The Philippines and Canada officially launched exploratory free trade agreement (FTA) talks in early 2025, signaling their intent to deepen economic cooperation and modernize trade rules. With bilateral trade reaching US$3.4 billion in 2023 and strong collaboration in technology, agriculture, education, clean energy, and infrastructure, the agreement is expected to deliver reduced tariffs, stronger investor protections, and expanded market access.
For Canada, the FTA aligns with its Indo-Pacific Strategy, supporting efforts to diversify trade beyond the U.S. and China. For the Philippines, it represents an opportunity to attract Canadian capital and innovation while positioning itself as a strategic gateway into ASEAN.
Strengthening trade and investment ties
In 2023, bilateral merchandise trade between the Philippines and Canada totaled US$3.4 billion. Philippine exports to Canada reached US$2.2 billion, led by insulated wire (US$227 million), gold (US$185 million), and integrated circuits (US$138 million). Canadian exports to the Philippines totaled US$1.2 billion, mainly comprising cereals, ores, meat, and machinery. By Q1 2024, Canadian exports to the Philippines had already surpassed US$1 billion.
Canadian foreign direct investment (FDI) in the Philippines stood at US$983 million in 2021, while Canada’s overall FDI stock in ASEAN totaled US$25.9 billion in 2023. The Philippines itself recorded a total FDI stock of US$8.6 billion as of November 2024, a 4.4 percent year-on-year increase. The Philippine Economic Zone Authority (PEZA) hosts 12 Canadian companies employing more than 16,700 Filipinos.
Key investment opportunities under the FTA
Technology and the digital economy
Valued at approximately PHP 2.25 trillion (US$40 billion) in 2024, the Philippines’ digital economy contributes 8.5 percent to GDP. With internet penetration at 73.6 percent and over 87 million active users, demand is rising for cloud infrastructure, secure platforms, and cross-border digital solutions.
Canada’s global strengths in cybersecurity, cloud services, and fintech could be better leveraged under an FTA that facilitates interoperability, aligns data governance standards, and clarifies restrictions under the Philippines’ Data Privacy Act and Cybercrime Prevention Act. Enhanced cooperation may also support the development of AI regulations and digital compliance protocols, positioning Canadian firms as early participants in the Philippines’ expanding knowledge economy.
Agriculture and agri-tech
Post-harvest losses in the Philippines range from 10 to 50 percent, with onion spoilage alone reaching up to 45 percent during inter-island distribution. Gaps in cold storage, transport logistics, and supply chain management continue to weigh on productivity and food security.
Addressing post-harvest inefficiencies is not only critical for reducing waste and stabilizing food prices, but also offers a high-return entry point for technology-driven investment, especially where Canada has proven global expertise.
Solutions from Canada’s agri-tech ecosystem, ranging from precision farming and cold-chain technology to climate-resilient inputs, can help address these inefficiencies. The Philippines’ 2023–2028 Development Plan offers incentives for modernization, making the sector highly receptive to innovation-led foreign partnerships.
Education and training services
In 2023, over 48,870 Filipinos were enrolled in Canadian educational institutions — a 51 percent jump from the year prior. The Philippines is now Canada’s third-largest source of international students, reflecting strong demand for globally recognized education pathways.
With strong demand for global education pathways and rising skills gaps in sectors like tech and healthcare, the Philippines presents a natural opportunity for Canadian universities, certification providers, and edtech platforms. An FTA could ease market entry for cross-border learning, professional licensing, and digital training solutions.
Renewable energy and environmental solutions
The Philippines added 7,200 MW in renewable capacity in 2023, increasing the clean energy share of its power mix to 26 percent. With government targets of 35 percent by 2030 and 50 percent by 2040, the energy transition presents sizable investment opportunities. Another 5,600 MW in capacity is expected by 2025, largely in solar and hydro.
Canada’s cleantech capabilities, spanning energy storage, ESG consulting, and off-grid systems, align well with the Philippines’ renewable energy targets. An FTA would create a clearer platform for foreign capital and technology transfer in support of the country’s energy transition goals.
Healthcare and life sciences
The Philippines’ healthcare expenditure reached PHP 1.44 trillion (approx. US$26 billion) in 2023, equivalent to 5.9 percent of GDP. Per capita spending rose to US$194, reflecting a growing emphasis on access, quality, and resilience in public health services. However, the country still faces structural gaps in health infrastructure, workforce availability, and medical supply chains, particularly outside urban centers.
The government’s push for universal healthcare (UHC), as mandated under the UHC Act of 2019, is accelerating demand for digital health platforms, remote diagnostics, electronic medical records, and interoperable insurance systems. These needs align closely with Canada’s global strengths in medtech, digital health, and biotech innovation.
Canadian firms can play a catalytic role by supplying technologies for mobile diagnostics, public health data systems, and chronic disease management. Opportunities also exist in medical equipment manufacturing, laboratory services, and clinical research collaborations, especially with the growing number of Philippine hospitals seeking international accreditation. An FTA could streamline product registration and regulatory compliance, opening the door to scalable, long-term partnerships.
Canada is also a key destination for Filipino healthcare professionals, particularly nurses and caregivers. An FTA could facilitate cooperation in health workforce development, enabling partnerships in training, credential recognition, and professional mobility, aligning labor needs with education and investment opportunities.
Infrastructure and logistics
Transport infrastructure in the Philippines ranks 102nd globally, while utility infrastructure sits at 96th, according to the World Economic Forum. The country’s Logistics Performance Index score remains at 2.7 out of 5, underscoring persistent challenges in capacity and reliability.
Canada’s infrastructure and engineering expertise are suited to support the Philippines’ Build Better More agenda, which includes over 190 major projects. An FTA could unlock clearer entry into PPPs and public works contracts through streamlined procurement frameworks.
What the FTA may include
While formal negotiations remain in the exploratory phase, early signals suggest the agreement will span a broad range of modern trade provisions.
Among the core features likely to be included are tariff reductions on priority goods, particularly in agribusiness and manufactured components, along with enhanced investor protections that clarify ownership structures, profit repatriation, and dispute resolution mechanisms.
Additionally, the agreement is expected to include progressive commitments in services liberalization—especially in sectors such as education, energy, and digital trade. Updated frameworks for intellectual property rights, cross-border e-commerce, and regulatory cooperation in data governance could help create a more predictable business environment.
Sustainability and ESG-linked standards may also form part of the framework, enabling both countries to align trade facilitation with broader environmental and development goals. These elements would not only ensure long-term commercial certainty but also signal a shared commitment to transparent, rules-based trade.
Risks and market considerations
Despite the strong potential of the Philippines–Canada FTA, investors must navigate several structural and policy-related risks when entering or expanding in the Philippine market.
Regulatory uncertainty continues to be a central concern. Inconsistent enforcement across government agencies, evolving licensing procedures, and sector-specific ownership restrictions can complicate market access. Delays in implementation or sudden policy shifts, especially in sectors like infrastructure, healthcare, and digital services, may pose operational risks for foreign firms.
Infrastructure remains uneven, particularly in transport, digital connectivity, and inter-island logistics. The country’s global rankings reflect these gaps, and while improvements are underway, project timelines and local coordination can impact delivery and scalability.
Macroeconomic risks — including exchange rate volatility and ambiguity around tax incentive eligibility or VAT refund mechanisms — can also affect financial planning and repatriation strategies.
To manage these challenges, prospective investors should adopt a long-term perspective, conduct in-depth due diligence, and work closely with experienced local partners and legal advisors to ensure compliance and risk mitigation.
Strategic value for ASEAN integration
The Philippines–Canada FTA is more than a bilateral trade initiative; it signals a recalibrated approach to Canada’s economic diplomacy in Southeast Asia. As part of its Indo-Pacific Strategy, Canada has committed over C$2.3 billion in funding toward regional partnerships, trade diversification, and infrastructure finance across the Indo-Pacific. A comprehensive FTA with the Philippines would mark its first standalone agreement with an ASEAN country, laying the groundwork for deeper institutional engagement with the bloc.
For the Philippines, the agreement reinforces its ambition to serve as a launchpad for North American businesses seeking access to ASEAN’s 680-million-strong consumer base. With its English-speaking workforce, improving infrastructure, and active participation in regional trade forums, the Philippines offers Canadian companies a scalable entry point into ASEAN supply chains, particularly in sectors such as electronics, shared services, and agrifood exports.
This bilateral FTA may also strengthen Canada’s relevance in overlapping trade frameworks such as the CPTPP and RCEP.
If successfully negotiated and implemented, it would serve as a model for how middle-power economies build resilient, forward-looking partnerships across the Indo-Pacific.
Source: ASEAN Briefing
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<p>Time: 2024 By: Ministry of Industry and Trade</p>
