Yoon Signs FTA with the Philippines, a Population and Resource Powerhouse... Positive Signals for Automobiles and Supply Chains

Signing of CEPA Agreement After 1 Year and 10 Months of Negotiations
Tariff Elimination on 96.5% of Philippine Products, 94.8% of Korean Products
Expanding New Markets and Strengthening Solidarity Through FTA and More

President Yoon Suk-yeol signed a Free Trade Agreement (FTA) with the Philippines on the 7th. This comes about 1 year and 10 months after the Korea-Philippines FTA negotiations were concluded. The Philippines, a country rich in essential core minerals for advanced industries and with a young population where one-third of its 110 million people are economically active between the ages of 13 and 24, is expected to expand economic cooperation through this FTA signing due to its significant consumption potential.

President Yoon signed the Korea-Philippines FTA during his attendance at the ASEAN (Association of Southeast Asian Nations) related summit held in Jakarta, Indonesia, in the afternoon. As a result, the Philippines will eliminate tariffs on 96.5% of all items, and Korea will eliminate tariffs on 94.8%, achieving a high level of market openness. The Philippines, with a population of 110 million and a large domestic market where consumption accounts for 70% of GDP, is expected to boost export vitality for Korean companies.

President Yoon Suk-yeol is shaking hands and taking a commemorative photo with Philippine President Ferdinand Marcos at the Korea-Philippines summit held at a hotel in Jakarta on the 7th (local time).
[Image source=Yonhap News]

Moreover, the Korea-Philippines FTA is the fifth bilateral FTA with ASEAN member countries following Singapore, Vietnam, Cambodia, and Indonesia. According to the Presidential Office, Korea has completed an FTA network covering 91% of the ASEAN market, enabling further expansion of trade within ASEAN.

Additionally, a foundation for cooperation in supply chains, including core minerals, has been established. According to the U.S. Geological Survey (USGS), as of 2022, the Philippines ranks second in nickel production used in electric vehicle batteries with 330,000 tons, following Indonesia (1.6 million tons). In cobalt production, the Philippines ranks fourth after the Democratic Republic of Congo (145,000 tons), Indonesia (9,500 tons), and Australia (7,000 tons).

In particular, Korean automobiles, which were previously subject to a 5% tariff, will have tariffs eliminated immediately upon the FTA’s enforcement, improving their competitiveness. Furthermore, tariffs on automobile parts and eco-friendly vehicles such as electric and hybrid cars, which previously had tariffs up to 30%, will be eliminated within a maximum of five years. The Philippines is the largest importer of automobiles among ASEAN countries. As of 2022, the market share by brand in the Philippines is dominated by Japanese brands at 82.5%, followed by American brands at 7.0%, Chinese brands at 6.4%, and Korean brands at 2.5%. Hyundai-Kia has remained around the 9th position in market share but is expected to increase its share in the future.

Choi Sang-mok, Senior Secretary for Economic Affairs, stated at a local press briefing, "We expect the export competitiveness of our automobiles to improve significantly in the Philippine automobile market, which has been dominated by Japan." He added, "The government will continue to expand FTAs with promising markets to actively support Korean companies in pioneering new markets."

Meanwhile, following the government’s conclusion of Korea-Central America FTA accession negotiations with Guatemala on the 5th, negotiations with Ecuador are also reported to be nearing completion.

This content was produced with the assistance of AI translation services.