By Justine Irish D. Tabile, Reporter

THE Philippines and Canada are aiming to conclude the exploratory talks for a free trade agreement (FTA) within the year, an official from the Department of Trade and Industry (DTI) said.

“Our plan is to finish the exploratory talks this year and submit recommendations to our principals after,” Trade Undersecretary Allan B. Gepty told BusinessWorld.

Mr. Gepty has returned from the second Philippines-Canada Joint Economic Commission (JEC) meeting which was held last week.

“We had a very successful JEC meeting with Canada, and it is good to see that our trade and investment relations are advancing,” he said, noting that Canada was the country’s 20^th largest trading partner last year.

“We discussed several areas of cooperation, such as energy, information and communications technology and cybersecurity, artificial intelligence, agriculture, food security, critical minerals, and the exploratory talks on a possible bilateral FTA,” he added.

He said that as Canada is set to diversify, the Philippines has to position itself as a strategic and reliable partner in the Indo-Pacific region.

“This can be bolstered by constant engagement, active private sector involvement, and, ideally, a bilateral FTA,” he said.

“In our economic relations, we don’t want to limit engagement in trade in goods, but we want to invest in each other’s region, collaborate on product development and innovation, and ensure a robust trade in services,” he added.

GARMENTS SECTOR
Meanwhile, the Philippine garments sector is expected to be among the beneficiaries of an FTA between the Philippines and Canada, according to the Foreign Buyers Association of the Philippines (FOBAP).

“Fifteen to 20 years ago, FOBAP members were exporting something to the tune of $300 million worth of garments to Canada. That was our third major market,” FOBAP President Robert M. Young said in a phone interview.

He said Filipino firms previously exported winter clothing such as padded jackets and snow apparel.

“We were shipping to Benjamin Moore, no less, the biggest department stores all over Canada, Hudson’s Bay, these kinds of stores that have like a thousand stores over there. So, we were really enjoying it,” he added.

However, Mr. Young noted these exports declined after the lifting of the quotas on the amount of textile and clothing imports allowed into Canada.

“Right now, they are buying tons and tons of winter items from China, Korea, Bangladesh, and Vietnam; that is why we are saddened that the quota was removed,” he added.

An FTA will slash the 10-20% tariffs imposed on the winter items that Filipino exporters sell to Canada, Mr. Young said.

However, he said that the Philippines will first have to address issues on rules of origin to fully utilize the FTA.

“We are only entitled to be qualified for duty-free importation into Canada of our winter items if the fabrics that we use are of Philippine origin,” he said.

“That is one big challenge for the Philippines. But if the Philippine team is able to negotiate that they allow us to use imported fabric, we can compete somehow,” he added.

He said that if the Philippines is able to ask for the special arrangement, it will be able to revive its exports to Canada.

“We have a very good record and good standing with Canada. But right now, we are only exporting a small volume to Canada because there is a lot of competition,” he said.

“So, an FTA will be good just as long as we can put that special arrangement on the negotiation table,” he added.

Meanwhile, the Philippine Economic Zone Authority (PEZA) expressed full support for the DTI’s initiative to pursue exploratory talks with Canada for a possible FTA, noting that it can help attract more Canadian enterprises.

“As the primary investment promotion agency for export-oriented industries in the Philippines, PEZA welcomes this move as a vital opportunity to diversify export markets, attract more foreign direct investments, and strengthen our global trade relations,” PEZA Director-General Tereso O. Panga said in a Viber message.

PEZA is home to 12 Canadian companies that provide employment to over 16,700 Filipinos.

“We are optimistic that a potential FTA with Canada will pave the way for the expansion of existing investors and attract new Canadian enterprises seeking a strategic gateway to the ASEAN (Association of Southeast Asian Nations) market through the Philippines,” Mr. Panga said.

“Moreover, the FTA is expected to broaden our sources of FDI by encouraging more Canadian manufacturing and information technology services companies to establish operations in the Philippines — positioning the country as a strategic production and services hub for the broader North American market,” he added.