THE only way South Korea can reduce the tariffs slapped on Philippine banana exports is through the forging of the ambitious Regional Comprehensive Economic Partnership (RCEP), its top envoy to Manila has said.
South Korean Ambassador to the Philippines Han Dong-man said that the conclusion of the RCEP remains as the priority avenue for Seoul to cut tariffs on Manila’s banana exports, which are currently levied with 30-percent duty.
“We will try to reduce the tariff with the accomplishment of RCEP. If they conclude the RCEP, then we can have whatever free-trade agreement [FTA] where we can reduce such tariff,” Han said during the recent BusinessMirror Coffee Club forum in Makati City.
“This is a very important issue for me because Davao and Mindanao, where the bananas are coming from, is the hometown of President Duterte,” Han added.
In June Manila sought a preferential trade agreement (PTA) with Seoul to cut tariffs on its fruit exports, including bananas, to 5 percent, but to no avail.
Han said they could not have a PTA with the Philippines as World Trade Organization (WTO) member-countries could red-flag it.
“I asked my deputy prime minister and my secretary for commerce to give a special tariff on the Philippines, but they said it is not possible. Because, if we do that, the other WTO member-countries will raise it as an issue against the rules of the WTO,” he explained.
“The only one way to reduce the tariffs is through FTA. That is why, for the moment, RCEP is the No. 1 [priority]. After RCEP, then we will continue to tackle this issue,” he added.
The South Korean diplomat vowed to do his best to iron out the reduction of tariffs on Manila’s banana exports with his colleagues.
“As an ambassador to the Philippines, I ask sometimes and I try to twist their arms to favor the Philippines because that’s part of my job. But sometimes I face difficulties,” Han said.
“The Philippines is also a member of the WTO and it is not easy [for us to give] unilateral benefit for special tariff to one country, which we will violate the WTO rules. I will do my best to sort this issue out,” Han added.
Han disclosed that Philippine bananas’ share in the South Korean market has declined from 90 percent to 80 percent due to the influx of produce coming from Central American countries, which have lower tariffs.
“With the free-trade agreement with South Korea and Central America, we are importing more bananas from Ecuador and other Central American countries,” he said.
Han said South Korea is now in the process of facilitating the entry of Philippine durian, pomelo and okra to its local market.
“One day, [South] Koreans will enjoy Davao durian or pomelo. We are also now in the process of importing okra,” he said. “We are importing many agriculture products [from the Philippines], and this is important.”
Earlier, the Pilipino Banana Growers and Exporters Association (PBGEA) urged the government to expedite the forging of a free-trade agreement (FTA) with Seoul that would allow Philippine banana exports to enter South Korea at lower tariffs, and ensure that the country would not lose the East Asian market against South American competitors.
PBGEA issued the statement after South Korea signed an FTA that allows five Central American nations to export bananas to Seoul at lower tariffs.
“The Philippines could lose South Korea as a top export destination for locally produced bananas three years from now unless tariffs are removed on this agricultural product to enable it to evenly compete with other banana exports entering this lucrative market,” the PBGEA said.
“Cheap banana imports from Central America have started to eat into the share of Philippine bananas in the Korean market, and these could totally push us out of the picture by 2022 unless we get the same zero-tariff treatment as they do,” PBGEA Executive Director Stephen Antig was quoted as saying in a news statement issued
on Wednesday.
Based on the estimates of the PBGEA, losing the South Korean market would result in the country foregoing close to $300 million in export revenues, with the government losing P6.5 billion in local and national tax revenues. This would affect 32,000 workers and over 200,000 dependents in the domestic banana industry of their means of livelihood, according to PBGEA.
Image credits: Alysa Salen