Philippine President Rodrigo Duterte. (Photo: Gulf News)

The Visiting Forces Agreement (VFA) provides rules for the rotation of thousands of US troops in and out of the Philippines for war drills and exercises. It has assumed additional importance as the United States and its allies contend with an increasingly assertive China.

President Duterte made the decision after meeting US Defense Secretary Lloyd Austin in Manila on Thursday. The decision won't change much on the ground as the pact had not been terminated but it provides stability for both countries.

"This provides certainty for us going forward, we can do long-range planning," Austin said during a news conference with his Philippine counterpart.

President Duterte vowed to terminate the pact after the US denied a visa to a Philippine senator. But he had repeatedly pushed back the expiration date, the last time last month, maintaining it until the end of the year.