EU seals Philippines trade deal in push to diversify away from China and US

On Tuesday, the European Commission reached a trade agreement with the Philippines, bolstering its strategy to diversify away from trade dependency on China and the United States. This move comes in the wake of the US imposing tariffs on various trading partners, intensifying global trade tensions. The EU has been actively pursuing new trade relationships, with recent major deals signed with India, Australia, and Indonesia.

According to EU Trade Commissioner Maroš Šefčovič, this agreement sends a clear message that the EU is strengthening its commitment to the Indo-Pacific region. Covering a market of 113 million people, the new deal eliminates over 94% of customs duties and grants EU businesses access to a market comprising more than 97% of bilateral trade. This includes key EU exports such as machinery, medicines, agricultural products like meat, pork, poultry, and spirits.

The Philippines' primary exports to the EU consist of semiconductors, integrated circuits, and industrial machinery. This agreement is also anticipated to facilitate EU investment in raw material resources in the Philippines, as the European Union seeks to reduce its reliance on China, which holds a monopoly on crucial raw materials.

Bilateral trade in goods between the EU and the Philippines totaled €17.6 billion in 2025, while trade in services reached €10.3 billion in 2024. Additionally, the stock of EU foreign direct investment in the Philippines amounted to €15.4 billion.

Šefčovič emphasized the mutual interest with countries in the broader Indo-Pacific area in tackling current global turbulence and addressing the strain on supply chains. China has allegedly weaponized critical products such as chips and rare earths, jeopardizing various sectors, including the automotive industry. Furthermore, Brussels anticipates trade agreements with Thailand and Malaysia, with the latter expected to be finalized by the end of the year.