14/09/2023 (South Korea/Philippines) - South Korea and the Philippines formalized a comprehensive Free Trade Agreement (FTA) on September 7, amid the increasing economic uncertainties facing the Philippines. The agreement, facilitated by Trade Secretary Alfredo Pascual and his Korean counterpart Ahn Duk-geun at the 43rd Association of Southeast Asian Nations (ASEAN) Summit in Indonesia, aims to fortify foreign trade ties between the two nations, an initiative in the pipeline since 2021.
With the expected enforcement in the first half of next year, the agreement prescribes the gradual abolition of tariffs impacting nearly 96.5% of Korean imports and about 94.8% of Philippine products over a stipulated period. This development is set to notably benefit South Korea's automotive industry and the Philippines' banana producers by eradicating the existing tariffs within a span of five years.
The timing of the FTA is opportune for the Philippines, which has been grappling with a dwindling trade performance exacerbated by China's economic deceleration, its primary trade partner. As per recent data from the Philippine Statistics Authority, the nation observed a decline in both exports and imports in July, with the cumulative trade deficit reaching $33.18 billion. The agreement offers a vital pathway for the Philippines to mitigate the repercussions of China's economic downturn, by diversifying its trade portfolio and fostering relationships with other robust economies.
Furthermore, the FTA seeks to foster expertise and global competitiveness among Philippine enterprises by exposing them to diverse markets with varying consumer preferences and product standards. The agreement is also set to enhance collaborations in sectors where South Korea has a pronounced competitive edge, such as shipbuilding, electronics, and automotive industries, potentially leading to broader investment opportunities and knowledge transfers.
As the nations anticipate the agreement's final ratification by the Korean National Assembly and the Department of Foreign Affairs in the Philippines, the focus now shifts to the necessary legal endorsements and the speed of their execution to bring the agreement into effect at the earliest.
For the Philippines, the FTA with South Korea not only embodies an economic lifeline amid prevalent challenges but signifies a strategic step towards expanding its global trade horizons and fortifying its economic foundations for a resilient future. The key to reaping the benefits of this partnership lies in a swift and seamless ratification process, urging the involved authorities to facilitate a timely conclusion to this monumental agreement.