THE Bureau of Customs (BOC) has issued a customs memorandum circular (CMC) modifying the import duties on certain imported articles covered by the Philippines-Korea free trade agreement (FTA).
The Philippine Exporters Confederation Inc. said in a statement over the weekend CMC No. 208-2024, dated Dec. 30, 2024, is in compliance with a provision in Executive Order (EO) No. 80, which implements the schedule of tariff commitments under the FTA.
“There is a need to modify the rates of import duty on certain imported articles to faithfully comply with the Philippine Schedule of Tariff Commitments under the Philippines-Korea FTA,” the EO said.
Estimates on revenue impact were not available but the Board of Investments earlier said the FTA is projected to help bring foreign direct investments worth ₱150 billion to ₱200 billion to the Philippines during the first three years of its effectivity.
Trade Secretary Cristina Roque said in a statement on January 3 the FTA, which took effect Dec. 31, 2024,“marks a historic milestone in the trade and economic relationship between the two countries. “
“This agreement is expected to create new opportunities for businesses and consumers, while fostering strong and resilient supply chains,” Roque said.
EO 80, signed last December 23, states all articles listed in the Philippine Schedule of Tariff Commitments under the Philippines-Korea FTA shall be subject to the rates of import duties at the time of importation.
“All originating goods from Republic of Korea listed in the aforementioned Philippine Schedule of Tariff Commitments under Section 1 hereof, that are entered into or withdrawn from warehouses or free zones in the Philippines for consumption or introduction to the customs territory, shall be levied the rates of duty as prescribed therein, subject to the submission of a Proof of Origin, in compliance with all applicable requirements under the Philippines-Korea FTA,” the EO added.
The Tariff Commission may be requested to issue advance rulings on the tariff classification of goods to confirm the applicable rates of duty of particular goods subject to EO 80.
The Philippines lifted tariffs on some 96.5 percent of goods from South Korea, including automobiles, electric and hybrid vehicles—presenting an opportunity for South Korea’s robust automotive industry to expand its presence in the Philippines.
The DTI said the agreement also allows the Philippines to export fresh bananas to South Korea at zero duty by January 2028. Tariff on banana has been significantly reduced from 30 precent to 24 percent upon entry and 18 percent by Jan. 1, 2025.
The FTA safeguards key Philippine industries where certain sensitive products remain protected with no tariff cuts for South Korean exporters. These products include some plastics and petrochemical products; beverages including liqueur, batteries and battery components, sugar and confectionery goods; and agricultural products such as fish, dairy, fresh fruit and vegetables, processed meat and meat products, sauces and condiments, and pastry goods.
South Korea will benefit from the FTA through lower tariffs on automotive vehicles, parts and components, especially for commercial passenger and transport vehicles.
In 2023, South Korea ranked fifth among the Philippines’ 230 trade partners, fifth out of 205 export markets, and fourth out of 221 import suppliers.
That year, bilateral trade between the two countries amounted to $12 billion. In the same year, South Korea also ranked seventh in terms of net foreign direct investment, with $21.3 million, and 12th in terms of approved investments with $27.3 million.
