In fact, as part of that flexibility, at least 40 tariff lines would actually be placed in the highly sensitive list and not subjected to any tariff reduction.
Leaders and Ministers of the Association of Southeast Asian Nations (ASEAN) are expected to sign the FTA with South Korea at the ASEAN Summit in Kuala Lumpur which will be held next week.
This was disclosed yesterday by Trade and Industry Secretary Peter B. Favila who said that documents to be signed for an ASEAN-Korea Free Trade Area (AKFTA) include a Framework Agreement on Comprehensive Economic Cooperation with an Annex on Economic Cooperation as an integral component of the framework; a Trade in Goods Agreement (TIG) of the AKFTA (with the Rules of Origin section to be negotiated next year and finalized by the time the ASEAN Economic Ministers Retreat in April 2006, to allow the TIG to enter info force by mid-2006) and the Agreement on Dispute Settlement Mechanism.
Favila said the Framework Agreement is necessary because the Comprehensive Economic Cooperation between ASEAN and South Korea covers not only merchandise FTA but also agreements on services and investments.
"Since the TIG will be signed by end-2005, the Framework commits the parties to liberalize their Trade in Services (TIS) and their investment sectors to one another and complete the negotiations on these by end-2006," Favila said.
Favila assured that Philippine interests are served by all the components of the AKFTA – the TIG, TIS and Investments and Cooperation.
With respect to TIG, some 28 percent of Philippine exports to Korea are currently dutiable.
Bureau of International Trade (BITR) director Ramon Vicente Kabigting explained that the Philippines stands to gain from the liberalization by Korea of its tariffs on certain products such as copper cathodes and several agricultural items.
Under the TIG modality, ASEAN-6 (Brunei, Indonesia, Malaysia, Philippines Singapore and Thailand) will have accelerated access into the South Korea market.
In exchange, the ASEAN-6 agree to grant duty free access for 90 percent of their tariff lines by Jan. 1, 2009.
By 2010, South Korea will eliminate all tariffs on 90 percent of their tariff lines while ASEAN 6 reciprocates by eliminating all tariffs on 85 percent of all tariff lines.
However, the Philippines has secured flexibility in cases where tariff reduction would only be up to 80 percent by 2010 and down to zero duty on 90 perecent of tariff lines only by 2012.
The AKFTA will have a Sensitive Track equal to 10 percent of all tariff lines simultaneously controlled by 10 percent of total import value. Various government agencies are now working to prepare the product list of Philippine’s Sensitive Track.
Favila said that with the agreement, the Philippines benefits with its ability to increase export in services and at the same time increase investment performance as it encourages more South Korea capital to come in the country.
"As we protect their capital, we expect more Korean investments to come in, particularly in shipbuilding and power, sectors which our investment promotions are focusing on," Favila said.
Annex on Economic Cooperation of the Framework sets the stage for increased Korean technical assistance and technology transfer to the Philippines. The cooperation that the Philippines will extend to Korea will be subject to domestic laws and regulations.