The Department of Trade and Industry (DTI) said they are now beginning consultations expected to run for six months with the South Korean government for the implementation of the Korea-Philippine Free Trade Agreement that took effect last 31 December 2024.
In a statement, the DTI said the six-month consultation would ensure prompt and targeted action on the identified areas for cooperation, which would identify specific projects, including their respective resource requirements and possible funding sources.
Consultations will include relevant stakeholders, with both sides committed to establishing and sustaining active communication channels for ongoing discussions about project development.
“The implementation of this bilateral FTA is a significant stride in growing trade and investment between the Philippines and South Korea, as it represents a collective achievement that will truly set the stage for the growth of our industries and businesses,” said Department of Trade and Industry Secretary Cristina Roque.
“To ensure the success of the FTA and all existing economic mechanisms between our countries, we recognize the significant role of continued partnership and stronger stakeholder engagement. This collaborative approach will help unlock a more prosperous and sustainable future for both the Philippines and South Korea,” the DTI chief added.
As the FTA enters into force, both sides will work closely together to ensure its successful implementation, which includes discussions on mechanisms for utilization monitoring and targeted promotion efforts.
The FTA with South Korea is the Philippines’ third free trade agreement, following the Philippines-Japan Economic Partnership Agreement signed in September 2006 and entered into force in December 2008, and the Philippines-European Free Trade Area FTA signed in April 2016 and entered into force in June 2018.
Through the FTA, the Philippines is positioned to gain significantly improved market access for tropical fruits, especially fresh bananas.
The FTA also paves the way for cooperation and investment in forward-looking sectors such as critical minerals processing and electric vehicle and parts manufacturing.
It will also allow the Philippines to export fresh bananas to South Korea at zero duty by January 2028, with tariffs starting at 24 percent upon entry and 18 percent by January 2025, considered a crucial development for the Philippine banana industry, as South Korea represents a key market.
The steady elimination of tariffs will significantly boost the competitiveness of Philippine bananas, especially against those from other regional producers like Vietnam.
As a major source of livelihood for many Filipino farmers, the banana industry is poised for growth and will create more employment opportunities in banana production and export as a result of the FTA.
In addition, the FTA safeguards key Philippine industries where certain sensitive products remain protected with no tariff cuts for South Korean exporters, which include products such as some plastics and petrochemical products; beverages including liquor, batteries and battery components, sugar and confectionery goods; and agricultural products such as fish, dairy, fresh fruit and vegetables, processed meat and meat products, sauces and condiments and pastry goods.
In return, South Korea will benefit from the FTA through lower tariffs on automotive vehicles, parts, and components, especially for commercial passenger and transport vehicles, leading to cheaper costs for vehicle assemblers and car owners.
The FTA positions South Korean automakers to better compete with established players from Japan, the United States and China.
Beyond tariff reductions, the FTA includes a comprehensive chapter on Economic and Technical Cooperation, a forward-looking chapter that encompasses priority sectors for trade and investment promotion and industrial development, such as health and scientific manufacturing, critical minerals processing, innovation and research and development, creative and cultural industries, intellectual property and e-commerce.
Collaboration in the said areas may involve information exchange, sharing of best practices, technical assistance, joint R&D and transfer of technology or new business models, benefitting micro, small and medium enterprises.
In 2023, South Korea ranked 5th among the Philippines’ 230 trade partners, 5th out of 205 export markets, and 4th out of 221 import suppliers.
Bilateral trade between the two countries amounted to $12 billion.
In the same year, South Korea also ranked 7th in terms of net foreign direct investment, with $21.3 million, and 12th in terms of approved investments with $27.3 million.