Foreign Affairs Undersecretary Edsel T. Custodio told reporters the importance of Korea as an economic partner of the Philippines. "We have a robust trade and economic relationship with Korea," Custodio said noting that Korea is second only to China in terms of investments in the country.
Custodio stressed that Korea have investments here in the electricals and electronics, construction, and shipbuilding. "We are developing a very strong economic relations with Korea," Custodio said.
Globally, Korea is now leading in information technology and research and development.
Korean investments in the country include that of Samsung (electronics), Korean Electric Power Co. (power), Hanjin (construction), among others.
Unlike the proposed ASEAN-Korea, a bilateral FTA with Korea is more focused on both countries.
The proposed ASEAN-Korean FTA is a very broad cooperation and will have to take into consideration the different levels of economic development in each of the ASEAN countries.
Domestic industries are not interested in the country’s participation in the proposed ASEAN-Korea free trade agreement (FTA) and if ever they agree they would like to see products to be placed under the sensitive and highly- sensitive lists.
Trade and Industry Undersecretary Elmer C. Hernandez, who is also Board of Investments managing head, said following a meeting of ASEAN Economic Ministers with Korea in Vientianne, Laos.
But even the government viewed Korea’s proposal as cunning and disadvantageous to the Philippines.
At the outset, however, Hernandez said that Korea offers a better package because it would reduce tariffs at higher percentage ahead of the Philippines. For instance, Korea may reduce tariffs for a total of 70 percent of its products while the Philippines at 60 percent at a much later date.
But as a total package, Hernandez said that Korea’s package would be disadvantageous to the Philippines because only 2 percent of the country’s exports will benefit from Korea’s advanced tariff cuts.
Based on the PhilippineKorea trade statistics, the Philippines is exporting a meager number of products to Korea as against the Philippine imports from Korea.
Another concern is that while most FTAs call for a 10 percent only of the tariff lines of a contracting party as the ones being proposed under the China-ASEAN FTA be included under the sensitive list and the bulk of 90 percent at zero rate, Korea proposed the same mechanism but not based on the tariff lines but the 10 percent is based on the value of exports of its partner country.
Hernandez said that Korea’s proposal offers no flexibility because there is a good possibility that the Philippines’ exports of a particular product might exceed the 10 percent limit to be placed under the sensitive list.
In addition, Korea has proposed that the 10 percent listing under the sensititive must be satisfied first before committing to the 90 percent of total trade where tariffs can be pegged at zero.
The Philippines is also pushing for an ASEAN-Korea FTA by 2012, same date as that of China. Korea, however, is pushing for an earlier date of 20102011.(BCM)
