The Philippines is no longer confident it would finish a free trade deal with South Korea by the deadline in November, as challenges remain unresolved on both sides.
Trade and Industry Secretary Ramon Lopez said they would still try to get the free trade agreement (FTA) signed next month. He said they would continue pursuing the talks even past the deadline.
Lopez did not dive into the specifics of the deadlock, but he said this involved South Korea refusing to bring down the tariff on Philippine bananas within a five-year timeframe.
Philippine bananas currently have to pay a 30-percent tariff to enter South Korea. While the Philippines is South Korea’s largest supplier of bananas, its 85-percent market share is under threat as Central American countries, which enjoy zero tariff, begin to increase their share.
“We’re still hoping to get this [signed] by November. But what we’re saying is it’s not easy,” Lopez told reporters last week.
This marks a sharp departure from the confidence both sides imbued when they first announced the plan for an FTA back in April.
The deal was supposed to be signed this November, marking the 70th anniversary of the two countries’ diplomatic relations.
“At first, we were kind of confident when we announced [the start of the negotiations]. We thought it would be easy because it only involves a few products,” Lopez said.
Lopez said there was a mismatch between what one was requesting and what the other side was comfortable giving.
The Philippines already has had relatively improved market access to South Korea through the Asean-Korean free trade area, which took effect about a decade ago.
Data from the Philippine Statistics Authority show, however, that the Philippines’ exports to South Korea dropped heavily last year, while the latter’s imports to the Philippines increased.
The Philippines exported $2.54 billion worth of goods to South Korea last year, a 41.3-percent decline from the $4.33 billion in 2017. South Korea was the Philippines’ ninth top export market in 2018.
DTI said the Philippines’ top exports to Korea included bananas, pineapples and copper.
On the other hand, the Philippines imported $11.16 billion worth of products last year, a 31.9-percent increase from the $8.47 billion recorded in 2017. South Korea was the Philippines’ third top import market. DTI said the Philippines imports mainly industrial products from South Korea.