Title
THE FREE TRADE AGREEMENT BETWEEN THE GOVERNMENT OF THE REPUBLIC OF THE PHILIPPINES AND THE GOVERNMENT OF THE REPUBLIC OF KOREA
Preamble
PREAMBLE
The Government of the Republic of the Philippines: ("the Philippines") and the Government of the Republic of Korea ("Korea"), hereinafter referred to collectively as the "Parties" and individually as a "Party":
RECOGNIZING their longstanding and strong friendship and the need to strengthen their close economic relations;
CONVINCED that a free trade area will create an expanded and secure market for goods and services in their territories and a stable and predictable environment for investment, thus enhancing the competitiveness of their firms in global markets;
RECOGNIZING the need to strengthen the framework for broader and deeper economic cooperation;
DESIRING to promote economic growth and create new employment opportunities;
RECOGNIZING the different levels of economic development between the Parties;
DESIRING to strengthen a mutually beneficial cooperative framework to foster creativity and innovation, and to promote stronger linkages in and between the dynamic sectors of their economies;
SEEKING to establish clear and mutually advantageous rules governing their trade and investment and to reduce or eliminate the barriers to such trade and investment between them;
DESIRING to promote a predictable, transparent, and consistent business environment that will assist enterprises in planning effectively and using resources efficiently;
RESOLVED to contribute to the harmonious development and expansion of world trade by removing obstacles to trade through the creation of a free trade area;
BUILDING on their respective rights and obligations under the Marrakesh Agreement Establishing the World Trade Organization and other multilateral, regional, and bilateral agreements to which both Parties are party; and
REAFFIRMING their desire to build upon their commitments under the Framework Agreement on Comprehensive Economic Cooperation among the Governments of the Member Countries of the Association of Southeast Asian Nations and the Republic of Korea as well as other relevant agreements pursuant to the Framework Agreement,
HAVE AGREED as follows:
Body
Chapter ONE. GENERAL PROVISIONS
Article 1.1. Establishment of a Free Trade Area
The Parties, consistent with Article XXIV of GATT 1994 and Article V of GATS, hereby establish a free trade area in accordance with the provisions of this Agreement.
Article 1.2. Objectives
The objectives of this Agreement are to:
(a) achieve the substantial liberalization of trade in goods between the Parties, in conformity with Article XXIV of GATT 1994;
(b) achieve the substantial liberalization of trade in services between the Parties, in conformity with Article V of GATS;
(c) mutually enhance investment opportunities;
(d) promote competition in their economies, particularly as it relates to economic relations between the Parties;
(e) bring substantial benefits to the Parties, with special consideration for Micro, Small and Medium Enterprises (MSMEs);
(f) develop appropriate cooperation initiatives in the fields of innovation and research and development; and
(g) establish a framework to enhance closer cooperation in the fields agreed upon by the Parties in this Agreement.
Article 1.3. Relation to other Agreements
1. The Parties reaffirm their rights and obligations under the WTO Agreement, the ASEAN-Korea FTA, and any other agreements to which both Parties are party.
2. Unless otherwise provided in this Agreement, in the event of any inconsistency between this Agreement and another agreement to which both Parties are party, the Parties shall immediately consult with each other with a view to finding a mutually satisfactory solution.
Article 1.4. Extent of Obligations
Each Party shall, subject to the provisions of this Agreement, ensure the observance of all obligations and commitments under this Agreement by its regional and local governments and authorities, and by non-governmental bodies in the exercise of governmental powers delegated to them by central, regional and local governments or authorities.
Article 1.5. General Definitions
For purposes of this Agreement, unless otherwise specified,
Agreement on Agriculture means the Agreement on Agriculture, in Annex 1A to the WTO Agreement;
Anti-Dumping Agreement means the Agreement on Implementation of Article VI of the General Agreement on Tariffs and Trade 1994, in Annex 1A to the WTO Agreement;
customs authority means the authority that, in accordance with the legislation of each Party, is responsible for the administration and enforcement of its customs laws and regulations:
(a) for the Philippines, the Bureau of Customs, or its successor; and
(b) for Korea, the Ministry of Economy and Finance or the Korea Customs Service, or their respective successors;
customs duties means any customs or import duty and a charge of any kind, including any form of surtax or surcharge, imposed in connection with the importation of a good, but does not include any:
(a) charge equivalent to an internal tax imposed consistently with Article III:2 of GATT 1994, in respect of like, directly competitive, or substitutable goods of a Party, or in respect of goods from which the imported good has been manufactured or produced in whole or in part;
(b) duty imposed pursuant to a Party?s laws and regulations consistent with Chapter Three (Trade Remedies);
(c) fee or other charge in connection with importation commensurate with the cost of services rendered;
(d) premiums offered or collected on an imported good arising out of any tendering system in respect of the administration of quantitative import restrictions or tariff rate quotas; or
(e) duty imposed pursuant to any agricultural safeguard measure taken under the Agreement on Agriculture;
Customs Valuation Agreement means the Agreement on Implementation of Article VII of the General Agreement on Tariffs and Trade 1994, in Annex 1A to the WTO Agreement;
days means calendar days, including weekends and holidays;
existing means in effect on the date of the entry into force of this Agreement;
GATS means the General Agreement on Trade in Services, in Annex 1B to the WTO Agreement;
GATT 1994 means the General Agreement on Tariffs and Trade 1994, including its notes and supplementary provisions, which is a part of the WTO Agreement;
goods means any merchandise, product, article, or material;
Harmonized System (HS) means the nomenclature of the Harmonized Commodity Description and Coding System defined in the International Convention on the Harmonized Commodity Description and Coding System, including all legal notes thereto, as in force and as amended from time to time;
Joint Committee means the Philippines-Korea Free Trade Agreement Joint Committee established under Article 11.1 (Joint Committee);
juridical person means any legal entity duly constituted or otherwise organized under applicable laws and regulations, whether for profit or otherwise, and whether privately-owned or governmentally-owned, including any corporation, trust, partnership, joint venture, sole proprietorship, or association;
ASEAN-Korea FTA means the Framework Agreement on Comprehensive Economic Cooperation among the Governments of the Member Countries of the Association of Southeast Asian Nations and the Republic of Korea and other means the Framework Agreement on Comprehensive Economic Cooperation among the Governments of the Member Countries of the Association of Southeast Asian Nations and the Republic of Korea and other relevant agreements stipulated in paragraph 1 of Article 1.4 of the Framework Agreement;
measure means any measure by a Party, whether in the form of a law, regulation, rule, procedure, decision, administrative action, or any other form;
measures adopted or maintained by a Party means measures adopted or maintained by:
(a) central, regional, or local governments and authorities; and
(b) non-governmental bodies in the exercise of powers delegated by central, regional, or local governments and authorities;
national means:
(a) for the Philippines, a Filipino national as defined in its Constitution, as amended; and
(b) for Korea, a Korean national within the meaning of the Nationality Act, as amended;
originating goods means products or materials that qualify as originating under Chapter Four (Rules of Origin);
person means a natural person or a juridical person;
preferential tariff treatment means tariff concessions granted to originating goods as reflected by the tariff rates applicable under this Agreement;
Safeguards Agreement means the Agreement on Safeguards, in Annex 1A to the WTO Agreement;
SCM Agreement means the Agreement on Subsidies and Countervailing Measures, in Annex 1A to the WTO Agreement;
territory means:
(a) for the Philippines, the national territory as defined in Article I of its Constitution. The term "national territory" also includes the exclusive economic zone and the continental shelf over which the Philippines exercises sovereign rights or jurisdiction in accordance with its laws and regulations and under international law; and
(b) for Korea, the land, maritime, and airspace under its sovereignty, and those maritime areas, including the seabed and subsoil adjacent to and beyond the outer limit of the territorial seas over which it may exercise sovereign rights or jurisdiction in accordance with international law and its domestic law;
Trade Facilitation Agreement means the Agreement on Trade Facilitation, in Annex 1A to the WTO Agreement;
WTO means the World Trade Organization; and
WTO Agreement means the Marrakesh Agreement Establishing the World Trade Organization, done on 15 April 1994.
Chapter TWO. TRADE IN GOODS
Article 2.1: Definitions
For purposes of this Chapter:
consular transactions
means requirements that goods of a Party intended for export to the territory of the other Party must first be submitted to the supervision of the consul of the importing Party in the territory of the exporting Party for the purpose of obtaining consular invoices or consular visas for commercial invoices, certificates of origin, manifests, shippers? export declarations, or any other customs documentation required on or in connection with importation; and
import licensing
means an administrative procedure requiring the submission of an application or other documentation (other than that required for customs purposes) to the relevant administrative body as a prior condition for importation into the territory of the importing Party.
Article 2.2: Objectives
The Parties shall liberalize trade in goods under this Agreement, in conformity with Article XXIV of GATT 1994.
Article 2.3: Scope and Coverage
Except as otherwise provided for in this Agreement, this Chapter shall apply to trade in goods between the Parties.
Article 2.4: Reduction or Elimination of Customs Duties
1.
Except as otherwise provided in this Agreement, each Party shall reduce or eliminate its customs duties on originating goods of the other Party in accordance with its respective Schedule of Tariff Commitments reflected in Annex 2-A.
2.
In accordance with the WTO Agreement, originating goods of the other Party shall be eligible, at the time of importation, for the most-favored-nation (MFN) applied rate of customs duty for those goods in a Party, where that MFN
In accordance with the WTO Agreement, originating goods of the other Party shall be eligible, at the time of importation, for the most-favored-nation (MFN) applied rate of customs duty for those goods in a Party, where that MFN
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applied rate is lower than the preferential rate of customs duty provided for in that Party?s Schedule of Tariff Commitments. Subject to each Party?s laws and regulations, each Party shall provide that an importer may apply for a refund of any excess duty paid for a good if the importer did not make a claim for the lower MFN rate applicable at the time of importation.
3.
Except as otherwise provided in this Agreement, neither Party shall increase any existing customs duty, or adopt any new customs duty, on originating goods of the other Party, as provided in its Schedule of Tariff Commitments.
Article 2.5: Acceleration of Tariff Commitments
1.
A Party may, at any time, unilaterally improve or accelerate its tariff commitments set out in its Schedule of Tariff Commitments. Such Party shall inform the other Party as early as practicable before the new preferential rate of customs duty takes effect.
2.
Upon request of a Party, the Parties will consult to consider accelerating the reduction or elimination of customs duties set out in their respective Schedule of Tariff Commitments. An agreement by the Parties to accelerate the reduction or elimination of a customs duty on a good shall supersede any duty rate or staging category determined pursuant to their respective Schedules of Tariff Commitments reflected in Annex 2-A.
3.
Following a unilateral improvement or acceleration of its tariff commitments referred to in Paragraph 1, a Party may raise its preferential customs duty to a level not in excess of that set out in its Schedule of Tariff Commitments for that year. Such Party shall inform the other Party of the date from which the new preferential rate of customs duty comes into effect as early as practicable before such date.
Article 2.6: Classification of Goods
The classification of goods in trade between the Parties shall be in conformity with the Harmonized System (HS).
Article 2.7: Agricultural Export Subsidies
The Parties reaffirm their commitments made in the 2015 Ministerial Decision on Export Competition, adopted in Nairobi, including elimination of scheduled export subsidy entitlements for agriculture goods.
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Article 2.8: Goods in Transit
Each Party shall continue to facilitate customs clearance of goods in transit from or to the other Party in accordance with paragraph 3 of Article V of GATT 1994 and the relevant provisions of the Trade
Facilitation Agreement.
Article 2.9: Temporary Admission of Goods
1.
Each Party shall allow, as provided for in its laws and regulations, goods to be brought into its customs territory conditionally relieved, totally or partially, from payment of import duties and taxes, if such goods:
(a)
are brought into its customs territory for a specific purpose;
(b)
are intended for re-exportation within a specific period; and
(c)
have not undergone any change, except normal depreciation and wastage due to the use made of them.
2.
Each Party shall, at the request of the person concerned and for reasons its customs authority considers valid, extend the time limit for duty-free temporary admission provided for in paragraph 1 beyond the period initially fixed.
3.
Neither Party shall condition the duty-free temporary admission of a good provided for in paragraph 1, other than to require that the good:
(a)
be used solely by or under the personal supervision of a national or resident of the other Party in the exercise of the business activity, trade, profession, or sport of that person;
(b)
not be sold or leased while in its territory;
(c)
be accompanied by a security or guarantee in an amount no greater than the customs duties, taxes, fees, and charges that would otherwise be owed on entry or final importation, releasable on exportation of the good;
(d)
be capable of identification when imported and exported;
(e)
be exported on the departure of the person referred to in subparagraph (a), or within such other period related to the
be exported on the departure of the person referred to in subparagraph (a), or within such other period related to the
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purpose of the temporary admission as the Party may establish, unless extended;
(f)
be admitted in no greater quantity than is reasonable for its intended use; and
(g)
be otherwise admissible into the Party?s territory under its laws and regulations.
4.
If any condition that a Party imposes under paragraph 3 has not been fulfilled, the Party may apply the customs duty and any other charge that would normally be owed on the good in addition to any other charges or penalties provided for under its laws and regulations.
5.
Each Party shall permit a good temporarily admitted under this Article to be re-exported through a customs port other than that through which it was admitted.
Article 2.10: Customs Valuation