The first chronicled links between the Philippines and Europe date back to the 16th century, when Ferdinand Magellan led a Spanish expedition to the archipelago and established the first European settlement in Cebu.

The advancement of Spanish power over the islands took on a gradual peace and led to three hundred years of Spanish presence. Spanish rule was interrupted intermittently by other Europeans who wanted to gain a foothold on the Philippines. When the Suez Canal opened in the 19th century, history was a more efficient trade system and other Europeans undertaking economic activities in the Philippines.

Thus, the first channels of economic relations between the two territories where formed. But it was the rapid conversion to Christianity during the Spanish Occupation that was to be the highlight of Europe’s legacy, leaving an indelible mark in the Philippine’s cultural heritage

Much has changed since colonial times. By the 20th century, relations matured and, as with other countries, Europe’s relations with the Philippines occurred on a level with individual Member States. However, the end of the Second World War marked the beginning of a challenging integration process in Europe – a continent once torn apart by war- leading to the creation of the European Community. The European Community would later become the European Union (EU) based on the belief that collective action was undoubtedly more worthwhile and effective that the sum of what each nation could do by itself.

In 1986, with the return of democracy to the Philippines, a long-term bilateral relationship between the EU and the Philippines ensued.

At a regional level, the 1990’s intensified the political dialogue between Europe and Asia through the establishment of such forums as the ASEM and ASEAN Ministerial gatherings. Bilateral dialogues have also intensified between the Commission and countries in the Asian region, taking into account the diversities among the nations. In the case of the Philippines, the European Commission and Philippines senior officials have, since 1997, engaged in periodic reviews of political, economic and co-operation issues in the framework of the Senior Official Meetings.

Since then, the EC’s partnership with the Philippines has sought to strengthen both trade and economic links, while simultaneously helping to promote the economic development of the less prosperous regions in the country. Combating poverty and raising the standard of living, particularly in the rural areas where the majority of the poorest people live, has also been a main goal of EC co-operation activities from the start.

The relationship between the European Union and the Republic of the Philippines is a longstanding one, which has broadened and deepened remarkably in recent years. Europe's dialogue with ASEAN began in the late 1970s, and was formalised with the signature of an EC-ASEAN co-operation agreement in 1980. Discussions on economic and political issues of common interest, at both the ministerial and official level have been regularly held since then. In addition, bilateral dialogues with the Philippines have included periodic reviews of political, economic and co-operation issues in the framework of regular Senior Officials Meetings.

The EU is a major trade and investment partner of the Philippines, with two-way trade amounting to more than €10 billion per year. In 2006 (the latest year for which full figures are available) Philippine exports to the EU amounted to €6.5 billion, while EU exports to the Philippines came to €4.0 billion - the balance of trade thus showed a healthy surplus of some €2.5 billion in favour of the Philippines. Nevertheless, Philippine exports to the EU have been declining in recent years (in contrast to exports from other major ASEAN partners), so it is clear that the Philippines is not taking full advantage of the opportunities which the EU market has to offer.

European companies have also been significant investors in the Philippines over the long-term, whether in the banking, industrial or service sectors. After a modest downturn in 2001-2003, EU foreign direct investments in the Philippines have grown quite substantially in 2005-06, at broadly the same pace as in other ASEAN partners, and first estimates suggest that 2007 has been another good year.

The EU is also an important partner for Philippine development. EC development cooperation with the Philippines is based on a Strategy Paper outlining the key priorities for our cooperation. During the period 2007 to 2013, the EC co-operation will focus on:

Helping the Philippines meet its Millennium Development Goals, by supporting a more equitable access to quality basic social services, such as the health services, through budget support and sector-wide approaches


Helping the Philippines in its political, economic and social reform processes by providing support to boost trade and its investment flows, to restore peace and security, especially in Mindanao, and to deepen dialogue on governance with and among all sectors of society

The EU’s support to the Philippines’ development process dates back to 1976. For the first time, funds were committed to co-finance NGO grassroots development actions in the country. A few bilateral projects were financed in the early 1980s, but a more substantial and structured development co-operation began only in 1986, with the Aquino administration’s commitment to democratic development.

In 2007, the EC confirmed its willingness to provide total grant funding of €61 million (a fraction under PHP 4.0 billion) over the period 2007-10, with a focus on strengthening health services, supporting the peace process in Mindanao, supporting local governance, and providing trade-related technical assistance.

With these new commitments, the European Commission's total cooperation funding for the Philippines, since these programmes began in 1976, now stands at just over €1 billion, or some PHP 65 billion in total. Of this, €625 million (60%) has been in grant funding, and €413 million (40%) in loans from the European Investment Bank.

EC development co-operation with the Philippines has focused from the outset on combating poverty and raising standards of living of the poorest groups in the country. This has included support for rural development and for agrarian reform, for the health sector (including women's health), for local governance, and for the promotion of human rights, democracy and the rule of law.

Since 2005, the EC co-operation programmes primarily supported equitable access to social services, with particular attention to quality health services through a sector-wide approach and budget support mechanism. It also aimed to foster sustainable development, which meets the needs of current generations without compromising the ability of future generations to meet their needs. In this context, environment and natural resources are capital that must be maintained in order to bolster economic activity. The EC approach of treating environment as a cross-cutting issue emphasises its place as an integral part of operations rather than as a sector with isolated projects that could fade away once funding priorities shift. Gender equity is another important cross-cutting issue. Gender mainstreaming is practiced throughout the programming cycle to ensure that EC operations benefit women and men equally.

Examples of ongoing projects are the Health Sector Policy Support Programme, ASEAN Centre for Biodiversity, Philippine Border Management, Anti-Money Laundering and Access to Justice for the Poor, among many other initiatives. The EC also provides assistance to victims of natural and man-made calamities in the Philippines.

This EC assistance is of course only one part of total EU cooperation with the Philippines. During the period from 1992 to 2004, the EC, the European Investment Bank and EU Member States collectively accounted for US$1.9 billion in Overseas Development Assistance (ODA) for the Philippines. Since total ODA for the Philippines, from all donors combined, amounted to US$21.8 billion over this same period, this made the EU as a whole the country's 4th largest ODA contributor, accounting for 8.8 % of the total, and coming after Japan (46.9%), the World Bank (17.6%) and the Asian Development Bank (16.6%). In terms of grants, the EU was the second largest donor after Japan during that period.

The EU-Philippine relationship has deepened steadily over time. Two-way trade is robust (but could be strengthened further), and EU investment in the Philippines has made a significant contribution. Our cooperation in the fight against poverty is long-standing, and we work actively together in regional fora. The EU continues to encourage and support the Philippine government to undertake decisive reforms to reduce current uncertainties, improve the investment climate, create more employment opportunities, intensify external trade relations and increase its competitiveness in the Asian region.

The EU and the Philippines have agreed to work together to negotiate a new, bilateral, Partnership and Co-operation Agreement (PCA). This agreement will build on and update the existing 1980 EC-ASEAN Cooperation Agreement, and is aimed at establishing a relationship based upon a modern policy agenda with an appropriate institutional framework, and enabling a policy dialogue on a wider range of issues, ranging from economic, scientific and cultural issues to political and social issues such as human rights, counter-terrorism and migration.

And building on the PCA, discussions are underway regarding a possible Free Trade Agreement between the EU and ASEAN, including of course the Philippines.

During the period 1995 to 2001, the EU has been second largest export market of the Philippines by absorbing 19% of Philippine exports. In fact, the EU has been instrumental in diffusing the impact of the Asian economic crisis on the Philippine economy. More than 50% of the Philippines exports to the EU over the period 1995-2000 consisted of computer components and parts; and electronics and electrical equipment, whereas food products accounted for a quarter of the total exports.



On the EU exports side, the Philippines is a small but fast growing market for the EU. Less than 1% of EU exports are purchased by the Philippines. However, EU exports to the Philippines more than tripled between 1990 and 2001. Also, while EU exports to the Philippines were hit hard by the Asian economic crisis, plunging by 38% in 1998, it seems EU exports have now somewhat recovered. Exports grew again by 37% in 2000 and seem to have stabilized since then. Over half of EU exports to the Philippines over the period 1995-2000 consisted of electronics, telecommunications, & electrical equipments; and power generating machines, mechanical appliances & computer-related items. Over the period 1995-2001, 9% of the total Philippine imports originated from the EU, putting it in fourth place after Japan, the US and the ASEAN countries.

Since the Asian economic crisis, the EU-Philippine trade balance has been in favour of the Philippines. Partial figures for 2001 show a trade balance surplus for the Philippines of €3 billion.

The EU has been the largest source of foreign direct investments (FDI) that have flowed into the Philippines in the past decade, overtaking both Japan and the US. Over the period 1990-2001, EU direct investments accounted for nearly one-fourth of the total FDI in the country.

EU investments have increased significantly in recent years, providing an important boost to the Philippine economy during the Asian crisis. In fact, from €364 million in 1997, it increased to €1.4 billion in 1999. The year 2000 proved to be an exceptionally fruitful year, with EU investments reaching €5 billion.

Since the mid-1990s, the EU has also surpassed the US as the largest supplier of bank credit to the Philippines. In fact, as of mid-2001, EU banks account for almost half of total outstanding bank credit to the Philippines. Japanese and US banks by comparison account for only 19% and 12%, respectively, of such credit.

The use of the euro has also gained in acceptance in the Philippines. In fact, the Philippine Government floated €350 million of euro-denominated bonds from the early part of 1999, allowing it to further diversity its foreign debt. The central bank has also adjusted the composition of its international reserves, although only 1% was denominated in euro as of end-1999, versus 82% in US dollars. Interestingly, although precise information is limited, there is evidence that the Philippines has begun to use the euro in international trade, both in import and export transactions.

The EU-Philippine relationship has deepened over time. The economic links have grown stronger in spite of the Asian financial crisis and the global economic downturn in the face of threats to global security. However, the potential to increase mutually beneficial partnerships between European and Philippine businesses is still great.

The increased political dialogue between Europe and Asia will in the future be an important tool to address many of the global challenges our societies are facing: threats to international security, environmental degradation, illegal trafficking of arms and human beings, among others.

As testimony to this strengthening of relations, March 2002, the European Commission approved its EC-Philippines Strategy Paper 2007-2013 and the Multi-Annual Indicative Programme. This sets out a five-year strategy for the Commission’s financial assistance to the Philippines. At the same time, it announced that over the next years, 2002-2004, an indicative sum of 51 million has been earmarked for the Philippines to finance this strategy.

The EC-Philippines Strategy Paper identifies the broad priorities for future co-operation between the Philippines and the European Commission. Mainly. These are: (1) assistance to the poorest sectors of society, and (2) assistance to trade and investment Other areas of co-operation include human rights, stability and security. Finally, education, culture and science/technology will be emphasized as tools to enhance partnership and facilitate the visibility of the EU in the Philippines and vice-versa.

In the Multi-Annual Indicative Programme for 2007-2010, potential areas of intervention were further developed, taking into account lessons learned from past EC-Philippine co-operation, government priorities, resources available and the need to reinforce co-ordination with other donors. Activities are foreseen in the fields of rural development, health, business enhancement, education, and good governance.

A special effort is being made to bring together the traditional development and economic co-operation approaches, promoting a more harmonious process that takes into account developmental constraints, but also the economic opportunities offered by international trade.

The Manila Delegation is a fully-fledged diplomatic mission and has the task to officially represent the European commission in the country. It plays an essential part in its political, economic and commercial relations with the country and provides information on the policies and institutions of the EU.

The Delegation also plays a crucial role in supervising the implementation of EU co-operation programmes in the Philippines – a role that is steadily increasing in line with the deconcentration of co-operation activities from Headquarters to Delegations foreseen in the reform of the management of the EC’s external assistance. The Delegations, although hierarchically a part of the EC structure, in practice serve EU interests as a whole in 123 countries throughout the world, and at five centers of international organizations (OECD, OSCE, UN,WTO).

The Delegation deals closely with the diplomatic missions of the EU Member States, serving as a venue for meetings and press conferences that involve the EU as a whole, acting as the contact point for joint cultural initiatives, and offering the Member States resources for specific information such as EU market access to the Philippines. It particularly works closely with the Member State holding the EU Presidency.

The Head of the Delegation is formally accredited as the official representative of the European Commission to the Government of the Philippines and is referred to as His Excellency, Ambassador and Head of the Delegation of the European commission to the Philippines.

The Delegation was officially opened in May 1991 following the influx of official development assistance to the country after democracy was restored under the Aquino administration in 1986. Since then, the Delegation has essentially been the information nerve center in the Philippines, keeping the Commission’s headquarters in Brussels aware of local developments and serving as the natural point of contact between the EU and Philippine officials. The Delegation has five sections: Contracts and Finance, Operations, Economic/Political/Trade, Public Affairs and Administration.

Although it has the status of a diplomatic mission, it does not deal with tasks of a consular nature (like issuing visas or providing tourist information, which are dealt with by the EU Member State Embassies) and instead functions as an official channel of bilateral relations, be it political, development, economic or cultural.