The Philippines and South Korea Launch Historic Free Trade Agreement to Boost Economic Ties

Jan 2025

The free trade agreement (FTA) between the Philippines and South Korea officially took effect on December 31, 2024, marking a historic milestone in their economic relationship. Signed on September 17, 2023, the FTA aims to create new opportunities for businesses and consumers while fostering strong and resilient supply chains. This agreement is particularly significant as it coincides with the 75th anniversary of diplomatic relations between the two nations and the elevation of their ties to a strategic partnership.

A key benefit of the FTA for the Philippines is improved market access for tropical fruits, especially fresh bananas. The agreement allows for the export of fresh bananas to South Korea at zero duty by January 2028, with an initial tariff of 24% that will decrease to 18% by January 2025. This development is crucial for the Philippine banana industry, which relies heavily on exports to South Korea as a key market. The gradual elimination of tariffs is expected to enhance the competitiveness of Philippine bananas against regional competitors like Vietnam, leading to growth in the industry and increased employment opportunities for Filipino farmers.

In addition to benefits for the banana sector, the FTA includes protections for sensitive Philippine industries, ensuring no tariff cuts for certain products exported by South Korea. These protected products encompass various categories, including plastics, beverages, agricultural goods, and processed foods. Conversely, South Korea will benefit from lower tariffs on automotive vehicles and parts, reducing costs for vehicle assemblers and consumers. The FTA also features a comprehensive chapter on Economic and Technical Cooperation that promotes collaboration in sectors such as health manufacturing, critical minerals processing, innovation, and e-commerce.

Philippine Department of Trade and Industry (DTI) Secretary Cristina A. Roque emphasized that this bilateral FTA represents a significant stride in trade and investment growth. Both nations are committed to monitoring its utilization and promoting targeted efforts to maximize benefits. This agreement marks the Philippines’ third free trade agreement following previous agreements with Japan and the European Free Trade Area.

(Source: Department of Trade and Industry Philippines)

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