President Yoon Suk Yeol (right) and Philippine President Ferdinand Marcos Jr. (left) on Sept. 7 applaud as Minister for Trade Ahn Dukgeun (second from right) and Philippine Secretary of Trade and Industry Alfredo Espinosa Pascual sign a bilateral free trade agreement at the hotel Langham, Jakarta in Indonesia. (Jeon Han)

By Koh Hyunjeong

The Ministry of Trade, Industry and Energy has signed a free trade agreement (FTA) with the Philippines in Jakarta, Indonesia, on the sidelines of the Association of Southeast Asian Nations (ASEAN) Summit.

Minister for Trade Ahn Dukgeun and his Philippine counterpart Alfredo Espinosa Pascual signed the accord on Sept. 7 at the hotel Langham, Jakarta in the Indonesian capital with the leaders of both countries in attendance.

The Philippines is thus the fifth ASEAN member country to sign a bilateral FTA with Korea following Singapore, Vietnam, Cambodia and Indonesia. The archipelago state is also part of multilateral FTAs that include ASEAN economies such as the ASEAN-Korea FTA and Regional Comprehensive Economic Partnership.

With a population of 110 million and domestic consumption comprising 70% of gross domestic product, the Philippines has high consumption potential. Its rich reserves of nickel and cobalt, two of Korea's top 10 strategic core minerals, also indicate extremely high potential for bilateral cooperation.

The FTA means Korea will remove tariffs on 94.8% of all Philippine imports and the Philippines 96.5% of those on Korean imports. The main beneficiaries will be cars and automotive parts. 

"Tariffs on Korean cars (tariff of 5%) will be immediately scrapped after the FTA takes effect, and those on auto parts (3%-30%) will be removed within five years," the ministry said. "This will make us more competitive on the Philippine automotive market over other major competitor countries."

The FTA could take effect as early as the first half of next year after ratification by the National Assembly.

hjkoh@korea.kr