ASEAN-Korea Free Trade Agreement (AKFTA)

The ASEAN-Korea Free Trade Agreement (AKFTA) establishes a comprehensive economic partnership to strengthen trade and investment relations between ASEAN Member States and the Republic of Korea. By progressively eliminating tariffs and non-tariff barriers, the agreement creates a transparent environment for businesses across 11 countries. For Philippine importers, AKFTA can reduce import duties and taxes on qualifying goods sourced from Korea.

‍

Key Components of the Agreement

The AKFTA utilizes several legal frameworks to build the partnership across different economic sectors:

• Trade in Goods - Signed on August 24, 2006, this agreement aims to eliminate tariffs on almost all products. Approximately 90% of products traded under the Normal Track enjoy duty-free treatment.
• Trade in Services - Signed on November 21, 2007, this agreement provides a legal framework to liberalize sectors such as business, communication, and finance.
• Investment Agreement - Signed on June 2, 2009, this agreement protects investors and guarantees against discriminatory government measures.
• Dispute Settlement - This mechanism resolves conflicts arising from the interpretation or implementation of the FTA.

‍

Rules of Origin (ROO)

To qualify for preferential tariff treatment, goods must "originate" from the exporting Party. Authorities use the following criteria for determination:

• Wholly Obtained - Applies to goods that a territory produces or harvests entirely, such as plants, live animals, or minerals.
• Regional Value Content (RVC) - A good generally requires an RVC of at least 40% of the FOB value to qualify as originating.
• Change in Tariff Classification (CTC) - Production must result in a specific change in the Harmonized System (HS) code to satisfy this requirement.

For more detail on how origin criteria work across Philippine trade agreements, see our guide on Rules of Origin.

‍

Tariff Reduction Schedules

Normal Track

Tariffs on products listed in the Normal Track are eliminated over a set period with 0% duty reached on the following schedule: Republic of Korea by 2010, ASEAN-6 (Brunei, Indonesia, Malaysia, Philippines, Singapore, Thailand) by 2012, Viet Nam by 2018, and Cambodia, Lao PDR, and Myanmar by 2020.

Sensitive Track

Products considered domestic priorities are placed in the Sensitive Track, further divided into:

• Sensitive List (SL) - Tariffs reduced to a range of 0% to 5% according to a specified timeline.
• Highly Sensitive List (HSL) - Products subject to limited tariff reductions or maintained at higher rates, categorized as: Group A (reduction to not more than 50% by 01 January 2016), Group B (reduction to not less than 20% by 01 January 2016), Group C (reduction to not less than 50% by 01 January 2016), Group D (tariff lines subject to tariff rate quotes from entry into force), and Group E (tariff lines exempted from concessions, maximum of 40 tariff lines at HS 6-digit level).

‍

Procedures for Tariff Adjustments

Exporters seeking to benefit from the AKFTA must follow five steps:

1. Identify the product's HS Code.
2. Verify the MFN rate to confirm the existence of an FTA preference.
3. Check the Category (Normal, Sensitive, or Highly Sensitive).
4. Confirm the Origin Criteria to meet ROO requirements.
5. Obtain a Certificate of Origin (CO) from the relevant issuing authority.

‍

For guidance on preparing the right documents when claiming AKFTA benefits, see our Import Documentation Checklist.