Asean-Korea FTA nears completion

A free trade agreement between ASEAN and Korea is nearing completion, according to Philippine Trade and Industry Secretary Peter B. Favila.

According to Favila, an ASEAN-Korea FTA (AKFTA) may be reached sooner than earlier expected following Korea’s decision to extend more concessions to ASEAN members.

The Philippines, itself, according to Favila now appears amenable to fast-tracking the AKFTA.

Earlier, the Philippines had expressed some doubts about the AKFTA, fearing that it may have no substantial benefit from the proposed agreement.

Korea is trying to fast-track the AKFTA in order to have an FTA that would be at par with China which is negotiating an ASEAN-China FTA.

A DTI review of the tariff lines to be affected by the proposed AKFTA had earlier showed that only two percent of total Philippine exports to Korea would actually benefit from the regional FTA.

Most of the benefit would be reaped by Korea. There were also fears that certain proposed provisions of the AKFTA may also result in the Philippines losing its flexibility with regard to tariff adjustments and compliance under the ASEAN-Common Effective Preferential Tariff scheme.

Korea wants the AKFTA to be in place by 2010 or the latest by 2011.

The Philippines would prefer that an AKFTA only be put in place by 2012.

The Philippines had informed its ASEAN neighbors that it needs to address its industry concerns first as well as the need to raise much needed revenues partly through the maintenance of high tariffs beyond the 2010 target agreed upon under the ASEAN FTA.

It was precisely because of those two concerns that the Philippines vigorously pushed for flexibilities in complying with the ASEAN-CEPT rate.

The Philippines had informed its ASEAN partners that due to fiscal constraints, the Philippines cannot endorse the subsequent target of achieving zero tariff for 80 percent of the country’s tariff lines by 2007.

In fact, the Philippines indicated that it may even have to extend compliance to the CEPT beyond 2010.