Palace order implementing S. Korea FTA expected soon

By Justine Irish D. Tabile, Reporter

EXPORTERS shipping to South Korea could avail of new tariff arrangements as early as this month following the expected completion of the entry into force requirements of the Philippine-Korean free trade agreement (FTA), the Department of Trade and Industry said.

On the sidelines of the National Exporters Week, Trade Undersecretary Allan B. Gepty said that the next step following the ratification of the FTA in both counties is the issuance of an executive order.

“The President will (have to) approve it. The executive order is scheduled to be issued in December,” he told reporters on Monday.

According to Mr. Gepty, the DTI received a letter dated Nov. 18 from South Korea declaring the completion of the legal procedures on Seoul’s end. The FTA had been ratified by the Philippine Senate on Sept. 23.

He said Philippine negotiators are targeting for the deal to come into force within the year to maximize the benefits of the new tariff regime.

“It will be a big help because there will be tariff cuts. Once it enters into force, there will be reductions already… in January there will be another cut,” he said.

“Actually, we already have agreed on the date, but I don’t want to preempt it,” he added.

Mr. Gepty has said that the FTA will enter into force on the first day of the second month, or on such other date as the parties may agree, following the date when the parties inform each other that all necessary domestic legal procedures have been completed.

Trade Undersecretary and Board of Investments Managing Head Ceferino S. Rodolfo said that besides the executive order, there is also a need for the Bureau of Customs to issue a customs memorandum order to implement the FTA tariff commitments.

After which, the two parties will have to send a formal notification to each other on the entry into force of the FTA, Mr. Rodolfo added.

Asked to comment, Foundation for Economic Freedom President Calixto V. Chikiamco said the main beneficiaries of the FTA include banana exporters.

“Our bananas suffer from a higher tariff compared with Central American exports into the South Korean market,” Mr. Chikiamco said.

South Korea was the third-biggest export market for Philippine bananas last year, accounting for $164.54 million, or 13% of fresh banana exports.

In the first half, banana exports to South Korea hit $102.58 million, well ahead of the year-earlier pace.

Aside from maintaining banana market share, Mr. Chikiamco said that the FTA may lead to more factories being set up in the Philippines to access the South Korean market.

“Therefore, it may cause an increase in FDI to utilize the country’s plentiful labor force to export to Korea,” he said.

“However, we also have to fix our infrastructure issues like ports and energy in order to attract investors to manufacture here,” he added.

Signed in September last year, the FTA eliminated 1,531 tariff lines on agricultural goods, of which 1,417 would be removed after the FTA enters into force.

It will also remove 9,909 tariff lines of industrial goods, 9,747 of which would be removed after the deal enters into force.

In total, the FTA will remove Philippine tariffs on 96.5% of goods from South Korea and Korean tariffs on 94.8% of Philippine products.