Korea and teh Philippines Strengthen Ties with New Free Trade Agreement
South Korea’s trade relationship with the Philippines is set to receive a significant boost. A new bilateral free trade agreement (FTA), slated to take affect January 2025, promises to enhance trade and bolster supply chain stability, according to South Korean Trade Minister Cheong In-kyo.
Minister Cheong announced the news during a recent business briefing, emphasizing the agreement’s importance in a shifting global trade landscape. He stated, “As the multilateral trade regime under the World Trade Organization weakens, the importance of FTAs continues to grow. Accordingly, an FTA with the Philippines, our key trade partner, will help Korea bolster its trade portfolio.”
The FTA is expected to lead to considerable market liberalization between the two nations. This includes significant tariff reductions, fostering increased investment and business collaboration, ultimately contributing to a more resilient supply chain. The agreement will eliminate tariffs on 94.8 percent of Korean products and 96.5 percent of Philippine products.
for the automotive sector, the impact is particularly noteworthy. The immediate elimination of a 5 percent tariff on cargo trucks and passenger vehicles, along with a phased elimination of tariffs on eco-pleasant vehicles over five years, is poised to substantially expand Korean automobile exports to the Philippines.
This FTA marks South Korea’s fifth bilateral trade deal with an Association of Southeast Asian Nations (ASEAN) member, following similar agreements with singapore, Vietnam, Malaysia, and Cambodia. While Korea already maintains an FTA with ASEAN as a whole, these individual agreements represent a strategic effort to deepen economic and diplomatic ties with key players in the region.
The implications of this agreement extend beyond bilateral trade. For U.S. businesses, this strengthened partnership between South Korea and the Philippines could create new opportunities for supply chain diversification and access to growing Asian markets. The increased stability and predictability offered by the FTA could also attract further foreign investment in both countries.
