Manila, Philippines – The Free Trade Agreement (FTA) between the Philippines and South Korea officially entered into force on December 31, 2024, marking a significant milestone in the economic and trade relationship between the two countries.
The agreement, signed on September 17, 2023, aims to enhance trade, foster economic cooperation, and boost industrial growth in key sectors. It is also seen as a timely development, coinciding with the 75th anniversary of diplomatic ties between the Philippines and South Korea, as well as the recent elevation of their relationship to a strategic partnership.
Key Provisions of the FTA
Under the FTA, the Philippines is set to gain improved market access for several key exports, including tropical fruits, with a particular focus on fresh bananas. The agreement allows the Philippines to export fresh bananas to South Korea at zero duty by 2028. Tariffs, which currently stand at 24%, will gradually decrease to 18% by January 2025, enhancing the competitiveness of Philippine bananas in the South Korean market.
While the agreement will offer significant benefits for Philippine exports, it also includes safeguards for certain sensitive sectors. Some products, including plastics, petrochemical goods, beverages, dairy, and specific agricultural products, will remain protected from tariff reductions, ensuring the stability of these industries.
For South Korea, the FTA will result in lower tariffs on automotive vehicles, parts, and components, particularly for commercial passenger and transport vehicles. This is expected to reduce costs for vehicle assemblers and car owners, helping South Korean automakers better compete with other global players in the region.
Economic and Technical Cooperation
Beyond tariff reductions, the FTA also includes a chapter on Economic and Technical Cooperation. This section highlights priority sectors for collaboration, including health, scientific manufacturing, critical minerals processing, innovation, intellectual property, and e-commerce. The agreement outlines joint efforts in research and development (R&D), technology transfer, and technical assistance, with a focus on helping micro, small, and medium enterprises (MSMEs) in both countries.
To implement these initiatives, both nations signed the Implementing Arrangement for Economic and Technical Cooperation, which will identify specific projects for execution. Initial consultations will take place within six months of the FTA’s entry into force to determine project priorities, funding, and other key resources.
Future Prospects
The Philippines’ Department of Trade and Industry (DTI) Secretary Cristina A. Roque emphasized the importance of continued partnership and stakeholder engagement to ensure the success of the agreement. She noted that the FTA will contribute to the growth of industries and businesses in both countries and help unlock a prosperous future for both nations.
This FTA marks the Philippines’ third such agreement, following the Philippines-Japan Economic Partnership Agreement and the Philippines-European Free Trade Area FTA.
In 2023, South Korea was one of the Philippines’ top trading partners, with bilateral trade totaling USD 12 billion. Additionally, South Korea ranked highly in foreign direct investment and approved investments in the Philippines.
As the FTA enters into force, both countries will continue to work together on mechanisms for its successful implementation, focusing on promotion efforts and ongoing consultations to optimize the benefits of the agreement for both nations.
Get the latest supply chain report news at The Supply Chain Report. Learn more about international trade with tools from ADAMftd.com.
#PhilippinesSouthKoreaTrade#LandmarkTradeDeal#SupplyChainGrowth#InternationalTrade#EconomicPartnership#TradeAgreement2025#ExportOpportunities
