South Korea and the Philippines About to Sign FTA
South Korea has signed an FTA with Cambodia and is about to sign another with the Philippines.
South Korea and the Philippines finalized their FTA talks and signed a joint declaration on Oct. 26. In addition, South Korea and Cambodia signed their bilateral FTA that day.
As a result of the agreement between South Korea and the Philippines, the two countries’ tariff elimination rates will reach 94.8 percent and 96.5 percent, respectively. Anticipated effects include an increase in the price competitiveness of cars exported from South Korea to the Philippines.In the ASEAN region, South Korea concluded a bilateral FTA with Singapore in 2006 and with Vietnam and Indonesia later. In addition, South Korea concluded an FTA with the ASEAN and joined the Regional Comprehensive Economic Partnership, in which the Philippines raised its tariff elimination rate to 89.2 percent on an item basis and 92.7 percent on an import value basis.
According to the agreement between the Philippines and South Korea, the former’s tariffs on auto parts and the vehicles including electric and hybrid cars and trucks will be eliminated within five years from 3 percent to 30 percent and from 5 percent, respectively. In addition, the 5 percent tariffs on plastic products, 5 percent on stationery, and 5 to 15 percent on processed foods will be removed within 15 years. The same applies to 5 percent on ginseng, chili and mackerel and 7 percent on pears.The agreement includes South Korea’s safeguard related to banana imports from the Philippines. Specifically, a tariff of up to 30 percent can be re-imposed if the imports exceed the previous year’s imports and this safeguard will remain effective for 10 years.
The agreement comes with a sub-agreement for economic and technological cooperation, which covers cooperation in the fields of climate change response, vaccine development, greenhouse gas reduction, pandemic response, etc. It comes with product-specific rules of origin as well and is expected to be officially signed in the near future.
As mentioned above, Cambodia and South Korea officially signed their FTA on Oct. 26. Cambodia’s annual economic growth rate has exceeded 7 percent for 10 years in a row and those aged 35 or younger account for no less than 65 percent of its population, which means it has a huge growth potential.
According to the agreement, Cambodia’s 15 percent tariffs on trucks and 35 percent tariffs on passenger cars will be eliminated immediately and 15 percent tariffs on heavy construction equipment and industrial machinery will be eliminated within 10 years. South Korea’s 5 percent tariffs on clothes will be removed, too.