PH-Korea free trade a boost for agri exporters
MANILA -More than P170 million worth of locally produced agricultural goods each year—including bananas and processed pineapple—will be covered under the recently signed free trade agreement (FTA) between the Philippines and South Korea, with the removal of the import duties of these goods shipped to the East Asian country seen starting next year.
Trade Undersecretary Ceferino Rodolfo on Friday said the 30 percent import tariffs currently levied on Philippine banana exports to South Korea will be reduced annually in equal increments until it becomes zero-rated on the fifth year of effectivity of the FTA.
“By next year, the tariff reduction on our exports should begin so the tariff disadvantage that we have is lessened,” Rodolfo said, referencing that the Philippines wants to catch up with Vietnam’s banana exports to South Korea, which will have zero duty beginning 2024.
Vietnam had signed an FTA with South Korea in 2015, which will gradually remove the import tariffs for the tropical fruit.
Aside from banana, Philippine exports of processed pineapple—goods, which are currently subjected to a 36 percent import tariff—will get the same, gradual reduction in a span of seven years, Rodolfo said.
According to the Department of Trade and Industry (DTI), the Philippines was able to negotiate for the removal of tariffs of 1,531 agricultural export items.
The export value of these agricultural goods shipped from the Philippines to South Korea are estimated to be at more than $3 million each year (P169.8M if $1 = P56.6) based on statistics from the DTI.
Aside from banana and processed pineapple, the other agricultural goods included in the FTA include fresh seafood, fruits and nuts, fresh and processed food beverages, sugar and pastry products, and tobacco products, among others
Likewise, import tariffs for 9,909 item types of industrial goods from the Philippines—including petrochemicals, personal care goods such as shampoo and soap, garments and automotive parts—will also be removed when the FTA enters into force.
It will be reviewed by the Department of Foreign Affairs.
“If they say that it is a treaty, we will have to go through the Senate for concurrence to the ratification of the president,” said the trade official.
“If assuming that it will be determined as an executive agreement, it is realistic to assume that by January 2024, it will enter into force,” he added.
Rodolfo said they also estimated that the FTA would help bring foreign direct investments worth P150 billion to P200 billion to the Philippines during the first three years of the FTA’s effectivity.