The Philippines-South Korea Free Trade Agreement will take effect on Dec. 31, 2024, giving duty-free entry on 11,164 tariff lines, valued at $3.18 billion or 87.4 percent of total Korea imports from the Philippines, Trade Undersecretary Allan Gepty said.
This shows that the Philippines is making significant strides in its negotiations on free trade agreements (FTAs) with South Korea, as well as the United Arab Emirates (UAE), the Department of Trade and Industry said.
One of the major beneficiaries of this free trade deal with Seoul is the banana industry, with the tariff rate on bananas going down to zero in five years.
“Upon effectivity, tariff rates on bananas will have a reduction of 6 percent; and another 6 percent reduction on Jan. 1, 2025,” said Gepty.
The trade agreement also sets in motion a mechanism for economic cooperation on key areas such as the creative industries, innovation, and manufacturing.
Meanwhile, DTI Secretary Cristina Roque said negotiations on the comprehensive economic partnership agreement (CEPA) with the UAE will be finished early next year, instead of end 2024.
Roque said the Philippines and UAE are in the final stages of negotiations on the economic partnership deal, with some of the market access issues on products to be covered being ironed out.
“We just started negotiations four months ago. Negotiations don’t happen overnight, it takes years but we want to move quickly. We have been meeting back and forth,” Roque said.
Roque said the economic partnership deal will have to go through final refinements, including the translation of the documents into English, and the approval by the executive branches of both parties. The agreement will also have to be ratified by the Senate.
Roque said investors from the UAE see the Philippines as a big market due to its huge population.
She said the UAE also welcomes the export of more products from the Philippines for overseas Filipino workers in the Emirates.
On the other hand, Roque said the free trade deal with South Korea will benefit the Philippine agriculture sector, particularly bananas.
South Korea imposes a 30 percent levy on banana imports from the Philippines, according to the DTI.
Under the agreement, tariffs on bananas will be reduced proportionately each year until zero is reached by the fifth year.
Signed on Sept. 7, 2023 during the 43rd Asean Summit in Jakarta, Indonesia, the PH-Korea agreement will help ease trade and investment flows, remove barriers to market access, and create new business and investment opportunities.
Gepty said the market share of fresh bananas in South Korea dropped to 65 percent in the 10 years to 2023, from a high of 98 percent in 2013.
Increasing market competition and the free trade deals signed by South Korea with other banana exporting countries are a disadvantage for the Philippines, Gepty noted.
These countries include Vietnam, Ecuador, Colombia, and Peru.
