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ASEAN, S. Korea start FTA talks


By BERNIE CAHILES-MAGKILAT


The Association of Southeast Asian Nations (ASEAN) and South Korea have started negotiations for the proposed free trade agreement that calls for zero tariffs for 80 percent of both parties’ total tariff lines by 2009.


Trade and Industry Senior Undersecretary Thomas G. Aquino said the Philippines participated in the initial trade negotiations for the proposed ASEAN-Korea Free Trade Agreement (AKFTA) held in Jakarta recently.

The next round of negotiations is scheduled this month in Seoul where the scope of the proposal should be finalized before the scheduled ASEAN Summit.

Aquino described the AKFTA as the most ambitious among all the ASEAN engagements.

"Of all the ASEAN engagements, the ASEAN-Korea FTA is the most ambitious in the sense that 80 percent of tariffs will be at zero by 2009. With this, the Philippines has to fasttrack the work done usually in three years, at least based on the ASEAN-China FTA negotiations," Aquino said.

The next round of negotiation is scheduled in mid-April in Seoul, South Korea where the details of the agreements to be finalized before the scheduled ASEAN Summit will be discussed.

The initial meeting was an offshoot of the ASEAN-Korea Summit in November last year in Vientiane, Laos where the leaders agreed to launch the negotiations in early 2005 for the AKFTA.

The staged approach to the proposed FTA, whereby certain areas like trade in goods would be negotiated and concluded in advance of other more sensitive areas such as services and investments, will be adopted for the AKFTA negotiations.

Negotiations for trade in goods will commence in 2005 followed by services and investments in 2006. Separate agreements will be negotiated in each of the three areas.

For the current year, the delivera-bles include the finalization of the Framework Agreement on Comprehensive Economic Partnership between ASEAN and Korea, the Trade in Goods Agreement, Rules of Origin for the AKFTA and Agreement on Dispute Settlement Mechanism.

All these have to be completed in time for the ASEAN-Korea Summit in October 2005.

"The Framework Agreement on Comprehensive Economic Partnership serves as an enabling document to bind other Member Countries to other aspects of the FTA since negotiations will be undertaken on a staged approach" Secretary Santos said.

"The approach assures both sides that the outstanding issues would also be addressed after the first phase of the negotiations is completed", Aquino said.

The Trade in Goods Agreement will include the agreed modality for tariff reduction and elimination between ASEAN and Korea.

Aquino said an important element of the negotiations in trade in goods is the Rules of Origin that will provide specific guidelines on the determination of originating goods from ASEAN and Korea and whether these could be accorded preferential rates within the AKFTA.

Preferential origin rules must be developed to prevent third country imports from taking advantage of the concessions that were agreed upon by ASEAN and Korea in the AKFTA.

Rules with respect to the avoidance or settlement of disputes between ASEAN and Korea concerning their rights and obligations under the AKFTA will also be required with the substantive concessions on goods in place.

ASEAN member countries’ exports to South Korea increased by 156 percent from $6.125 million in 1993 to $15.702 million in 2002. Top five exports include mineral products, machinery and electrical appliances, chemicals, wood and wood articles, and plastics.

The regional trade bloc’s imports from South Korea likewise grew by 107 percent from $7.148 million in 1993 to $14.830 million in 2002 with machinery and electrical appliances, base metal and metal products, mineral products, chemicals, and textile and apparels as top five imports.

On a bilateral level, South Korea remained as one of the Philippines’ top ten trading partners for the last five years (19992003).

Two-way trade between the two countries increased by 0.18 percent annually. South Korea also ranked as the country’s seventh biggest trading partner, ninth largest export market and fourth largest import supplier in 2003.

Semiconductor devices remain as the country’s top export product to South Korea, with exports amounting to $691 million in 2003 or 52.73 percent of the total exports.

Other top exports to South Korea were: parts and accessories of automatic data processing machines, $73 million or 5.59 percent; refined copper cathodes, $65 million or 4.95 percent; storage units, $55 million or 4.18 percent; and petroleum naphtha, $38 million or 2.92 percent.

Top imports, on the other hand, include semiconductor components & devices, $483 million; cellular phones worth $249 million; other material & accessories, for the manufacture of semiconductor devices, $132 million; dice of any material, $111 million; and parts and accessories of automatic data processing machines, $110 million.

South Korea’s investments in the Philippines amounted to $712.2 million, making up for 3.7 percent of the total amount of foreign investments in 2003. Investments range from the sectors of IT-services, manufacturing, fishery and agriculture.

The Philippines and South Korea entered into a trade agreement on 24 April 1978 that was ratified on 30 September 1978. The exchange of notes of ratification was done on 6 November 1978. The treaty is operational. The two countries also signed the Philippine-Korea Investment Agreement on April 7, 1994.

In the multilateral level, South Korea has an agreement for liberalized trade among the less developed member-countries of the ESCAP (Indonesia, Laos, Philippines, Indonesia, Thailand, Bangladesh, Pakistan).

This agreement provides for tariff concessions on some commodities including agricultural items, manufactured goods, chemicals and minerals.




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