA in place because a “significant portion of Philippine exports to South Korea are classified as low tariff or are duty-free, such as electronic products under MFN rates.”
Philippine exports to South Korea declined 12% to $2.734 billion in the first 10 months of 2025. The FTA has been in place since Dec. 31, 2024.
Meanwhile South Korean exports to the Philippines grew 5.7% to $8.538 billion over the same period, according to the Philippine Statistics Authority (PSA).
“Another (reason) is that Philippine exports in the high-tariff sectors may have difficulty complying with the rules of origin, i.e., the value added of the Philippines may be low,” Mr. Manzano said via Viber.
He added that many exporters may still be learning the ropes with regard to using the FTA.
“Note that the Philippines-South Korea FTA was implemented late last year, so it is possible that it may take some time for Philippine exporters, like MSMEs, to use the FTA. Perhaps efforts to address the aforementioned issues may help increase utilization,” he added.
Mr. Gepty said many untapped opportunities remain, with the RCEP free trade area alone being the biggest market accounting for 29% of global trade, 29% of total GDP, and a market of 2.3 billion people.
“Thus, it is important that investors and stakeholders take advantage of this trade agreement. More than the market access, it offers a stable and predictable business environment with clear and reasonable rules for trade and investment.”
He said the information side is being addressed through the Trade Education and Advocacy (TEA) Campaign and Usapang Exports.
“We also partner with business organizations such as the Philippine Chamber of Commerce and Industry, PhilExport, and the Women Business Council… we need more partners to increase awareness and utilization of FTAs.”
Regarding the Philippines-European Free Trade Association (EFTA) Free Trade Agreement, which offers access to Switzerland, Iceland, Norway, and Liechtenstein, “goods that can be exported duty free including most of our fish products and other key agricultural goods. There is also a good opportunity for services such as professionals, construction, and business services.”
“Our businesses need to be aware and at the same time be capacitated to access these foreign markets,” he said. “This is especially important because the Philippines is now more visible in the international economic community.”
Trading partners see the Philippines as “able and willing to shape the rules-based trading system and expand its trade network. The FTAs we are negotiating right now such as with the EU, Chile, and eventually with Canada, India, and Israel are indicators that we are expanding our preferential market access and that we are strengthening our foothold in the global economy.”
Foreign Buyers Association of the Philippines (FOBAP) President Robert M. Young said that although the Philippines needs more FTAs to keep up with regional counterparts, the government must make sure exporters have benefits at par with those enjoyed by exporters from the FTA partner.
“The Philippines must make sure that we can compete on an equal footing,” according to Mr. Young, who is also the trustee for the textile, yarn and fabric sector of the Philippine Exporters Confederation, Inc. (Philexport).
Speaking to BusinessWorld by phone, he noted that FTAs essentially remove the tariff revenue generated from exports. “For example, let’s say we are trading with Korea … we sell mangoes to them, but our mangoes are very high-priced, higher than the other guys exporting to Korea. Will Korea buy? Of course not,” he said.
“They have enough reason, and all the right to refuse our mangoes … The Philippines must be ready for the price war as far as FTAs are concerned,” he added.
Without preparing exporters for FTAs, he said such agreements could instead kill Philippine industries, as they will encourage more imports.
“You have to make sure that you can compete price-wise, quality-wise, and delivery-wise. Because otherwise, what will happen is puro importation ang mangyayari (imports will proliferate). That will result in a trade deficit,” he said.
“FTAs are very dangerous because they can cause job losses. When the country will be flooded with all these cheap imported goods; all the factories that are making these products will close shop,” he added.
These imports, he said, could also impact startups and developing industries.
The DTI’s Export Marketing Bureau reported that the Philippines is running a trade deficit even within its various regional partnerships.
In the 10 months to October, the Philippines exported $31.768 billion worth of merchandise to RCEP members, while importing $82.112 billion.
A similar pattern can be seen in the ASEAN Free Trade Area, the ASEAN-Australia-New Zealand Free Trade Area, the ASEAN-China Free Trade Area, the ASEAN-India Free Trade Area, the ASEAN-Japan Comprehensive Economic Partnership, and the ASEAN-Korea Free Trade Area, it said.
Mr. Young said not many garments exporters utilize the FTAs. “That is because the other countries are also producers of garments, and (partner countries) will never buy our garments because other countries’ garments are cheaper than ours,” he said. “The cost of garments in the Philippines is the highest in ASEAN now. The lowest price of our pants is $7; in Vietnam it’s $5, in Malaysia it’s $6, in Laos it’s $6.50,” he added.
He said this stems from high labor and power costs, as well as the absence of a textile industry.
“But the industry is still alive. In FOBAP, what we do is we go to the higher-priced items instead. We are catering to those that can pay more,” he said.
“Our prayer is that there will be a textile industry here in the Philippines and that the government will wake up and provide the sector with subsidies,” he added.
