Bilateral trade between France and the Philippines: A current overview and future prospects
After experiencing a spectacular development over the past few years thanks to a boom in aerospace exports, commercial relations between France and the Philippines remain positive despite a small downturn in 2016.
France is the Philippines’ 14th largest supplier and 18th most important client (Source GTA-GTIS). Among EU Member States, France is also one of the Philippines’ most important trading partners. In 2015, commercial exchange between France and the Philippines amounted to €1.44 billion. French exports totalled €839 million, while French imports from the Philippines amounted to €602 million. The French trade surplus reached €237 million. Commercial exchange between the two countries is expected to further develop, against a backdrop of the prevailing strong growth of the Philippine economy, and the supply of French aerospace components in 2018 and 2019.
Overview of commercial exchange between France and the Philippines
In 2015, commercial exchange between France and the Philippines amounted to €1.44 billion, a drop of 39% compared to the previous year (€2.365 billion). This decrease was a result of the sharp contraction of France’s exports (-56%), dropping from €1.896 billion in 2014 to €839 million in 2015. At the same time, there was a 28% increase in French imports from the Philippines, from €469 million to €602 million. France’s trade surplus therefore saw a decrease in 2015, falling to €237 million, in contrast with the record surplus of €1.4 billion in 2014. Over the first half of 2016, France’s trade surplus continued to fall, from €54 million to €150 million for the same period in 2015. France’s exports to the Philippines reached €434 million, a drop of -3% (€447 million over the first half of 2015), while France’s imports from the Philippines continued to rise considerably (+28%), reaching €380 million (€297 million in the first half of 2015).
The strong variations in French exports are due to French aerospace supplies
Aerospace supplies have made up the bulk of all France’s exports since 2012, resulting from contracts signed mainly by Airbus, but also by ATR and Airbus Helicopters. Sales in this sector reached €970 million in 2013, and a record level of €1.44 billion in 2014, before falling to €313 million in 2015. Over the first half of 2016, exports of aerospace components reached €208 million. If we include current Airbus and ATR aircraft contracts, these sales should once again see a significant increase in 2018 and 2019.
Excluding the aerospace industry, French exports to the Philippines grew by +17% in 2015 compared to the previous year, increasing from €457 million to €535 million.
The largest single exporting sector is agricultural produce and the food industry, which accounts for 27% of exports, excluding aerospace exports. The former reached €143 million in 2015, an increase of almost 16% compared to 2014 (€123 million). This significant rise can be explained by exceptional exports of cereals in 2015 (€24.5 million) thanks to the excellent harvest in France, and the favourable exchange rate (i.e. a weak euro) and a strong demand for cereal in the Philippines following the natural disasters in 2013 and 2014. Excluding cereals, France’s farm food product sales are dominated by meat products (primarily pork, nearly €40 million in exports in 2015), followed by dairy products (€32 million), wine (€5 million) and cattle feed (€4.8 million).
The second most important export product group is computer, electronic & optical products and electronic components (24% of exports excluding aerospace), which increased by 20% in 2015 compared to 2014, from €109 million to €131 million. The sales of electronic components alone accounted for €96 million in 2015. After being processed locally, these electronic components are re-exported by the Philippines to Japan, the United States, China and Europe, where they are used in the manufacturing of other electronic goods.
Pharmaceutical products are France’s third largest export to the Philippines (14% of all exports, excluding aerospace) with exports reaching €75 million in 2015, an increase of +22% on 2014 (€61 million), and following on from a +14% increase in
2014 compared to the year before that. Chemicals, perfumes and cosmetics, the fifth largest export product group, accounted for €45 million of exports in 2015, a -19% decrease (€56 million in 2014).
Continuing growth of French imports from the Philippines since 2015
The strong increase in France’s imports from the Philippines which started in 2015 continued in the first half of 2016. In 2015, French imports from the Philippines rose by 28%, reaching €602 million, compared to €467 million in 2014. France’s most important import product group is electronic components, which accounted for 38% of France’s imports in 2015 (€228 million), an increase of 27% compared to 2014. The next import product groups: medical & dental instruments and supplies (€52 million in 2015), computers and computer peripherals (€42 million) and electronic consumer goods (€27 million) all saw a significant increase. On the whole, electrical & electronic equipment accounted for 63% of French imports from the Philippines.
Agricultural produce and farming industries is the Philippines’ second largest exporting sector to France, with sales reaching almost €55 million in 2015, a rise of almost 37%. Agricultural produce consists primarily of fruit (€10 million in 2015) and non-processed fish products (€4 million). Processed products include coconut-based oils (€9 million), preparations containing fruit & vegetables (€7 million) and preparations containing fish products (€6 million).
In the first half of 2016, French imports from the Philippines continued to see a very dynamic growth rate of almost +28%, reaching €380 million, compared to €297 million for the same period in 2015.
Continuing growth of Philippine exports to France
The strong growth of Philippine exports to France between 2014 and 2015, repeated in 2016, can be explained primarily by the granting of preferential GSP+ market access by the European Union on January 1, 2015. According to Eurostat, in 2015, Philippine exports to the European Union increased by almost 19% compared to 2014, reaching €6.8 billion. The European Union estimates that 22% of Philippine exports to EU Member States benefited from the preferential GSP+ market access in 2015.
Commercial exchange between the European Union and the Philippines
In 2015, the commercial exchange between the European Union and the Philippines reached €12.9 billion, with a slight trade surplus of €641 million in favour of the Philippines. The European Union is the Philippines’ fifth most important trading partner, accounting for 11% of all trade, after ASEAN member countries (20%), Japan (15%), China (14%) and the United States (13%), and before Taiwan (6%) and South Korea (5%). Moreover, the European Union accounts for about 10% of ASEAN foreign trade.
In 2015, the European Union was the Philippines’ most important client, accounting for 12% of all its exports, after Japan (21%) and the United States (15%) and just before China (11%). Philippine exports to the European Union reached €6.8 billion.
With respect to imports in 2015, the European Union was the Philippines’ fourth largest supplier, after China, the United States and Japan.