FTAs prospects, U.S. tariff exemptions keep exporters upbeat

Exporters, banking on positive impacts of pending free trade agreements (FTAs) and new United States tariff exemptions, are hopeful about their prospects next year after a challenging 2025.

During the group’s fourth quarter General Membership Meeting, Philippine Exporters Confederation Inc. (PHILEXPORT) president Sergio Ortiz-Luis Jr. said the country and Canada are poised to launch negotiations for a FTA by early 2026. 

“The ASEAN (Association of Southeast Asian Nations)-Canada FTA is also on track for completion next year, while discussions for our entry into the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) are advancing, with member countries expected to consider our application soon,” he said.

First ever FTA with the Middle East and UAE

Ortiz-Luis said the Philippines has also finalized its first-ever FTA in the Middle East with the United Arab Emirates called Comprehensive Economic Partnership Agreement (CEPA), and is awaiting signing.

“This, together with ongoing efforts to seal a similar pact with Chile, expands our reach into the Gulf and South America — two dynamic markets where Filipino products and services can thrive,” he added. 

Ortiz-Luis also cited the recent Executive Order of US President Donald Trump, exempting over $1 billion worth of Philippine agricultural exports from the 19-percent reciprocal tariff. These include coconut oil, processed fruits, coffee, cocoa, bananas, spices, tomatoes, and beef, among others.

“This results in about 46% of our exports to the US now tariff free, maintaining our competitiveness in one of our largest export markets,” he said. “Despite tariff pressures from the US, we secured major relief for exporters.” 

Encouraging sectoral prospects 

Ortiz-Luis said sectoral prospects remain encouraging as the semiconductor and electronics industry — the country’s largest export contributor — is expected to grow 5 percent to 7 percent next year, driven by demand for artificial intelligence, electric vehicles, Internet of Things, and data centers. 

This could raise electronics exports to $45 billion to $47 billion, reinforcing the country’s position in global value chains, he added. 

He also said exporters have found ways to keep afloat as they continue to grapple with weak global demand in some sectors, volatility in tariff policies, rising operating costs, and manufacturing slowdown. 

“We identified new markets, turned to digital tools, expanded to non-traditional export destinations, and leveraged the peso’s competitiveness to recover lost ground,” Ortiz-Luis said. 

Digital economy major growth engine

“The digital economy is likewise emerging as a major growth engine, a boon to our MSMEs (micro, small and medium enterprises) and exporters who are already well positioned in this market space,” he added. 

Further, Ortiz-Luis underscored two among three flagship deliverables for the Philippines’ ASEAN 2026 Chairmanship that will impact directly on exports and create a more predictable, rules-based, and digitally enabled region to strengthen export competitiveness.

These are the ASEAN Digital Economy Framework Agreement and expanded ASEAN FTAs with Canada, Korea, Australia and New Zealand, he said. 

Ortiz-Luis said that despite lingering and increasing headwinds in various forms, Philippine goods exports during the first 10 months of 2025 reached $70.43 billion, while imports reached $111.75 billion, the second-highest level on record.

“As factories are busy fulfilling orders, our advocacy work is continuing and has been sustained and with some progress. We were vocal on urgent exporters concerns on access to financing, governance, raw material constraints, stiffer market requirements, supply chain disruptions and compliance as difficult realities faced by MSMEs,” he said. 

Ortiz-Luis also reiterated the call for the government to increase funds for export promotion and MSME support as export industry players aim to compete globally.