Banana growers want quick resolution of South Korea tariff issue

MANILA, Philippines — The country’s banana industry is asking both Manila and Seoul to finally settle the still unresolved issue on the reduction of high tariff rates slapped to Philippine cavendish bananas.

The Pilipino Banana Growers and Exporters Association Inc. (PBGEA) has called on the South Korean and Philippine governments to resolve the tariff issue.

This after Korea continues to insist on greater market access and zero tariff for its automotive exports to the Philippines.

PBGEA said the negotiations “have only started in the second quarter, while the tariff rates for our competitors have been getting more and more favorable to our disadvantage.”

PBGEA is hoping that President Duterte will raise anew the issue, along with other concerns on the proposed free trade agreement between the two countries.

Duterte will be in Korea this week for a bilateral meeting with South Korea President Moon Jae-in. Duterte first brought up the issue on banana imports during his state visit in April 2018.

Banana shipments to South Korea are levied 30 percent and the country’s trade negotiators want this reduced to at least five percent, if not zero.

“South Korea should also consider the special relationship with the Philippines because of historical circumstances, particularly during the Korean War in the 1950s,” PBGEA chairman Alberto Bacani said.

“Central American bananas have been slowly eroding the market share of the Philippines. If this continues any further, the Philippines will not be able to compete,” PBGEA president Victor Mercado said.

South Korea is the country’s third most important banana market, next to China and Japan. Despite the high import tariff, banana shipments to Korea last year increased to 420,344 metric tons valued at $203.69 million.

However, banana growers are worried that the Philippines' share in the South Korean market may be reduced, as Central American economies have secured trade deals with Seoul that reduced, if not eliminated, tariff on their bananas.

FTAs were inked in February 2018 with Costa Rica, El Salvador, Honduras, Nicaragua and Panama to ease duties on more than 95 percent of goods and open up the services and investment markets.

The Department of Trade and Industry has relayed its demand to lower tariffs on agriculture exports and South Korea is amenable as long as the Philippines cuts import duties on industrial products, especially automotive parts.

The Philippines hopes the FTA would translate to improved market access for its agricultural products such as banana, pineapple, okra, avocado, poultry products, and mango—in exchange for Korea’s industrial goods.

Negotiators are looking at different tariff rate proposals aimed at erasing or at least narrow the trade deficit between the Philippines and South Korea.