Philippine banana and pineapple exporters scored victory in the Korean fruit market with the signing of the Philippine-South Korea free trade agreement (FTA) during the sidelines of the recently-concluded 43rd ASEAN Summit in Jakarta, Indonesia.
The FTA allows for a graduated tariff decrease for both commodities in 5 to 7 years upon entry into force (EIF) of the agreement.
President Ferdinand Marcos Jr. and South Korean President Yoon SukYeol witnessed the signing of the FTA between Trade Secretary Alfredo Pascual and South Korean Trade Minister Ahn Duk Geun.
Mr. Marcos said the trade agreement would further enhance the vibrant relationship and partnership between the Philippines and South Korea, expressing optimism that it would go beyond the government-to-government partnership to involve private firms and private sector partners.
“The signing of the FTA is certainly a very big step in that regard.
It can only be a successful arrangement for both our countries. I look forward to the expansion of the trade agreement between your country and mine,” he told Yoon.
The Philippines and South Korea began their negotiations for the FTA in June 2019 and concluded them in October 2021. They were supposed to sign the agreement in June 2022 but both sides had to do some “legal scrubbing” on the concluded chapter texts of the bilateral pact.
Yoon said he is eager to elevate the strategic partnership between the Philippines and South Korea.
“And in this regard, I believe that the Korea-Philippines Free Trade Agreement signed later today will set another important milestone in our bilateral relations,” he told Mr. Marcos.
Pascual, meanwhile, said the FTA serves as a “clear demonstration of the intent to elevate the current bilateral relations with South Korea to a stronger strategic partnership.”
“The Philippines’ engagement with South Korea is built on trade through market access, economic cooperation, and investments through collaboration in targeted sectors, such as critical minerals and supply chains,” he said.
“Very clearly our goal to correct the tariff disadvantage has been achieved. We were able to get from Korea a commitment for them to remove tariffs on the Philippines. Bananas are our major concern for this FTA alongside other agricultural produce and products,” added Trade undersecretary Ceferino Rodolfo.
“Assuming the FTA enters into force by 2024, our bananas will enter the Korean market at 0 percent by 2029,” Rodolfo added, stressing the
importance to start the process immediately since competitors from other banana-exporting countries are eating up the Philippine share.
From 90 percent market share, the Philippine share of the Korean banana market has eroded to 78 percent when Vietnam was granted preferential tariff on their banana exports to Korea.
Processed pineapples, on the other hand, are also given tariff reduction of annual gradual decreases leading to 0 percent at the 7th year after the FTA comes into force.
At present, Philippine processed pineapple exporters pay 36 percent duties as they enter the Korean market.
Aside from agricultural goods, Rodolfo said the FTA covered industrial goods such as petrochemicals, personal care goods such as shampoo and
soap, garments, and various automotive and automotive parts.
The FTA is envisioned to help promote the Philippines as a strong market for smart and sustainable investments, ensure its major economic gains with enhanced market access to South Korea, and yield strategic investments in priority sectors and industries.
South Korea is a valued trade and investment partner of the Philippines.
In 2022, it ranked fourth in terms of total bilateral trade, valued at $15.45 billion, and sixth in total approved investments, valued at $90.62 million.
Meanwhile, President Marcos has lauded the World Bank for realigning its programs, particularly in its partnership with the Philippines, to address emerging challenges in the post-pandemic era.
This was after Mr. Marcos’ bilateral engagement with World Bank Group president Ajay Banga on the sidelines of the ASEAN Summit.
“I have to commend the World Bank because now I’m looking at the list of the programs and projects in the pipeline. And there you can see the very desirable shift from what we were doing before to what we are doing now, post-pandemic,” the President told Banga.
Mr. Marcos thanked the World Bank for the various grants it has extended to the country, including the recently approved Philippine Second Financial Sector Reform Development Policy financing worth $600 million.
He expressed hope that the program would be a success to boost the resiliency and the sustainability of the financial sector after the impact of the COVID-19 pandemic.