The Market Monitor Minding the Nation's Business
AFRAID of losing the South Korean market, the Pilipino Banana Growers and Exporters Association Inc. (PBGEA Inc.) is urging the Senate to ratify the Free Trade Agreement (FTA) with SoKor.
The FTA removes tariffs on bananas to boost exports and to compensate for losses caused by the Panama disease that has been dampening production.
“If we are not able to finalize this free trade agreement with (South) Korea, we are very afraid that we will lose the Korean market entirely,” said Melquiades Hernandez, PBGEA and Dole Philippines corporate and government affairs consultant to the Senate foreign relations committee hearing that is looking into the FTA with South Korea.
The Philippines and South Korea signed the free trade deal in September 2023 as both countries sought to boost trade ties, Business World reported.
The deal will remove tariffs on about 94.8 percent of Philippine products, while the Philippines will remove tariffs on 96.5 percent of South Korean goods.
Tariffs on bananas, which are currently charged a 30 percent tariff, are set to go to zero over five years. Tariffs on processed pineapples, which are currently charged 36 percent, will be removed in seven years.
Hernandez said his group is working with the Department of Agriculture to come up with countermeasures to address the outbreak of Fusarium wilt, also known as the Panama disease.
Philippine banana exports rose by 3.4 percent to 2.3 million metric tons last year, according to the Food and Agriculture Organization (FAO).
In its Banana Market Review, FAO linked this increase to the increased investment in containing the Panama disease and the rehabilitation of about 4,000 hectares of infected plantations.
The Philippine government is aiming to export more bananas, processed pineapples to South Korea once the trade deal is finalized.
For industrial goods, the FTA led to tariff elimination for 9,909 lines, of which 9,747 lines are set for tariff elimination upon entry into force.
“The Panama disease is a big issue for our industry, including the high cost of production because of efforts to address the diseases, and the availability of land,” Hernandez said.
The Department of Trade and Industry earlier said the Philippines is likely to ratify the FTA with South Korea by the middle of the year.
Under the Constitution, international agreements and treaties require a concurrence of two-thirds of the Senate’s members for ratification.
In December last year, then-Senate President Juan Miguel F. Zubiri told BusinessWorld that the deal would be ratified by January.
The trade deal, however, has yet to reach the Senate plenary floor. ROSE DE LA CRUZ