South Korea to scrap tariffs on Philippine banana, pineapple

MANILA, Philippines — Department of Trade and Industry (DTI) said the tariffs on the country’s banana and processed pineapple exports to South Korea would gradually be eliminated after the signing of a free trade agreement (FTA).

Trade Undersecretary and Board of Investments (BOI) managing head Ceferino Rodolfo said the FTA aims to correct tariff disadvantages of major Philippine exports, particularly fruits, to Korea.

“We were able to achieve this objective to correct the tariff disadvantage because we were able to get from Korea a commitment or concession for them to remove tariffs on Philippine bananas in five years,” Rodolfo said.

Currently, Philippine bananas exported to South Korea are slapped with a 30 percent tariff.

“From entry into force of the agreement, it will go down in five equal installments until it becomes zero,” Rodolfo said.

Rodolfo stressed the importance of eliminating the tariff on banana exports due to the competitive disadvantage particularly from Vietnam whose banana exports to South Korea are levied a six percent tariff  but would be down to zero by next year.

Apart from bananas, Rodolfo added that the tariff for processed pineapple exports to South Korea would also be eliminated in seven years from the current 36 percent.

Under the recently-signed FTA, the Philippines was able to secure tariff elimination for a total of 1,531 lines. Of the total, 1,471 lines are for tariff elimination upon the entry into force of the agreement.

The notable lines with preferential market access include fresh seafood, crustaceans, fruit and nuts, processed food and beverages, sugar and pastry products, waste products and tobacco and tobacco products.

“Average Philippine exports of these products to Korea are greater than $3 million,” the DTI said.

For industrial goods, the Philippines was able to secure tariff elimination for a total of 9,909 lines. About 9,747 lines are for tariff elimination upon entry into force of the agreement.

Rodolfo said Korean shampoo and other types of medicated soap are for tariff elimination from five percent to zero percent in 10 years.

According to Rodolfo, the Department of Foreign Affairs (DFA) has yet to determine if the FTA would be implemented as a treaty or an executive agreement.

“Whether a treaty or executive agreement, we will transmit to the office of the president for executive ratification,” Rodolfo added.

If the agreement is treated as a treaty, Rodolfo said this would have to go through the Senate for concurrence.

“For us, assuming that it is an executive agreement, ]it is] realistic to assume that by January of 2024, it will enter into force,” Rodolfo said.

Trade Secretary Alfredo Pascual and Trade Minister Ahn Duk Geun signed the Philippine-South Korea FTA in the presence of President Ferdinand Marcos Jr. and South Korean President Yoon Suk Yeol at the 24th ASEAN-Korea Summit in Jakarta, Indonesia.

“For the Philippines, this FTA serves as a clear demonstration of the intent to elevate the current bilateral relations with South Korea to a stronger strategic partnership. The Philippines’ engagement with South Korea is built on trade through market access, economic cooperation, and investments through collaboration in targeted sectors such as critical minerals and supply chains,” Pascual said.

To further enhance the Philippines and South Korea partnership through increased trade and investment relations as well as job generation, the DTI said the FTA is also envisioned to significantly contribute to the Philippines’ value proposition as a strong market for smart and sustainable investments, especially as a manufacturing and export hub in the region.