Manila Makes a Shift to the Desert: Inside the PH-UAE Free Trade Agreement
Economists are calling the CEPA a strategic lifeline, providing Manila with a high-income safety net as trade relations with Beijing and Washington grow increasingly unpredictable.
by JV Ordoñez
Published on Jan 14, 2026
It’s official: The Philippines and the oil-titan United Arab Emirates (UAE) have inked a free trade agreement expected to ramp up Manila's exports to the Gulf state by just over 9 percent—a move that could be instrumental in diversifying the Southeast Asian nation's revenue streams.
Signed in the heart of Abu Dhabi on Tuesday, January 13, the Comprehensive Economic Partnership Agreement (CEPA) marks the Philippines' first free trade pact with a Middle Eastern nation, a milestone in Manila's mission to broaden its global trade horizons.
We spoke with economists about the specific rewards the Philippines is set to reap from the deal, which spans digital trade, sustainable development, intellectual property, and technical cooperation. The consensus? While the agreement is broad, key Philippine exports like bananas, pineapples, canned tuna, and electronics remain the stars of the show.
So, to bring you up to speed, the CEPA was signed by Philippine President Ferdinand "Bongbong" Marcos Jr. and UAE President Sheikh Mohamed bin Zayed Al Nahyan on the sidelines of the Abu Dhabi Sustainability Week 2026 Summit, based on a statement released by the Presidential Communications Office.
"It is a meaningful diversification move opening a high-income market... Its ‘game changer’ effect will hinge on how fast firms actually use the preferences," Philippine Institute of Development Studies senior research fellow John Paolo Rivera told Esquire Philippines in a Viber message.
Remember, there are about 900,000 Filipinos in the Gulf country, so this deal is a bridge ready to be crossed to bolster trade ties and to harness key sectors between both nations.
The Philippine President's office highlighted in its statement that the CEPA aims to cut tariffs, boost investment flows, and ease the participation of Filipino micro, small, and medium enterprises across sectors. These include information technology, business process management, healthcare, education, tourism, and construction.
PIDS' Rivera elaborated that the Philippine government ought to prioritize premium Filipino food and lifestyle exports (processed foods, health/wellness products), as well as healthcare, education, and high-end tourism tie-ups.
He also cited the need to leverage the UAE's need for more cybersecurity, financial technology support, artificial intelligence, and other services from Manila's budding IT-BPM industry.
A little background on existing ties between the Philippines and the UAE shows bilateral trade accumulating to about $1.83 billion (P109.04 billion). Abu Dhabi is Manila's 18th largest trading partner and receives nearly 40 percent of Philippine exports to the Middle East. Both countries established diplomatic relations way back in 1974.
"Best bet is premium services and tech-enabled offerings, because margins are higher and PH can compete on talent (IT-BPM) and experience-based exports (health, education, tourism) while also building branded, higher-value consumer products," Rivera noted.
"The CEPA’s broader coverage (trade, services, investment/MSME participation) supports this strategy."
Manila's new pact is yet another addition to its growing network of trade deals with countries like Japan, South Korea, the European Free Trade Association, the Association of Southeast Asian Nations, and the Regional Comprehensive Economic Partnership. This is all against a backdrop of uncertainty surrounding dynamic trade policies, US trade tariff schemes, constant wars, and Manila's quest to diversify trade away from China amid heightened tensions over the South China Sea.
Calixto Chikiamco, president of the Foundation for Economic Freedom, also chimed in by referencing the recently signed law that extends the previous 75-year limit for foreign investors to lease land in the country to 99 years.
"IT-BPM, healthcare, education, and tourism. With the 99-year lease law, UAE foreign citizens can invest in agriculture, tourism, industry, and agro-forestry, especially in the Bangsamoro Autonomous Region in Muslim Mindanao areas," he said in a Viber message.
The Philippine trade department earlier hailed the new law for pushing the needle in the country's quest to become a top global investment destination, with Trade Secretary Cristina Roque claiming it would provide long-term security and that the Southeast Asian nation is open for business.
Manila's free trade pact with Abu Dhabi is a real door opener
With a massive $1.83 billion market set to expand for both countries, the Middle East is a crucial gateway for Manila’s economic growth aspirations.
Jonathan Ravelas, Senior Adviser at Reyes Tacandong & Co., says the undeniable upside to the deal is its role as a growth driver that would offset slowing trade elsewhere.
"It immediately lowers barriers, widens market access, and gives our key exports — from bananas and pineapples to electronics and tuna — a clearer path into a $1.83‐billion trade partner like the UAE," he said in a Viber message.
The perennial concern for many investors is the dreaded red tape or stubborn tariffs for key products such as fruits, fish, and electronics. The CEPA aims to make it easier for these Middle Eastern investors to set up shop and for Manila to consequently sell more of its products to the regional powerhouse.
The door-opener here is the quantifiable return on investment of a projected 9.13 percent growth in exports—a boost the country desperately needs amid the volatility of traditional markets such as China or the U.S.
"Just as important, it creates a more stable playing field for Filipino firms and professionals in sectors like IT‐BPM, tourism, healthcare, construction, and education — crucial given the UAE hosts around 900,000 Filipinos," according to Ravelas, who served as the chief market strategist at BDO Unibank for 20 years.
"In short, this isn’t just a trade agreement; it’s a platform for new opportunities, deeper investment ties, and a stronger Philippine footprint in a fast‐growing region."
The World Bank projects that the Philippines is likely to be the third-fastest-growing economy in the East Asia and Pacific region, with a growth rate of 5.3 percent this year and 5.4 percent in 2027. This puts Manila just behind Vietnam (6.3 percent) and Mongolia (5.6 percent).
"In the Philippines, planned structural reforms are likely to boost investment and productivity, but concerns around governance remain,” the World Bank said in its Global Economic Prospects report published on Wednesday, January 14, 2026.
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