ASEAN – KOREA FREE TRADE AREA During the ASEAN-Korea Summit held in Bali (Indonesia) in October 2003, the Korean President proposed that ASEAN and Korea should deepen relations by developing a comprehensive economic partnership, including the establishment of an ASEAN-Korea Free Trade Area. The proposal was in part, a direct reaction to the blistering pace of ASEAN’s Free Trade Agreement negotiations that were being conducted with China, Japan and India. The negotiation for the ASEAN – Korea Free Trade Agreement (FTA) was launched in early 2005. In December 2005, at the ASEAN-Korea Summit held in Kuala Lumpur (Malaysia), the Framework Agreement on Comprehensive Economic Co-operation between ASEAN and Korea was signed. This Framework called for the conclusion of key agreements such as the Agreement on Trade in Goods, Trade in Services, Investment, Agreement, and Agreement on Dispute Settlement Mechanism.

Agreement on Trade in Goods The Agreement on Trade in Goods (AKTIGA) provides for the substantial reduction or elimination of tariffs and other barriers to establish the ASEAN – Korea FTA by 2010 under various tracks, namely: Normal Track (2006-2010) and Sensitive Track (2012-2016). There are differentiated timeframes for ASEAN and Korea as Korea frontloaded 70% of its tariff lines in the Normal Track upon entry into force of the Agreement, 95% not later than 01 January 2008 and all Normal Track lines by 01 January 2010. The ASEAN 6 is to reduce its tariffs for at least 50% of its Normal Track not later than 01 January 2007; 90% by 01 January 2009 and all tariff lines in the Normal Track by 01 January 2010, with flexibility up to 2012. Additional flexibility was accorded to the Philippines and Indonesia wherein 10% of products in the Normal Track can be eliminated in 2012 instead of 2010. The AKTIGA was implemented by the Philippines on 01 January 2008 with the publication of Executive Order (E.O.) 639 which provides for tariff reduction of products under the Normal Track for that year. Given that the schedule of tariff cuts for the aforementioned Agreement involves further reduction in the rates of a number of products under the Normal Track, the Philippines was subsequently required to draft another legal enactment to implement this tranche of Philippine commitments. This is covered under EO 812.

Agreement on Trade in Services The Agreement on Trade in Services (AKTISA) provides for the progressive liberalization of the services sector through the substantial sectoral coverage which includes all modes of supply. Services and services suppliers/providers in the region will enjoy improved market access and national treatment in sectors/subsectors where commitments have been made. The market access commitments of the Parties to the AKTISA are contained in the first package of specific commitments that are attached to the Agreement. Korea’s package of commitments covers 112 sectors/sub-sectors in the following broad categories: business services (professional, computer and related services, research and development, real estate, rental/leasing services without operators, other business services); communication services (courier, telecommunications, audio-visual); construction; distribution services (commission agents’, wholesale trade, retailing, franchising); educational services (higher education, adult education); environmental services (sewage, refuse disposal, other); financial services (insurance and insurance related, banking and other financial services); tourism and travel related services (hotels and

restaurants, travel agencies and tour operators, tourist guides); recreational, cultural and sporting services (entertainment services); transport services (maritime transport, maritime auxiliary services, air, rail, road and pipeline transport, services auxiliary to all modes of transport, other transport services); and other services not included elsewhere (hairdressing and other beauty services). Korea’s commitments under the AKTIS were at Doha Development Agenda (DDA) levels with a few improvements in terms of sub-sectors offered and commitments made under market access and national treatment. Since the DDA round has not been concluded yet, ASEAN Member Countries including the Philippines will enjoy the concessions earlier than the rest of the WTO membership. The AKTISA is expected to bring in more investments, particularly in the power sector, shipbuilding and railway transport. Filipino service suppliers, particularly professionals can provide crossborder services (mode 1) and engage in partnerships with Korean service suppliers (mode 3) in a number of business/professional services. In most sectors, intra-corporate transferees can provide services under mode 4. The Agreement was signed last 21 November 2007.

Investment Agreement The Investment Agreement under the Framework Agreement on Comprehensive Economic Cooperation Among ASEAN Member Countries and the Republic of Korea seeks to enhance the promotion, facilitation, liberalization and protection of covered investment in due consideration of the different stages of economic development and provide for adequate flexibility to the Parties of the Agreement. It is comprised of 31 Articles and an Annex on Approval in Writing. The Agreement was signed on 02 June 2009 and ratified by the Philippines on 05 March 2010.

Copies of the Agreements and relevant Philippine Executive Orders are available online through the following url links: Framework Agreement on Comprehensive Economic Co-Operation 1. Text of the Agreement http://www.aseansec.org/18063.htm 2. Protocol (to include Thailand) http://www.aseansec.org/22303.pdf Trade in Goods Agreement 3. Text of the Agreement http://www.aseansec.org/AKFTA%20documents%20signed %20at%20aem-rok,24aug06,KL-pdf/TIG%20%20ASEAN%20Version%20-%2022August2006-final.pdf 4. Protocol (to include Thailand) http://www.aseansec.org/22301.htm 5. Schedule of Commitments http://www.aseansec.org/akfta.htm (refer to Annex 1 and Annex 2) http://www.aseansec.org/22303.pdf (for Thailand) 6. Philippine Executive Orders  EO 639 (NT ‘08) www.tariffcommission.gov.ph/eo_639.htm  EO 812 (NT Flexibility ‘09-‘12) www.tariffcommission.gov.ph/eo_812.htm Trade in Services Agreement 7. Text of the Agreement http://www.aseansec.org/21111.pdf 8. Protocol (to include Thailand) http://www.aseansec.org/22305.htm 9. Schedule of Commitments http://www.aseansec.org/23340.htm Investment Agreement 10. Text of the Agreement

http://www.aseansec.org/22973.pdf