Philippines Signs Free Trade Agreement with ASEAN, Australia, New Zealand, Boosting Economic Prospects for MSMEs

In a significant development for regional economic integration, the Philippines recently concluded the second protocol to the ASEAN-Australia-New Zealand Free Trade Agreement (AANZFTA), signaling promising economic prospects ahead. This milestone agreement is anticipated to offer better opportunities for micro, small, and medium enterprises (MSMEs) within the Philippines and across the broader ASEAN region.

The announcement came from President Ferdinand Marcos Jr. during the leaders’ plenary at the ASEAN-Australia Special Summit held in Melbourne on Wednesday, March 6, 2024. President Marcos expressed confidence in the potential of the agreement to address evolving challenges in the business environment and to complement efforts aimed at strengthening supply chain resilience, expanding trade and investment, promoting inclusivity, and fostering sustainable development.

“With the momentum from the CEO Forum yesterday, and AANZFTA together with the Regional Comprehensive Economic Partnership (RCEP) Agreement, we are confident that we will usher in even more robust economic cooperation within our region and provide a legal framework for a more prosperous future,” remarked President Marcos.

The ASEAN-Australia-New Zealand Free Trade Agreement (AANZFTA) is a comprehensive agreement encompassing approximately 663 million individuals in the ASEAN member states, Australia, and New Zealand, collectively representing a combined Gross Domestic Product (GDP) of approximately $4 trillion as of 2016.

The overarching aim of AANZFTA is to promote sustainable economic growth in the region by fostering a more liberal, facilitative, and transparent market and investment regimes among its twelve signatories. These signatories include Brunei Darussalam, Cambodia, Indonesia, Lao PDR, Malaysia, Myanmar, Singapore, Thailand, Viet Nam, Australia, New Zealand, and now, the Philippines.

Key provisions of the AANZFTA include the progressive reduction and eventual elimination of tariffs on various goods, the facilitation of the movement of goods through modern rules of origin and simplified customs procedures, liberalization of trade in services, facilitation of the movement of business persons engaged in trade and investment activities, and the protection of covered investments.

Moreover, President Marcos welcomed Australia’s Southeast Asia Economic Strategy to 2040, highlighting the importance of expanding collaboration in critical sectors such as agriculture, food security, digital economy, infrastructure, tourism, and healthcare.

He commended Australia’s longstanding support for ASEAN-led mechanisms and encouraged continued engagement to ensure peace and stability in the region, particularly in the Indo-Pacific. Marcos also reiterated the Philippines’ commitment to addressing climate change, emphasizing domestic efforts to reduce emissions and offering to host the Board of the Loss and Damage Fund for climate change.

“In the Philippines, we have taken concrete actions by implementing policies and initiatives to reduce emissions by catalyzing investments in our rich sources of renewable energy,” he affirmed.

The signing of the AANZFTA protocol and ongoing collaboration between ASEAN, Australia, and New Zealand underscore a shared commitment to fostering economic cooperation and addressing regional challenges through multilateral partnerships. The agreement is expected to open new avenues for trade and investment, promote economic growth, and contribute to the prosperity and development of the Philippines and its neighboring countries in the ASEAN region.