IT’S all systems go for the country’s possibly second bilateral free-trade agreement (FTA), as the Philippines and South Korea on Monday officially launched negotiations in a bid to conclude them by November.
In a joint statement, Trade Secretary Ramon M. Lopez and South Korean Trade Minister Yoo Myung-hee “affirmed their common goal to achieve a comprehensive and future oriented FTA.” With this affirmation, they announced the official start of FTA negotiations with the objective of concluding the trade deal by November.
Lopez said the trade deal will enhance trade and investment activities between the Philippines and South Korea, as it will include provisions on the reduction, if not elimination, of certain tariff and nontariff measures, as well as creation of investment opportunities.
“For the Philippines, the FTA means we can achieve improved market access for our agriculture products, such as banana, pineapple, mangoes, as well as industrial products and other services. We are working on better reciprocity of tariff rates and market access of our agricultural and industrial products to improve the balance of trade with South Korea,” Lopez said in a separate statement.
Agricultural exports to South Korea such as bananas and mangoes are imposed with a tariff of 30 percent, and Manila has been insisting that Seoul reduce it to 5 percent, if not zero.
Further, the Philippines is trying to balance its trade sheet with South Korea. Merchandise trade with the East Asian country expanded 7.11 percent to $13.7 billion, from $12.79 billion in 2017, according to data from the Philippine Statistics Authority (PSA).
PSA data showed this expansion was largely due to a higher volume of imports from South Korea at $11.16 billion, up 31.91 percent from $8.46 billion.
On the other hand, exports to South Korea last year declined 41.33 percent to $2.54 billion, from $4.33 billion in 2017. This reduction in exports widened the trade deficit with Seoul, which is now at $8.62 billion.
Also, approved investments from South Korea slumped 44.21 percent to P1.88 billion, from P3.37 billion, according to PSA data.
Beyond goods, services
On top of an agreement in goods and services trade, the FTA will include deals aimed at improving people to people ties. This could mean easier travel access for Filipinos to South Korea, and vice versa.
South Koreans were the country’s top visitors, according to data from the Department of Trade and Industry, registering a total of 1.58 million tourist arrivals last year.
“These include movement of natural persons and more investment opportunities that could lead to job generation. These also include greater collaboration in innovation, as well as research and development that will support the implementation of our inclusive innovation and industrial strategy,” Lopez added.
If approved, the FTA with South Korea will only be the second bilateral trade deal of the Philippines.
Manila’s first and only bilateral FTA is with Tokyo, covering trade in goods, trade in services, investments, movement of natural persons, intellectual property, customs procedures, improvement of business environment and government procurement. Entered into force in 2008, the Philippines-Japan Economic Partnership Agreement is under review for possible changes in its provisions.
The Philippines is trading with South Korea as a member-state of the Association of Southeast Asian Nations, and both economies are negotiating parties to the Regional Comprehensive Economic Partnership.
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It will be the third bilateral FTA as PH has signed and ratified an agreement with the EFTA (Switzerland, Norway, Iceland, et al) states.