By means of John Victor D. Ordoñez, Reporter
THE SENATE on Monday ratiFThe Free Trade Agreement (FTA) between the Philippines and South Korea has been finalized, a move that will pave the way for increased exports of Philippine bananas and processed pineapples to Seoul.
Twenty-one senators voted in favor of the ratiFication of the free trade pact, which will eliminate Philippine tariffs on 96.5% of goods from South Korea, while Seoul will lift tariffs on about 94.8% of Philippine products.
The Constitution requires ratification of two-thirds of the members of the SenateFication of international agreements and treaties.
The Philippines and South Korea signed the free trade pact in September last year, which will boost trade between the two countries.
However, the deal is still undergoing ratificationFication process in the Korean National Assembly.
Under the agreement, the Philippines has secured the elimination of 1,531 tariff lines on agricultural goods, of which 1,417 would be abolished after the FTA enters into force.
It will also remove 9,909 tariFf lines of industrial goods, 9,747 of which would be removed after the deal comes into effect.
“It provides an opportunity to expand the number of our raw materials that can access the Korean market,” Philippine Chamber of Commerce and Industry President Enunina V. Mangio said. Business world in a Viber message.
“To benefit fullyFIf we decouple it from the FTA, we need to improve our infrastructure and regulations to attract investment from Korea.”
She also mentioned the need for the government to improve the technological capabilities of local industries to make them more competitive.
South Korean automakers are expected to benefit from the free trade deal, which will eliminate 5% tariffs on Korean-made cars. Tariffs for Korean electric and hybrid vehicles would also be abolished Ffive years.
The Philippines is expected to attract as much as P200 billion in foreign direct investment for the electric vehicle and agro-processing industries within three years, according to estimates from the Department of Trade and Industry.
The Philippines is also seen increasing exports of bananas and processed pineapples to Seoul. TariFfs on Philippine bananas, which are currently subject to a 30% tariffFf, is removed inside Ffive years. At the same time, the 36% tariff on processed pineapple from the Philippines will be abolished in seven years.
“This is a good development for our banana and pineapple industries as they can capture a larger market in South Korea,” former Undersecretary of Agriculture Fermin D. Adriano said in a Viber message.
Based on data from the United Nations Commodity Trade Statistics Database, South Korea was the third largest market for fresh bananas in the Philippines last year, with exports reaching $164.54 million, after China ($359.77 million) and Japan ($562.58 million).
South Korean Ambassador to the Philippines Lee Sang-hwa previously said he expects the FTA to be a “game-changer” for trade and investment between Manila and Seoul.
According to data from the Philippine Statistics Authority, South Korea was the Philippines’ fifth-largest trading partner in 2023, with total trade of about US$12 billion. Exports to South Korea were valued at $3.53 billion last year, while imports amounted to $8.49 billion.
This is the third FTA involving the Philippines and South Korea, following the Korea-ASEAN FTA and the Regional Comprehensive Economic Partnership.
However, Jose “Sonny” A. Africa, executive director of the IBON Foundation think tank, said the expected increase in exports of these agricultural products is unlikely to substantially boost the economy, saying the government is better off.Ff the adoption of an industrial policy.
“The proposed FTA will be entered into outside a genuine national industrialization strategy and will thus be a policy step backwards,” he said in a Viber message. “These investments must be more embedded in the local economy to contribute to broader national industrial development.”
Raul Q. Montemayor, national manager of the Federation of Free Farmers, said the free trade pact does not guarantee that Filipino farmers will “gain much” compared to Korean automakers, who will have better market access to the Philippines.
“Our other concern is that most of the benefitsFIf there is any, it will go to large multinationals that capture the majority of professionalsFit comes from exports,” he said.