On 23 September 2024, the Philippines Senate ratified a free trade agreement (FTA) with South Korea. The agreement will eliminate tariffs on 94.8 percent of Philippine exports to South Korea and 96.5 percent of South Korean exports to the Philippines. The agreement is still pending ratification by South Korea's National Assembly.
Under the FTA, 1,531 tariff lines on AG goods will have reduced tariffs with the 1,417 lines enjoying 0% tariffs upon entry into force. For industrial goods, 9,909 tariff lines will see reductions, with 9,747 lifted upon the FTA’s implementation. The agreement, expected to take effect in the first quarter of next year, also provides benefits to the Philippine garment sector which is projected to reach $1 billion by 2025. The FTA will open the way for the Philippines to further expand its trade in the South Korea market, where the country exported $17.2 million worth of apparels in 2023.
South Korean automakers stand to gain from the FTA, which will remove the current 5 percent import duty on automobiles. Tariffs on electric and hybrid vehicles are set to be eliminated over five years. The FTA is also expected to increase South Korean investment in the Philippines' growing electric vehicle (EV) market, which benefits from supportive government policies. This is complemented by a recent memorandum of understanding (MoU) between the two countries on cooperation in the critical raw materials supply chain, which will further stimulate the local EV industry.
