The European Union and the Philippines reached a substantial agreement on a comprehensive free trade agreement Tuesday, marking a significant step toward expanded market access and supply chain resilience.

European Commission President Ursula von der Leyen announced the breakthrough after a call with Philippine President Ferdinand Marcos Jr. during the United Nations General Assembly in New York. EU Trade Commissioner Maroš Šefčovič and Philippine Trade and Industry Minister Maria Cristina Aldeguer-Roque confirmed the sides had reached "substantial agreement" that places the deal on a clear path to formal conclusion in the coming months.

The pact would eliminate more than 94 percent of customs duties and cover over 97 percent of bilateral trade. It grants EU businesses access to a market of roughly 115 million consumers while opening Philippine government procurement and strengthening rules on digital trade, intellectual property, and sustainable development.

Key EU exports expected to benefit include machinery, pharmaceuticals, medical devices, and agricultural products such as meat, pork, poultry, and spirits. Philippine exports, led by semiconductors and integrated circuits, would gain preferential entry to the EU's single market of more than 450 million people.

The agreement positions the Philippines as only the third ASEAN nation, after Singapore and Vietnam, to conclude a bilateral free trade deal with the EU. Bilateral goods trade reached €17.6 billion in 2025, with services trade adding further volume.

Negotiators must still complete technical and legal work before a possible signing in 2027. The deal would replace the EU's Generalized Scheme of Preferences Plus arrangement and deepen economic ties in the Indo-Pacific amid efforts to diversify away from concentrated dependencies.

Von der Leyen said she looks forward to returning to Manila to sign the agreement once remaining steps are completed. Both sides highlighted the importance of open and predictable trade in the current geopolitical environment.