THE Department of Trade and Industry (DTI) said it will seek to balance of the interests of the agriculture industry, which wants to export more produce to South Korea, and the auto and parts industry, which might be disadvantaged by Seoul’s demands for lower tariffs for its products.
The terms of the trade relationship are currently being worked out in negotiations for a Free Trade Agreement (FTA) with South Korea.
“Initially, South Korea requested (lowering) certain tariff lines mostly on auto, auto parts. But then again the fact remains that we have local industries to protect,” Assistant Secretary of the Trade Department’s Industry Development and Trade Policy Group Allan B. Gepty said at the Tariff Commission hearing last week.
“Eto yung medyo (This is somewhat) challenging,” he added.
The Philippines’ chief trade negotiator said the country imposes a maximum tariff of 30% on automotive-related tariff lines. This, is much lower than the 100% duty imposed by Vietnam, with which South Korea has an FTA.
“In summary, under the present AKFTA (ASEAN-Korea FTA), we have already made concessions for around 190 tariff lines. Vietnam has 104 tariff lines and it also has an FTA,” Mr. Gepty said.
Exports which the Philippines hopes to expand include mango, pineapple and banana, on which South Korea imposes up to 30% tariffs. Produce from other trading partners such as Vietnam and Canada are levied 15%.
Mr. Gepty said there is a need “to protect and preserve” the country’s global market share for these agricultural products, particularly banana.
He noted that banana is among the country’s top 10 merchandise exports, currently dominated by electronics, machinery and transport equipment, and other manufactured goods.
Pilipino Banana Growers and Exporters Association (PBGEA) representative Yvette. B. A. Malabanan said the South Korean market share of Philippine Cavendish bananas has been declining to 77.8% in 2018 from 97.5% in 2013.
“[I]f we do not work on the elimination of tariffs, the banana export industry will cease to be the second-top agricultural export of the country and the most significant provider of jobs in the countryside of Mindanao,” according to the position paper PBGEA submitted to the Tariff Commission.
South Korea has been moving to lower tariffs to zero on fresh Cavendish banana of Latin American producers.
Mr. Gepty said the Philippines and South Korea conducted the first round of FTA negotiations in early June. — Janina C. Lim