PH mulls PTA with S. Korea for banana exports

The Philippines has raised the possibility of forging a bilateral Preferential Trading Arrangement (PTA) with South Korea to improve market access for banana exports.

Trade and Industry Secretary Ramon M. Lopez reported that he raised anew the Philippine request for lower tariffs and greater market access for bananas during his meeting with Korean Trade Minister Kim Chun during their meeting at the RCEP Meetings in Korea.

“We have an open discussion and we are considering options on a better process moving forward, either bilateral thru a PTA or under the ASEAN-Korea Free Trade Agreement,” said Lopez.

The government is expected to submit its proposal in the next two weeks.

The Philippines is still the largest supplier of banana to South Korea with over 85 percent, but other countries are also trying to increase supply.

Earlier, the Pilipino Banana Growers and Exporters Association (PBGEA) warned that the Philippines could lose South Korea as top export destination for locally grown bananas unless the government pressed anew a proposed bilateral trade arrangement to remove the 30 percent tariff on Philippine banana exports.

According to the group, banana imports from Central America have started to eat into the share of Philippine bananas in the Korean market. If this continues, Philippine bananas will be out of the picture by 2022 unless local exporters can get the same zero-tariff treatment.

Costa Rica, El Salvador, Honduras, Nicaragua, and Panama would benefit from zero import tariffs on the bananas they export to South Korea by 2021. Peru is already enjoying zero tariffs on their banana exports to South Korea, while Colombia will get the same treatment three years from now.

Even Vietnam, an ASEAN economy, will get to sell bananas to South Korea with zero-tariff by 2021.

ASEAN-Korea Free Trade Agreement (AKFTA) is favorable to Southeast Asian economies in several aspects but it is highly disadvantageous to the Philippines in particular when it comes to the banana trade because the fruit is included in Korea’s Highly Sensitive List (HSL), which means that banana is exempted from any tariff concessions from reciprocal agreements.

The high import tariff of 30 percent on Philippine bananas is shouldered by the buyer in Korea, and even if the Philippines is geographically nearer, a businessman planning to sell the fruit in that country would prefer to buy from Central America because of the zero tax.