After EU-Philippines trade deal, Asean could be next

THE European Union and the Philippines reached a substantial agreement on a trade deal on Sep 22.

Yet an even bigger economic prize, that of an EU-Asean trade agreement, may also now be edging closer as part of Europe’s grand strategy of pivoting to the Asia-Pacific, driven in part by the tariffs of the Trump presidency.

One of the most important drivers of any EU-Asean trade deal being agreed in the coming years is political momentum. This is why it is very important for the Philippines and EU to finalise the deeper details of their agreement.

Their bilateral talks began in 2016 but collapsed in 2017, before picking up again in 2024 just before US President Donald Trump’s second term.

The emerging deal would cover more than 97 per cent of bilateral trade and remove over 94 per cent of customs duties. According to the EU, bilateral trade in goods in 2025 totalled 17.6 billion euros (US$19.9 billion), making the EU the Philippines’ fourth-largest trade partner.

For the bloc, the deal is forecast to benefit European automakers, manufacturers and farmers. The Philippines also has sizeable reserves of critical minerals, which the EU might gain greater access to.

But obstacles remain, including European public procurement rules. These would restrict access in the EU’s green and energy-intensive sectors for nations without procurement agreements with the bloc.

Both sides hope that a final deal can be inked by no later than 2027, with European Commission (EC) president Ursula von der Leyen intending to travel to Manila then for its final signing. If that happens, European national capitals would probably also need to ratify the agreement.

However, unlike some recent EU deals, like that with Mercosur – the South American trade bloc – the deal with the Philippines may not prove too controversial for Europe on economic grounds.

For instance, France’s powerful agribusiness lobby was strongly against the Mercosur trade agreement, but Paris has welcomed the deal with Manila given that the EU as a whole has a farm goods trade surplus with the Philippines.

This does not mean that there is no opposition in Europe to the deal. Non-governmental organisations, for example, have asserted that the human rights record of the Philippines is not consistent with the EU’s promotion of democratic values, as espoused in agreements such as the 2009 Treaty of Lisbon.

Europe’s pivot to Apac

The EU has been widely criticised in the past for the relative slowness with which it has been perceived to conclude new trade deals. Yet, the Philippines deal is the latest evidence that this pace is decisively changing in the second term of Dr von der Leyen.

As EU trade commissioner Maros Sefcovic said last week: “Already now, we are keen to promote the deal, because South-east Asia is the region to be in. After Indonesia – and now the Philippines – we are making strides with Thailand and engaging intensively with Malaysia.”

With these moves, Europe has clearly decided to double down on bolstering its commercial ties with Asean and the wider Apac, with an underlying goal of building a competitive advantage amid geo-economic tumult such as Trump’s tariffs and ongoing armed conflicts.

This is not a new initiative. In her first term as EC president, Dr von der Leyen adopted a strategy to reinforce the EU’s strategic focus, presence and actions in Apac.

Outside of economics, free and open maritime supply routes in full compliance with international law have been designated as a crucial consideration.

Europe is also working increasingly closely with key Apac partners, including Asean nations, on security and defence, with tackling malicious cyberactivities, terrorism and organised crime on the agenda.

The EU’s focus on Apac is seeing results. Indeed, some 60 per cent of European business leaders think Asean offers the best economic opportunities globally during the next half-decade, according to data from the EU-Asean Business Council.

Moreover, around 80 per cent of the same leaders believe they will trade more with, and invest more in, South-east Asia during that time frame.

The longer-term goal could be a wider EU-Asean free trade agreement.

Singapore Deputy Prime Minister Gan Kim Yong, whose nation takes over the chairmanship of Asean in 2027, flagged on Sep 25 that the bilateral deals the EU is reaching with Asean nations “build on each other” and “set the stage for further integration at the Asean level”.

To be sure, there are clear challenges to such a deal. It should be remembered, for instance, that when the EU last launched trade talks with Asean in 2007, they were quickly undermined by human rights considerations when Myanmar cracked down on protesters.

Still, the Philippines deal underlines the EU’s belief that Asean presents a big opportunity. At a time of major geo-economic and geopolitical flux, the region is an increasing priority for Dr von der Leyen as she tries to drive economic competitive advantage before her EC presidency ends in 2029.

The writer is an associate at LSE IDEAS at the London School of Economics