The Philippines expects 97 percent of its exports to South Korea will enjoy either zero to reduced tariff under the planned free trade agreement (FTA).
This developed as the Department of Trade and Industry (DTI) and the Department of Environment and Natural Resources (DENR) on Monday signed with South Korea’s Ministry of Trade, Industry & Energy a memorandum of understanding (MOU) for strategic cooperation on critical raw materials supply chain, the first of its kind.
The partnership, which pre-dates the Economic and Technical Cooperation chapter of the FTA, aims to establish stable supply chains for critical raw materials essential for electric vehicles, semiconductors, and renewable energy.
Allan Gepty, undersecretary of the Department of Trade and Industry (DTI) in a television interview yesterday said the banana industry will benefit the most in the FTA as the Philippines was able to secure concessions from South Korea.
“For several years, we had the biggest market share in South Korea. In
2013, our market share reached 98 percent but this has gone down to 65 percent in 2023 due to competition from Ecuador and Vietnam, among others,” Gepty said.
He said Vietnam has been increasing its market of banana exports since the products enter South Korea duty-free. Philippine bananas are slapped a 30- percent tariff.
“With the bilateral FTA, tariff on banana will eventually go down to zero,” Gepty said.
He said other agriculture and industrial goods will enjoy enhanced access, complementing those concessions which prevail under the Asean-Korea FTA (AKFTA) and the Regional Comprehensive Economic Partnership (RCEP).
Gepty added the FTA includes a comprehensive chapter on economic and technical cooperation including partnership on research and development in electric
vehicles mineral processing, mineral processing, automotive and creative industry.
Gains on both sides
In her presentation at the Philippines-South Korea Business forum in Manila on Monday, Export Marketing Bureau director Bianca Sykimte said under the bilateral FTA, duties on some $210 million worth of Philippine agriculture exports to South Korea will be eliminated in three to five years from the date the FTA comes into force. Tariff rates on these products are now at 3 to 24 percent.
For South Korea, $200 million exports to the Philippines involving machinery and equipment that include automotive and automotive parts, will enjoy duty-free access under the FTA. Duties are now pegged at 3 to 30 percent.
Raw materials supply chain MOU
Meanwhile, the DTI and the Department of Environment and Natural Resources (DENR) on Monday signed with South Korea’s Ministry of Trade, Industry & Energy a memorandum of understanding (MOU) for strategic cooperation on critical raw materials supply chain, an agreement that would cover an integrated approach in mineral development.
The parties agreed to collaborate and generate investments and undertake research and development and capacity building exercises so that the Philippines can adopt new technologies on how to rehabilitate mines and adopt sustainable mining practices
The MOU was signed by DTI Secretary Cristina Roque, DENR Secretary Maria Antonia Loyzaga and Korea’s Trade, Industry and Energy Minister Dukgeun Ahn on Monday coinciding with the visit of South Korean President Yoon Suk Yeol.
“The participants will collaborate to discuss and form a strategic partnership for the establishment of critical raw material supply chains, and cooperate to ensure a stable supply of critical raw materials within their partnership enhance collaboration with the development production, processing and supply of critical raw materials, strengthen research and development and scientific cooperation in the areas of exploration, mining, processing and recycling of critical materials,” the MOU said.
The DTI anticipates investments from South Korean companies whose edge is on battery processing.
The MOU serves as a platform for promoting critical minerals sector as it supports the electric vehicle ecosystem.
“This MOU will not only ensure a stable supply of critical raw materials but also facilitate the transfer of technology and expertise, contributing to the Philippines’ journey towards economic complexity,” Roque said. “We are confident that this partnership will drive sustainable economic growth, create jobs, and enhance our competitiveness in the global market.”
1st local agri machinery complex
Meanwhile, the Department of Agriculture (DA) signed an MOU yesterday with the Korea Agricultural Machinery Industry Cooperative (KAMICO) and the local government of Cabanatuan City to establish the Korea Agricultural Machinery Industry Complex (KAMIC).
KAMIC is set to be the country’s first local agricultural machinery manufacturing cluster that is expected to enhance agricultural mechanization across the country and help improve productivity and food security, the DA said in a statement.
The facility is also seen to stimulate local manufacturing and distribution, enhance crop quality, increase farmer incomes and produce tailored agricultural machinery.
The MOU was signed by DA Secretary Francisco Tiu Laurel Jr., KAMICO Chairman Shin Gil Kim and Cabanatuan City Mayor Myca Elizabeth Vergara. Irma Isip and Jed Macapagal
