The tariff rates for the country’s banana exports to South Korea will get a sizable reduction next week under the newly implemented free trade agreement (FTA), beginning with a 6 percent decrease on Dec 31 and another 6 percent cut on January 1.
“One of the major beneficiaries of the FTA is the banana industry as tariff rate for bananas will be reduced to zero in 5 years,” trade undersecretary Allan Gepty told reporters on Monday.
The country’s bananas are among the more than P170 million worth of locally produced agricultural goods covered under the Philippines-South Korea FTA, which will take effect on Dec. 31
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A 30 percent import tariff is currently levied by South Korea to bananas shipped from the Philippines, taxes that will be reduced to zero within the fifth year of effectivity of the trade deal.
Philippine exports of processed pineapple– goods which are currently subjected to a 36 percent import tariff- will see the same gradual reduction.
Gepty added that a total of 11,164 tariff lines accounting for $3.18B or 87.4 percent of total Philippine exports to South Korea will be granted preferential duty-free entry under the FTA.
Aside from these, the Philippine trade official said that the FTA also provides a mechanism for economic cooperation on key areas such as creative industries, innovation, and manufacturing.
Based on estimates by the Board of Investments (BOI), the Department of Trade and Industry’s (DTI) lead in investment promotions agency, the FTA is also projected to help bring foreign direct investments worth ₱150 billion to ₱200 billion to the Philippines during the first three years of its effectivity.
The Philippines and South Korea signed the FTA in September 2023 on the sidelines of the 43rd summit of the Association of Southeast Asian Nations (ASEAN) held in Jakarta, Indonesia.
The Philippine Senate ratified the FTA earlier on September 23, while the South Korean parliament approved it in November.
Two-way trade between the two countries totalled $12.02 billion in 2023, with the Philippines exporting $3.53 billion and importing $8.49 billion worth of goods from South Korea, according to DTI ‘s records.