Growers, exporters call for zero-tariff on banana exports to Korea

MANILA The Philippines could lose South Korea as a top export destination for locally produced bananas three years from now unless tariffs are removed on this agricultural product.

The proposed move is to enable the Philippine bananas to compete with other banana exports entering this lucrative market on a level playing field.

Officials of the Pilipino Banana Growers and Exporters Association (PBGEA) aired this warning, as they pressed the government anew to work out a bilateral agreement with South Korea to remove the 30-percent tariff on Philippine banana exports.

Losing the Korean market, which is among the top three destinations for Philippine banana exports, would rob 32,000 workers and over 200,000 dependents in the domestic industry of their means of livelihood, the group said.

It might also result in estimated annual export revenue losses of close to USD300 million and another PHP6.5 billion in foregone local and national tax revenues, according to PBGEA.

Cheap banana imports from Central America have started to eat into the share of Philippine bananas in the Korean market and these could totally push us out of the picture by 2022, unless we get the same zero-tariff treatment as they do, said PBGEA executive director Stephen Antig.

For his part, PBGEA president Alexander Valoria pointed out that the Central American countries of Costa Rica, El Salvador, Honduras, Nicaragua, and Panama would benefit from zero import tariffs on the bananas they export to South Korea by 2021. Peru is already enjoying zero tariffs on their banana exports to South Korea, while Colombia will get the same treatment also three years from now.

Valoria is also president of Tagum Agricultural Development Corp.

Even Vietnam, a fellow ASEAN economy of the Philippines, will get to sell bananas to South Korea with zero-tariff by 2021, Valoria noted.

Paul Cuyegkeng, president of Sumifru Philippines Corp., said Filipino banana growers merely want a level playing field in competing with exporters from other countries not only in South Korea, but in Japan and China as well.

We are talking about protecting the banana industry and saving jobs, Cuyegkeng said. It would be highly ironic if we lose jobs in the banana industry, which is mostly based in Mindanao when the main program of our President, who hails from this island, is job creation.

Valoria said while the Central American countries recently signed a free trade accord with Korea as a bloc, Costa Rica, El Salvador, Honduras, Nicaragua, and Panama were also able to forge separate bilateral agreements with Korea in favor of their agricultural exports.

This is the same level of support and action that we need to ensure that our fruit exports remain competitive in the fast-expanding Asian market, Antig said. ASEAN has an existing free trade agreement with Korea, but we should negotiate separate bilateral deals like what the Central American countries did, so that the agreements are country-specific and not regionalized.

Valoria said while the ASEAN-Korea Free Trade Agreement (AKFTA) is favorable to Southeast Asian economies in several aspects, it is highly disadvantageous to the Philippines in particular, when it comes to the banana trade because the fruit is included in Korea's Highly Sensitive List (HSL), which means that banana is exempted from any tariff concessions from reciprocal agreements.

What we can do is to come up with a separate bilateral agreement, with Korea removing the import tariff on Philippine bananas, Antig said.

Valoria added that countries like Guatemala and Costa Rica currently export a small percentage of bananas to South Korea compared with the Philippines.

"But they could easily bump us off from this lucrative export market three years from now because our bananas would be more expensive than those coming from Central America, he pointed out.

The high import tariff of 30 percent on Philippine bananas is shouldered by the buyer in Korea, Antig explained, so even if the Philippines is geographically nearer, a businessman planning to sell the fruit in that country would prefer to buy from Central America because of the zero tax.

Without the actual removal of the import tariff, the Philippines will undoubtedly lose the Korean market to Central American competitors, Antig said.

According to PBGEA, South Korea represents a market of 30 million boxes for Philippine bananas from a production area of 8,000 hectares, or the equivalent of 390,000 tons.

Valoria noted that bilateral trade between the Philippines and Korea is heavily lopsided in favor of the latter. South Korean exports to the Philippines reached USD10.6 billion in 2017, while Philippine exports to Korea amounted to only USD3.7 billion.

This trade imbalance can be corrected, Antig said, this is if the Philippines can get more favorable terms for the country's exports to Korea, particularly agricultural products.

With the widening agricultural trade deficit, we appreciate the call of (Socioeconomic Planning) Secretary (Ernesto) Pernia for increased government support to aid Philippine exports. But beyond doubling efforts to market the country's export products, the government must assess the benefits and disadvantages of existing free trade agreements to reverse trade imbalances with bilateral or multilateral partners, as in the case of the AKFTA, Antig said. (PR)

Source: Philippine News Agency