Philippines risks further losing banana market share in South Korea

Delays in FTA ratification

MANILA, Philippines — The Philippines may lose the South Korean market for bananas if the free trade agreement (FTA) with the East Asian country is not ratified soon, as local exporters face stiffer competition against other foreign suppliers.

Government officials and banana industry stakeholders were in unison that the prospective FTA, which is awaiting Senate ratification, would protect and salvage the country’s share in South Korea’s banana market.

The Philippines has been struggling to keep its foothold in the South Korean banana market, its third largest destination for fresh banana exports, after neighboring countries such as Vietnam ramped up their exports on the back of lower costs and better market access through lower tariffs.

Trade Undersecretary Allan Gepty disclosed that the market share of the country’s bananas in South Korea has fallen to 69 percent from 99 percent in recent years.

Banana industry players have earlier warned that the country would lose its market share in South Korea due to lowering of tariffs extended by South Korea to other banana suppliers, worsened by lackluster domestic production hampered by pests and diseases.

“Just imagine the threat to our banana industry if we will not pursue (this FTA),” Gepty told the Senate committee on foreign relations yesterday.

The FTA, signed by the two countries in September 2023, would reduce the tariffs slapped by South Korea on Philippine bananas to zero percent within a five-year time period from its current rate of 30 percent.

“The big problem with South Korea has been the unfair competition because of Vietnam. They already have an FTA and by next year the [tariff on Vietnam] will be zero percent versus our 30 percent,” said Alberto Bacani, who represented the Pilipino Banana Growers and Exporters Association (PBGEA), during the hearing.

PBGEA executive director Stephen Antig said the five-year tariff reduction period would buy the industry some time to rehabilitate areas affected by Panama disease and expand production to take advantage of the eventual tariff elimination.