"(The Philippines) was able to secure tariff elimination for a total of 1,531 lines, of which 1,417 lines are for tariff elimination upon EIF of the Agreement - for agricultural goods. While a total of 9,909 lines, of which 9,747 lines are for tariff elimination upon EIF of the agreement, are for industrial goods," says Trade Undersecretary Ceferino S. Rodolfo.
In terms of trade value, notable lines with preferential market access include fresh seafood under 24 chapters in the agreement. These include products such as glass, eels, octopus, crustaceans, fruits and nuts, fresh and processed food and beverages, sugar and pastry products, waste products, tobacco and tobacco products.
PH secures zero tariffs for 11,164 goods in SKorea FTA
At a glance
The Philippines was able to secure zero tariffs for 11,164 agricultural and industrial products upon entry into force (EIF) of its bilateral free trade agreement (FTA) with South Korea, the Department of Trade and Industry (DTI) reported.
DTI Undersecretary Ceferino S. Rodolfo said the day after the signing of the Philippines-South Korea FTA on Thursday, Sept. 7, that these are concessions that the Philippines secured from South Korea.
DTI Secretary Alfredo E. Pascual and Trade Minister Ahn Duk Geun signed the agreement in Jakarta. It was witnessed by President Ferdinand R. Marcos Jr. and South Korean President Yoon Suk Yeol at the sidelines of the 43rd ASEAN Summit in Indonesia.
Rodolfo said that if the agreement would be determined by the Department of Foreign Affairs as an executive agreement, it is expected to take effect in January 2024.
"It is realistic to assume that by January of 2024, it will enter into force (EIF), assuming that it is an executive agreement,” he said. If the DFA decides it to be a treaty, the FTA deal will go through the usual ratification by the Senate.
Of total tariff concessions, Rodolfo said that 1,417 lines will come from the agricultural sector and 9,747 from the industrial goods.
"(The Philippines) was able to secure tariff elimination for a total of 1,531 lines, of which 1,417 lines are for tariff elimination upon EIF of the Agreement - for agricultural goods. While a total of 9,909 lines, of which 9,747 lines are for tariff elimination upon EIF of the agreement, are for industrial goods," Rodolfo said.
In terms of trade value, notable lines with preferential market access include fresh seafood under 24 chapters in the agreement. These include products such as glass, eels, octopus, crustaceans, fruits and nuts, fresh and processed food and beverages, sugar and pastry products, waste products, tobacco and tobacco products.
Rodolfo also reported that the average Philippine exports of these products to South Korea are more than $3 million.
The Philippines was also able to secure tariff elimination in five years for bananas, eliminated tariffs for pineapples in seven years and elimination for the remaining tariff lines upon entry into force of the agreement.
“If it will be enforced in 2024, then the tariff for banana exports to Korea will be zero by 2029” he said.
For industrial goods, Rodolfo reported that of the 9,909 lines for tariff elimination, 1,747 lines are for elimination upon EIF of the agreement.
Under the existing ASEAN-South Korea FTA, a total of 257 tariff lines with rates ranging from five to ten percent have been granted tariff removal with the Philippines-South Korea FTA.
These include petrochemicals, personal care goods such as shampoo and soap under, hair preparations, garments, article of apparel, various automotive and parts, and accessories.
Rodolfo also said that one of the major objectives of the FTA is to "correct the tariff disadvantage of major Philippine exports to Korea.”
He explained that the existing ASEAN-South Korea FTA serves as a baseline for the creation of the Philippine-South Korea FTA, wherein “there are some important products of export interest to the Philippines that were not covered in the ASEAN-Korean FTA, referring to bananas and tropical fruits. Most importantly the supply of bananas, which is the dominant product of export to Korea.”
DTI Assistant Secretary Allan B. Gepty also added that “the major concern of banana producers in the Philippines is that Vietnam has been creeping in the market share of bananas in South Korea at about 2 to 3 percent, while Philippines’ market share to South Korea is at 78 to 80 percent."
As of 2023, the Philippines' current tariff on bananas is at 30 percent, while Vietnam has only six percent.
Rodolfo said that the second objective of the FTA is “to generate investments for the future-oriented industries,” pointing out to the electric vehicles negotiation that started in 2019.
Meanwhile, Pascual conveyed the importance of the Philippines-South Korea FTA as it is an important pillar in terms of the Philippines’ positioning as the regional hub for smart and sustainable and manufacturing services, considering in particular the type of investments.
The Philippines is also promoting under the technical cooperation chapter of the Philippines-South Korea FTA, future-oriented industries and sectors.
Rodolfo said that South Korean businesses already visited Central Luzon in the context of Philippines-South Korea FTA to make Central Luzon as the hub for smart and sustainable manufacturing.
Moreover, Rodolfo said that the South Korean government is also planning on “putting up data centers at areas with good renewable energy sources of power like in Ilocos Norte, where onshore windmills are built”.
Last year, DTI announced that P150 billion to P200 billion worth of investments would be generated in three years from the trade pact with Korea. Rodolfo said that the government is still committed to reaching this amount. (Ma. Joselie C. Garcia)