The Philippines-Australia Trade Agreement, signed on 16 June 1965, was superseded by a new Trade Agreement on 25 June 1975.

The two countries signed three more agreements: the 1989 MOU to improve the Philippine Export Promotion and Planning Project; the 1989 Agreement to promote and protect investments; and the 1997 MOU to enhance trade and investment.

In view of the increasing trade between the Philippines' southernmost island (Mindanao) and Australia's Northern Territory, the two countries signed during the 1995 Presidential State Visit an MOU between Mindanao and the Northern Territory on Economic and Cultural Cooperation.

The Philippines is currently working to increase its exports to Australia by, inter alia, obtaining market access for fresh fruits (i.e., bananas and pineapples) and processed foods and to increase Australian investments into the country.

A. Trade and Investment Statistics

Australian statistics showed that, for CY2003, total merchandise trade between the two countries amounted to A$1.767 billion (representing a -8.0% growth compared to 5.4% last year). The Philippines ranks 27th as Australia's merchandise trade partner.

Philippine exports rose by 4.7% to A$807,153 million due to a 242% increase in exports of crude petroleum. Australian exports continued to decrease, falling by 16.9% in 2003 to A$960,641 million.

The balance of trade that in recent years has been in favor of Australia tilted slightly in the direction of the Philippines, from a ratio of 1:1.5 in 2002 to 1:1.2 in 2003.

Top 10 Philippine exports for 2003 consisted of computer parts (A$192,417 million); crude petroleum (A$101,056 million); integrated circuits; radio-broadcast receivers; confidential items; telecommunications equipment; refined petroleum; chemicals and related products; computer parts; and electric power machinery. These items comprise 72% of the country's total exports to Australia.

Top 10 Australian exports consisted of milk and cream (A$147,036 million); ships, boats and floating structures (A$114,294); medicaments; live animals; copper; confidential items; aluminium; cereal preparations; photographic supplies; and bovine meat. These items comprise 64% of the country's total exports to the Philippines.

B. Official Development Assistance (ODA)

Statistical records obtained from the Australian Agency for International Development (AusAID) show that Australian development cooperation with the Philippines began with the allocation and expenditure of official development assistance (ODA) for the Philippines during the financial year 1975/1976.

Australian aid projects initially focused mainly on education and health. In 1985, both countries adopted the Development Country Program (DCP) approach that aimed to support democratic, economic and social reforms and development objectives through human resources development, natural resources management and institutional strengthening.

On 28 October 1994, both countries formalised bilateral development cooperation by signing the General Agreement on Development Cooperation (GADC). As an umbrella agreement, the GADC covers all development cooperation activities and provides general conditions for assistance. All individual project arrangements are negotiated under the GADC.

Currently, the Philippines is the fifth largest bilateral recipient of Australian development assistance, after Papua New Guinea, Solomon Islands, Indonesia and Vietnam. Australia is the second largest provider of ODA in the Philippines after Japan.

For FY2004/2005, total Australian aid allocated to the Philippines amount to A$62.2 million, 90% of which is provided bilaterally (Development Cooperation Program) and the rest coursed through APEC and the ASEAN-Australia Economic Cooperation Program or AAECP.