The Korean Embassy released an official statement that the Philippine-Korea Free Trade Agreement (FTA) is set to take effect on 31 December, a day earlier than when the Department of Trade and Industry (DTI) said the deal would be in full force on 1 January 2025.

“With a comprehensive scope covering 97 percent of imports, the FTA will significantly enhance market access for Philippine products like bananas and pineapples in the Korean market,” the Korean embassy said in a statement on Monday.

But during a roundtable discussion with Trade reporters last week, Trade Secretary Cristina Roque noted that the Philippines-Korea FTA would take effect on 1 January 2025.

Huge tariff cuts

“Starting 1 January, the Philippines-Korea FTA will take effect. From 30 percent, our bananas will go to zero tariff in five years. Every year, it will go down six percent. Tariffs for bananas will go down already; that is something we are (really) looking forward to because our export of bananas is huge,” Roque said.

Earlier, the Department of Trade and Industry said currently, bananas are the country’s top agricultural export to South Korea, with a tariff rate of 30 percent.

In contrast, bananas from Vietnam and Indonesia already enjoy 0 percent tariff rate.

While the Philippines’ market share of bananas was at 98.80 percent in 2013, it has significantly declined to 69 percent in 2023.

Meanwhile, Vietnam’s share increased from 0.04 percent in 2013 to 12 percent in 2023.

Bilateral South Korea FTA

The bilateral FTA with South Korea is projected to boost Philippine market access for tropical fruits, especially bananas and processed pineapples.

Under the FTA, exports of key Philippine products to South Korea, including fresh bananas in five years, will enjoy zero tariffs.

Other agricultural products from the Philippines that gained preferential market access to Korea through the FTA are yellowfin tuna, processed pineapple, pineapple juice, prepared or preserved oysters, fresh blue crabs, fresh guavas, fresh papaws or papaya, canned sardines, and fresh tilapia.

Beyond agricultural trade, the agreement is poised to foster economic cooperation to attract investments in forward-looking sectors such as critical minerals processing and electric vehicles and parts manufacturing.

For industrial products, Philippine menswear and other apparel goods such as trousers, shirts, jackets, and blazers also gained preferential market access to Korea.

Implementing agreement

An implementing agreement was also signed by both parties to strengthen collaboration on priority sectors for trade and investment under the Economic and Technical Cooperation. Under this, the Philippines and South Korea will begin consultations within six months after the agreement enters into force to identify projects for cooperation.

Priority sectors include e-vehicles, health cooperation, vaccine manufacturing, critical minerals processing, innovation, research and development, creative and cultural industries and e-commerce.

Cooperation in these areas may involve information exchange, sharing of best practices, technical assistance, joint research and development, and transfer of technology or new business models, among others.