By John Victor D. Ordoñez, A reporter
SENWE Monday ratifA free trade agreement (FTA) between the Philippines and South Korea, a move that will pave the way for increased exports of Philippine bananas and processed pineapples to Seoul.
Twenty-one senators voted for the ratifsign of the free trade agreement, which will remove Philippine tariffs on 96.5% of goods from South Korea, while Seoul will raise tariffs on about 94.8% of Philippine products.
The Constitution requires a two-thirds majority of the Senate for ratificationfinternational treaties and agreements.
The Philippines and South Korea signed a free trade agreement in September last year, which will boost trade between the two countries.
However, the agreement is still ratifconsultation process in the National Assembly of Korea.
Under the agreement, the Philippines received the elimination of 1,531 tariff lines on agricultural goods, of which 1,417 will be removed after the FTA takes effect.
It will also remove 9,909 tariff industrial goods lines, 9,747 of which will be removed after the agreement goes into effect.
“It provides an opportunity to expand the number of our goods that can reach the Korean market,” said Philippine Chamber of Commerce and Industry President Enunina V. Mangio. BusinessWorld in a Viber message.
“To get the most out of itffrom the FTA, we must improve our infrastructure and regulatory environment to attract investment from Korea.”
He also mentioned the need for the government to improve the technical skills of local industries so that they can compete.
South Korean automakers are expected to benefit from the FTA, which will remove the 5% tariff on Korean-made vehicles. Tariffs on Korean electric and hybrid cars will also be removed internally ffor years.
The Philippines is expected to attract up to P200 billion in foreign direct investment in the electric vehicle industry and the agro-processing sector within three years, according to estimates from the Department of Trade and Industry.
The Philippines is also seen growing bananas and processed pineapple exports to Seoul. Tariffs in Philippine bananas, which currently have 30% tari.ff, will be removed internally ffor years. At the same time, the 36% tariff on processed pineapples from the Philippines will be removed in seven years.
“This is a good development for our banana and pineapple industries as they can find a big market in South Korea,” former Agriculture Minister Fermin D. Adriano said in a Viber message.
Based on data from the United Nations Commodity Trade Statistics Database, South Korea was the Philippines’ third largest market for fresh bananas last year when exports reached $164.54 million, behind China ($359.77 million) and Japan ($562.58 million).
South Korean Ambassador to the Philippines Lee Sang-hwa earlier said he is banking on the FTA to be a “game changer” for trade and investment between Manila and Seoul.
By 2023, South Korea became the Philippines’ fifth largest trading partner with total trade reaching nearly $12 billion, according to data from the Philippine Statistics Authority. Exports to South Korea last year were estimated at $3.53 billion, while imports were $8.49 billion.
This is the third FTA involving the Philippines and South Korea, after the Korea-ASEAN FTA and the Regional Comprehensive Economic Partnership.
However, Jose “Sonny” A. Africa, executive director at the IBON Foundation, said the expected increase in exports of agricultural products to foreign countries is unlikely to significantly boost the economy, saying the government is betterff adopting an industrial policy.
“The proposed FTA will be entered into without a real national industrial development strategy and will be a policy step backwards,” he said in a Viber message. “This investment must focus more on the local economy to contribute to the development of national industries.”
Federation of Free Farmers National Manager Raul Q. Montemayor said the free trade agreement does not guarantee that Philippine farmers will “gain more” compared to Korean car manufacturers who will have improved market access in the Philippines.
“One thing that worries us is that most of the beneficiariesfof it, if any, goes to the big multinationals who capture most of the expertsfit comes from imports,” he said.
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