BusinessMirror December 29, 2024

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A broader look at today’s business Sunday, December 29, 2024 Vol. 20 No. 79

P25.00 nationwide | 2 sections 20 pages | 7 DAYS A WEEK

NEW FRIENDS, MARKETS VITAL TO A NEW WORLD

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By Andrea E. San Juan

MID the rise in trade-restrictive measures and geopolitical uncertainties, the Philippines is ramping up its efforts to forge more free-trade agreements (FTAs) to expand its market access and diversify markets beyond traditional partners. In 2024, five trade deals, albeit unfinished, have made progress in their respective negotiations, while the Philippines-Korea FTA is expected to take effect on the last day of the year or on December 31, 2024. Two rounds of 6-percent tariff cuts are seen in the first few days of its effectivity in the Philippines. Upon effectivity, Allan B. Gepty, Department of Trade and Industry (DTI) Undersecretary for International Trade Group, said South Korea will grant preferential dutyfree entry on 11,164 Philippine tariff lines accounting for $3.18 billion or 87.4 percent of total Korean imports from the Philippines. Meanwhile, one of the major beneficiaries of the free-trade deal with South Korea is the banana industry, as the tariff rate for bananas will be reduced to zero in five years. “For tariff rate for bananas it will have a tariff reduction of 6 percent on December 31, 2024, and another 6 percent reduction on January 1, 2025,” Gepty told the BusinessMirror in a Viber message. This means that only two days into its effectivity, the free-trade deal with South Korea grants a 12-percent tariff cut for Philippine banana exports to Korea.

Earlier, DTI Secretary Cristina Roque said that through the FTA with Korea, the 30-percent tariffs levied on banana exports would be reduced by 6 percentage points annually until it gets zero-rated in the fifth year. Gepty underscored that the ratification of the FTA is a “major milestone” for the Philippines as it will now increase the preferential market access of Philippine exports to Korea to 97 percent based on trade value. “This will complement the Asean Korea FTA and the [Regional Comprehensive Economic Partnership] RCEP Agreement. Our banana industry will also mainly benefit from this FTA as the tariff rate for bananas will be reduced to zero in five years from effectivity,” said the Trade official.

27-member European Union

WHAT Gepty considers “another milestone” in the Philippine international trade policy landscape in 2024 is the resumption of talks for the Philippines-European Union Free Trade Agreement. In the latter part of March 2024, European Commission Executive Vice President Valdis Dombrovskis and former Philippine Trade and Industry Secretary

“Upon effectivity, South Korea will grant preferential duty-free entry on 11,164 Philippine tariff lines, accounting for $3.18 billion or 87.4 percent of total Korean imports from the Philippines.” — Allan B. Gepty, DTI Undersecretary for International Trade

“The EU is the Philippines’s fourth largest trade partner. The FTA between the two parties is projected to increase trade by up to €6 billion.” — Valdis Dombrovskis, European Commission EVP

“We are hoping that we can address the remaining issues under the PH-UAE CEPA and conclude the negotiation early next year.” — Trade Secretary Cristina A. Roque

“There is a need to continue establishing FTAs with the EU, Chile, etc., as a way to diversify markets away from traditional partners.” — Dr. George N. Manzano, former Philippine Tariff Commissioner

Amid global trade uncertainties, the Philippines is securing key free-trade agreements, including the Philippines-Korea FTA, to expand market access and boost exports. Ongoing negotiations with the EU and UAE promise further economic growth and tariff reductions, benefiting industries like bananas. Alfredo E. Pascual formally announced the resumption of FTA negotiations between the European Union and the Philippines. Dombrovskis said the Philippines has the potential to be a major market for the EU industry, with a GDP of €370 billion and a population of over 115 million people. “Trade in goods was worth over €18.4 billion in 2022, while trade in services was worth €4.7 billion in 2021,” he also noted. Dombrovskis also pointed out that the EU is the Philippines’s fourth largest trade partner. Further, the FTA between the two parties, he noted, is projected to increase trade by up to €6 billion. As to the sectors that the 27-member bloc is setting sights on in the Philippines, Dombrovskis recognized that “the Philippines is also an important producer of a number of critical raw materials,

such as nickel, copper and chromite, all of which are vital for the green transition.” Fast forward to October 2024: Gepty said the Philippine trade negotiating team had set an internal target as it eyes to conclude by 2026 the negotiations for the trade deal with the EU. “In one of the President’s speeches, he said he wanted this concluded by 2027. So internally, we want to target 2026. So we’ll exert all our efforts,” the Philippine Trade negotiator said.

EU GSP+ maintained

GEPTY also highlighted the importance of the EU GSP+ to Philippine traders, saying, “With the country’s active engagement with the EU and other stakeholders, and its compliance with the 27 international conventions on human rights, labor, environment and good gover-

nance, the Philippines was able to maintain its beneficiary status.” EU GSP+ expired on December 31, 2023, but was extended for four years or until 2027. The country’s trade negotiator said this will provide the time needed for the EU’s legislative process to finalize and adopt the new GSP scheme. However, he explained anew that if the Philippines reaches upper-middle income status and maintains it for three consecutive years, it would lose its GSP+ benefits. “Thus, to address the possible adverse effects of withdrawal of preferential tariff rates under the EUGSP+, the Philippines is currently negotiating a free-trade agreement with the EU,” said Gepty.

PH-UAE Comprehensive Economic Partnership Agreement (CEPA)

ALSO listed among the “big accom-

plishments” of the trade negotiating team in 2024 is the PH-UAE CEPA, Gepty said. Gepty told reporters in May that the first round of talks for the FTA between the Philippines and UAE would start in early part of May this year and hopefully be concluded within the year. He earlier underscored the importance of this trade deal, saying, “We have a lot of professionals and also businesses in the UAE.” However, at a recent briefing with reporters, Roque said that while the Philippine trade negotiating team is “on the last stages of negotiations” already, she divulged that the trade deal with the Middle Eastern country is still being “ironed out a little bit.” “There’s really no delay [in the UAE CEPA]. It’s just…there are so many products. We also have a lot Continued on A2

PESO EXCHANGE RATES n US 58.0140 n JAPAN 0.3672 n UK 72.6799 n HK 7.4684 n CHINA 7.9498 n SINGAPORE 42.6919 n AUSTRALIA 36.0847 n EU 60.4738 n KOREA 0.0396 n SAUDI ARABIA 15.4539 Source: BSP (December 27, 2024)


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