Philippine Exporters Brace for Tariff Cuts as Korea FTA Nears Completion
Exciting news for Philippine exporters! A new free trade agreement with South Korea is poised to come into effect this month, promising significant tariff reductions and expanded market access.
The final legal procedures on the South Korean side have been completed, paving the way for a December executive order from Philippine President Ferdinand Marcos Jr., according to Trade Undersecretary Allan B. Gepty. This landmark agreement, ratified by both countries earlier this year, eliminates tariffs on a vast majority of traded goods.
"We are targeting for the deal to come into force within the year to maximize the benefits of the new tariff regime," Gepty said. "There will be immediate tariff cuts upon implementation, with further reductions following in January."
Gepty, without revealing specific dates, assured that both parties have agreed on an entry into force date.
"Once implementational mechanics are finalized, a formal notification will be sent to each other confirming the start date," added Trade Undersecretary Ceferino S. Rodolfo.
Economists predict significant benefits for key Philippine exports.
"Our banana exports, currently hampered by higher tariffs compared to Central American competitors, stand to gain tremendously," stated Calixto V. Chikiamco, President of the Foundation for Economic Freedom.
South Korea represents the Philippines’ third-largest market for bananas, consuming over $164 million worth of the fruit last year.
Chikiamco anticipates the agreement could spur foreign direct investment in the Philippines.
"Companies may set up factories here, leveraging our abundant labor force to produce goods for the Korean market," he said. However, he stressed the need for infrastructure improvements like ports and energy to fully capitalize on this investment opportunity.
The free trade agreement, signed in September last year, boasts impressive tariff reductions. Nearly 97% of Philippine goods entering South Korea and over 94% of South Korean goods entering the Philippines will be tariff-free.
Exporters, particularly those in the agricultural and industrial sectors, are eagerly awaiting the official launch of this game-changing agreement, poised to reshape trade between the two nations and boost economic growth in the Philippines.
