Vietnam and Singapore are currently the only Southeast Asian countries with free trade agreements with the European Union.

The Philippines could become the third, following an agreement with the EU on a free trade deal. The Philippines and the European Union have reached an agreement on a free trade deal, which could affect trade and investment between the two sides. The agreement was announced by EU Commissioner for Trade and Economic Security Maros Sefcovic and Trade Secretary Ma. Cristina Roque following a conference call, with negotiating teams on both sides set to finalise the remaining details.

The EU and the Philippines resumed negotiations for a comprehensive FTA in March 2024. The European Commission's latest information still lists the agreement as being under negotiation, with the sixth round of negotiations held in May 2026.

The agreement is expected to reduce trade barriers and change market access conditions for businesses on both sides, including micro, small and medium enterprises (MSMEs), farmers, manufacturers and consumers. For the Philippines, this could provide greater access to the EU market for locally produced goods and services, while European companies could gain access to the Philippine consumer market.

For the automotive industry, the potential impact is relevant, as European-made vehicles currently face a different tariff environment from brands benefiting from existing Philippine trade agreements. Depending on the final tariff schedules agreed upon by both parties, the automotive provisions could affect the price and competitiveness of European cars in the Philippines.

The potential effects could also extend beyond completely built-up (CBU) vehicles. Changes to trade barriers for automotive components could affect how European suppliers conduct business with Philippine manufacturers and distributors, while potentially creating opportunities for local suppliers to become part of European-linked supply chains.

For car buyers, the potential effect of the FTA could include changes in competition in the market. If tariffs on European vehicles and parts are reduced, European brands could have greater scope to compete on pricing, specifications and model availability.

However, this does not automatically mean that every European car will become cheaper, as final retail prices will still depend on the agreement's tariff schedules, excise taxes, VAT, logistics costs, exchange rates and manufacturers' pricing strategies.

European Commission President Ursula von der Leyen has said that she looks forward to returning to the Philippines in 2027 to sign the FTA.