R.G. Machica / Atomy Kalos Group / January 21, 2024
The Free Trade Agreement (FTA) between the Philippines and South Korea, signed in 2023, presents several benefits for the Philippines and South Korea. Some of the key advantages include:
1. Tariff Reductions and Eliminations: Under the FTA, South Korea will lift tariffs on 94.8% of Philippine products, while the Philippines will open its market to 96.5% of Korean products. This includes the immediate elimination of tariffs on Korean cars and the gradual removal of tariffs on car parts over five years. Tariffs on various Korean food items like processed food, ginseng, pepper, pear, and mackerel are set to be removed within 15 years. For Philippine products, tariffs on bananas will be removed over a five-year period.
2. Agricultural Sector Benefits: The agreement is particularly favorable for Filipino farmers. It provides duty-free market access to several Philippine farm products, including bananas, canned pineapples, okra, papaya, glass eels, refined coconut oil, and cashew nuts. This reduction in tariffs is expected to boost exports and improve the competitiveness of Filipino agricultural producers in the South Korean market.
3. Expansion in Various Sectors: The FTA encompasses provisions for capacity building and technical cooperation, covering industries like smart farming, film production, electric vehicles (EVs), and public health emergencies. This is likely to enhance cooperation in vaccine production and defense industries, reflecting a commitment to jointly addressing global challenges.
4. Benefits for Private Sector and Specific Industries: The agreement is expected to benefit the automotive industry, with the elimination of tariffs on many auto units and parts giving a competitive edge to South Korean automakers in the Philippines. The information technology and electronics sectors, services industry, and emerging sectors like smart farms and EVs are also expected to see growth and investment opportunities.
Overall, the FTA is seen as a significant step in bolstering bilateral trade and investment relations between the Philippines and South Korea, with the potential to generate jobs and contribute to the Philippines’ value proposition as a regional hub for smart and sustainable investment.
