The Philippines is willing to reduce the tariff on completely built-up vehicles from South Korea to as low as zero as both countries continue negotiations over a bilateral free trade agreement, sources said Wednesday.
Industry sources said both governments were open to reducing tariff rates on automobiles. Incoming CBUs from South Korea carry a tariff rate of 5 percent under the Asean-Korea FTA. Vehicles from other Southeast Asian countries are subject to zero-percent tariff under the Asean Free Trade Association.
Sources said the Philippines was planning to reduce the tariff on Korean vehicles to zero under the Philippines-South Korea Free Trade Agreement. Both countries are expecting to wrap up the basic terms and concessions for the proposed FTA by November 2019.
The Philippines has a standing agreement with Korea under the Asean-Korea FTA but expects to upgrade the agreement to a bilateral FTA.
The Philippines expects to resume negotiations by September 2019 and sign a pre-FTA agreement covering the basic terms and directions by November.
Sources said the Philippines was negotiating for lower tariff rates on agricultural exports particularly bananas and pineapple. While local banana growers seek the elimination of 20-percent tariff on bananas, the Trade Department is willing to settle for 5-percent tariff, according to sources.
The Philippines also pushes for concessions on electric vehicles and proposed to help Korea build a battery production hub in the country where local manufacturers can supply nickel for the electric batteries and copper for vehicles.
Korea is the Philippines’ fourth biggest trading partner and the second-biggest source of imports.
Bilateral trade reached nearly $14 billion worth of merchandise goods in 2018.
The Philippines exported $2.6 billion worth of goods to Korea and imported $11.3 billion from the same country last year, data from the Trade Department showed.