The Philippines’ free trade agreements (FTAs) and preferential trade schemes are expected to help mitigate the effects of the 17% reciprocal tariff imposed by the Trump administration on Philippine exports to the United States, according to Philippine Economic Zone Authority (PEZA) Director General Tereso Panga.
Panga highlighted that the country’s participation in the Regional Comprehensive Economic Partnership (RCEP), the Association of Southeast Asian Nations (ASEAN), and the upcoming renewal of the European Union Generalized Scheme of Preferences Plus (EU GSP+) will support exporters in navigating the tariff challenges. The Philippines also has FTAs with Japan, South Korea, and the European Free Trade Association (EFTA) countries, including Iceland, Liechtenstein, Norway, and Switzerland. Additionally, the Philippines benefits from the UK’s Developing Countries Trading Scheme, which offers zero tariff on certain goods entering the UK market.
Panga added that the Corporate Recovery and Tax Incentives for Enterprises to Maximize Opportunities for Reinvigorating the Economy (CREATE MORE) will attract more investments into the country. “PEZA believes these measures will mitigate the tariff impact and make the Philippines an even more attractive investment destination,” he said.
He acknowledged the challenges posed by the reciprocal tariffs, particularly for sectors like electronics, semiconductors, and information technology and business process management (ITBPM), which make up significant portions of PEZA exports. Despite the tariff hike, Panga emphasized PEZA’s commitment to supporting its locators and stated that the government may lobby for reduced tariffs on electronics and ITBPM exports to the US.
Panga also pointed out that the Philippines benefits from the second-lowest US reciprocal tariff in ASEAN, positioning the country as part of the “China+1+1” strategy, which encourages businesses to maintain operations in China while diversifying their supply chains into the Philippines.