Business World Online - 24 September 2024
Senate ratifies PHL-South Korea FTA
By John Victor D. Ordoñez
The Senate on Monday ratified the free trade agreement (FTA) between the Philippines and South Korea, a move that will pave the way for increased exports of Philippine bananas and processed pineapples to Seoul.
Twenty-one senators voted in favor of the ratification of the free trade pact, which will remove Philippine tariffs on 96.5% of goods from South Korea, while Seoul will lift tariffs on around 94.8% of Philippine products.
The Constitution requires concurrence by two-thirds of the Senate’s members for ratification of international agreements and treaties.
The Philippines and South Korea signed the free trade pact in September last year, which will boost trade between the two countries.
However, the deal is still undergoing the ratification process at the Korean National Assembly.
Under the deal, the Philippines secured the elimination of 1,531 tariff lines on agricultural goods, of which 1,417 would be removed after the FTA enters into force.
It will also remove 9,909 tariff lines of industrial goods, 9,747 of which would be removed after the deal enters into force.
“It presents an opportunity to expand the number of our commodities that can access the Korean market,” Philippine Chamber of Commerce and Industry President Enunina V. Mangio told BusinessWorld in a Viber message.
“To fully benefit from the FTA, we should improve our infrastructure and regulatory environment to attract investments from Korea.”
She also cited the need for the government to upgrade the technological capabilities of local industries to make them more competitive.
South Korean automakers are expected to benefit from the FTA, which will remove the 5% import duties on Korean-made automobiles. Tariffs on Korean electric and hybrid vehicles would also be eliminated within five years.
The Philippines is expected to attract as much as P200 billion worth of foreign direct investments for the electric vehicle industry and agricultural processing sector within three years, according to estimates from the Department of Trade and Industry.
The Philippines is also seen to increase banana and processed pineapple exports to Seoul. Tariffs on Philippines bananas, which currently have a 30% tariff, will be removed within five years. At the same time, the 36% tariff on processed pineapples from the Philippines will be removed in seven years.
“This is a good development for our banana and pineapple industries as they can get a bigger market in South Korea,” former Agriculture Undersecretary Fermin D. Adriano said in a Viber message.
Based on data from the United Nations Commodity Trade Statistics Database, South Korea was the Philippines’ third-biggest market for fresh banana last year with exports reaching $164.54 million, after China ($359.77 million) and Japan ($562.58 million).
