ASEAN-Korea free trade talks set to start
Manila Bulletin
8 November 2004
ASEAN-Korea free trade talks set to start
By BERNIE CAHILES MAGKILAT
Negotiations on the proposed ASEAN-Korea Free Trade Agreement (AKFTA) is expected to commence next year as ASEAN and Korean leaders are seen to favorably endorse the recommendations at the forthcoming ASEAN-Korea Summit this month.
Bureau of International Trade Relations Angelo M. Benedictus told businessmen at the 1st Philippines-Korea Business Forum said that under the proposed timetable by the ASEAN-Korea Experts Group (AKEG), FTA negotiations may be completed in two years time or by 2007.
By 2009, the AKFTA is expected to be realized or year earlier than ASEAN China’s FTA by 2010 or three years’ ahead of the Philippines accession to the ASEAN-China, which is by year 2012 yet.
By 2009, the AKEG timetable expects that 80 percent of products will be reduced to zero tariff and the remaining 20 percent will be subject to negotiations in consideration of the different levels of economic development of the ASEAN countries.
There will be special and differential treatment and flexibilities provisions to safeguard sensitive sectors of each country.
Likewise, the four new members of ASEAN, Cambodia, Laos, Myanmar and Vietnam will be applied special treatment or different timetables for accession into the FTA.
As in other FTA deals, Benedictus said the AKFTA will have a comprehensive coverage that include liberalization of goods, services, investment and economic cooperation.
Based on the results of the studies made by AKEG, the impact of an AKFTA will be beneficial to both parties.
The arrangement means an improved regional gross domestic product of ASEAN from 0.03 percent to 0.49 percent under a liberalized trading regime.
Capital access would mean improved the region’s GDP from 0.30 percent to 2.07 percent.
The tariff liberalization would contribute 0.04 percent for the Philippines GDP and 0.32 percent impact for a combined tariff and capital access.
For the rest of ASEAN, the zero tariff would mean 0.03 percent to 0.10 percent while a combined tariff and capital means 0.16 percent to 2.07 percent.
Based on the study, the tariff and capital access liberalization will mean moderate expansion for the following sectors of the Philippines, primary goods, textile and apparel, metal products, transportation equipment, electronic and electronic goods and machinery.
Korea is ASEAN’s 5th largest trading partner and vice-versa in which ASEAN exports $17.1 billion to Korea in 2003 and ASEAN imports $15.1 billion from Korea.
For the period 2002-2003, bilateral trade between the two countries grew by 2.2 percent.
In terms of investment, ASEAN will be an important destination for Korea.
Direct investments from Korean recovered in 2003 following a decrease in the 1990s to 2002 due to the emergence of China and the Korean financial crisis.
Benedictus further said he does not believed that Korea would be at a disadvantaged once the JapanPhilippine FTA is concluded saying it is up to both parties to pursue their potentials.
But a bilateral FTA between Korea and the Philippines is something that economic managers have to discuss.
Some businessmen at the forum have pushed for a bilateral FTA between the Philippines and Korea.
As of end 2003, Korean investments in the country reached $750 million.
Among the biggest Korean investors in the country include Korea Electric Power Corp., Samsung Electronics Manufacturing of the Philippines Co., LG Collins.
The Philippines is promoting the country as an ideal site for Korea to invest in business process outsourcing, animation services, content development and broadband development.
