The Philippines and Korea on Monday committed to improve on their offers under a planned free trade agreement (FTA) they intend to seal by the first half of 2020.
In a joint statement on the Early Achievement Package signed by Trade Secretary Ramon Lopez and Korean Trade Minister Yoo Myung-hee Busan on the sidelines of the Philippines-Korea Summit on Monday, both sides agreed to among other things include additional tariff lines and/or other mechanisms that will further facilitate trade and investments.
The ministers also agreed to accelerate the negotiations by concluding the remaining six chapters of the FTA: trade in goods, trade in services, investment, rules of origin, economic and technical cooperation, and legal and institutional issues. The negotiators have so far concluded one chapter, on competition.
The Early Achievement package reported the progress of the trade negotiations, including priority products such as banana, garments, and automotive parts for the Philippines and pharmaceuticals, petrochemicals, and auto parts for South Korea.
Lopez said the goal is to improve market access for agricultural products such as bananas and other tropical fruits, as well as industrial products and other services.
Bananas are a particular interest to the Philippines to level the playing field with its competitors. With a tariff rate of 30 percent for banana exports to South Korea, the Philippines is at a disadvantage to Vietnam, which will enjoy zero tariffs by 2024. Peru already has zero tariffs for banana exports, while other Central American countries will enjoy the same perk by 2021.
The FTA was supposed to have been signed in time for the Summit both negotiations were stalled due to differences in market opening mechanisms.
South Korea is the Philippines’ fourth major trading partner, 8th export market and 2nd import supplier in 2018, with total trade amounting to $13.92 billion. Top exports to South Korea include bananas and electrical and semiconductor products while top imports include petroleum and integrated circuits.
Through the FTA, the Philippines hopes to increase exports of food and agriculture-based products, auto parts, organic and natural products, and design-driven products like garments and furnishings, among others. – Irma Isip