IMPLEMENTATION of a recently approved free trade agreement (FTA) between the Philippines and South Korea will lead to substantial tariff savings for locally produced goods, Trade department officials said last week.
In particular, phased tariff cuts for banana exports — South Korea is the Philippines’ third-largest market for the fruit — could potentially hit up to $25.2 million by the end of next year, Export Management Bureau (EMB) director Bianca Sykimte told reporters on Thursday.
Tariffs are scheduled to fall to zero at the end of five years, she added, which will provide an estimated $189 million in savings for the banana sector.
Trade Undersecretary Ceferino Rodolfo also told reporters that the lower tariffs would bring the Philippines at par with competitors like Vietnam and Costa Rica that already have tariff-free access.
He noted that without the FTA, Philippine bananas would have been levied a 30-percent tariff by South Korea.
“The entry-into-force of the bilateral FTA in the very last day of 2024 holds not just ceremonial significance — as we celebrate 75 years of our diplomatic relations — but also brings tremendous commercial benefits to our banana and pineapple growers and processors,” Rodolfo said.
“In literally a span of just two days (from Dec.31 to Jan.1), our exporters of bananas will benefit from a 12 percentage-point reduction in the tariffs that they face in the South Korean market, a very significant 40-percent reduction in tariffs,” he added.
Another product that will benefit from the FTA is canned pineapples, which will see duties drop to 25.7 percent from 36 percent by Jan. 1.
The FTA will also benefit other sectors such as machinery, transport equipment and garments, though the most significant gains are expected in agriculture.
Despite political turmoil in South Korea, Rodolfo said the FTA remained on track. He said there was broad support from the South Korean parliament as 286 members voted in favor of the trade deal with only three opposed and three abstentions.
“The Philippines, on our side, remain to be very confident about the prospects and strength of the Korean economy regardless of the political dynamics that is happening there,” he said.
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