EU and Philippines agree on trade deal as Canada advances parallel pact

Terms of the European Union agreement

European Commission President Ursula von der Leyen and Philippine President Ferdinand Marcos Jr. reached an agreement in principle on a bilateral free trade deal on 22 September 2026. The accord eliminates duties across more than 94% of tariff lines, covering over 97% of trade in goods between the two economies. For the first time, the Philippine government will open its public procurement market to foreign bidders under the terms of the agreement. The pact also establishes regulatory frameworks for digital commerce, intellectual property rights, and protections for hundreds of European foodstuffs with protected geographical indications. European industrial exporters gain broader access for machinery, transport equipment, pharmaceuticals, and medical devices, alongside tariff reductions for pork, poultry, dairy, and spirits.

“We agreed to liberalise over 94 percent of tariff lines, which cover more than 97 percent of goods on both sides.”

Supply chains and bilateral investment

Negotiations between Brussels and Manila initially began in 2015 before pausing and subsequently resuming in March 2024. European Union Trade Commissioner Maroš Šefčovič pointed to critical raw materials and semiconductors as sectors that will gain resilience through diversified supply routes. The agreement aims to support investment in renewable energy across the Philippines, which has a population of 113 million. In 2025, the bloc ranked as the fourth-largest trading partner of the Philippines, accounting for 8.3% of the country's total merchandise trade. Bilateral goods trade reached 17.6 billion euros in 2025, while trade in services totaled 10.3 billion euros in 2024. European foreign direct investment in the Philippines stands at 15.4 billion euros, compared to 2.4 billion euros of Philippine investment in the European Union.

EU FDI in Philippines15.4

Philippine FDI in EU2.4

EU FDI in Philippines

15.4 billion EUR

Philippine FDI in EU

2.4 billion EUR

Data from the article text

Regional negotiations across Southeast Asia

The pact is part of a broader European effort to expand commercial partnerships across the Indo-Pacific region. Brussels implemented a trade agreement with the Mercosur bloc in May 2026 covering Argentina, Brazil, Paraguay, and Uruguay, while also pursuing agreements with India, Mexico, and Australia. Following talks with Indonesia, EU negotiators are advancing discussions with Thailand and maintaining dialogue with Malaysia. Philippine Trade and Industry Secretary Roque and Commissioner Šefčovič instructed negotiating teams to finalize technical details over the coming months. The resulting framework provides rules for small and medium enterprises, agricultural producers, and manufacturers.

Parallel Canadian trade initiatives

Canada is also concluding separate free trade negotiations with the Philippines and the Association of Southeast Asian Nations. Canadian Trade Minister Maninder Sidhu announced on 22 September 2026 in Manila that talks are more than 90% complete. Ottawa is working to finalize both treaties ahead of Prime Minister Mark Carney's scheduled visit to Manila in November 2026. Sidhu stated that the push reflects a long-term diversification strategy rather than a reaction to shifts in United States trade policy.

“Plan A was always diversification, regardless of what happens with our partners.”

Energy and digital infrastructure commitments

Canadian trade policy toward Southeast Asia emphasizes energy supply, supported by more than five liquefied natural gas export terminals under development on Canada's Pacific coast. Southeast Asian economies have experienced higher fuel import costs after shipping disruptions in the Strait of Hormuz. Canada has also committed financing for the Luzon Economic Corridor manufacturing hub on the main island of the Philippines. Beyond industrial manufacturing, Canadian companies are pursuing investment in Philippine data centers to meet regional demand for artificial intelligence and digital services.