- Vietnam and South Korea will start negotiations on a bilateral free trade agreement (FTA) early next year with an aim to create more business opportunities for enterprises of the two countries, Korean officials said on Tuesday.

Kim Deok Ku, deputy director of FTA Division under the Ministry of Knowledge Economy, said on the sidelines of a conference on ASEAN-South Korea FTA on Tuesday that his country had completed a feasibility study for an FTA with Vietnam. The agreement is planned to be discussed early next year, he added.

The bilateral FTA between Vietnam and South Korea will involve many sectors with a large number of products enjoying strong tax cuts, boosting business cooperation between two sides, said Sim Jin Su, director of Industrial Support Division of the FTA Promotion & Policy Adjustment Authority.

South Korea previously signed an FTA with ASEAN on commodities, services and investments. When exporting to South Korea, Vietnamese firms need to have certificate of origin (C/O) with AK form to enjoy tax incentives.

Besides, according to the FTA, South Korea committed to remove 90.8% of tariff lines on Vietnam’s normal products, 7% on sensitive products and 3% on extremely sensitive products.

Meanwhile, Vietnam has committed to remove 90.1% of tariff lines on South Korean imports. Specifically, Vietnam will lower tariffs on imports from South Korea to 0-5% for at least 50% of tariff lines in 2013 and completely remove all tariffs in 2018.

Sensitive products to South Korea are farm produce while those sensitive to Vietnam are motorbikes and auto spare parts.

Besides Vietnam, South Korea is conducting feasibility studies for FTAs with Indonesia and China.

Vietnam’s total import from South Korea was over US$10.4 billion in the ten-month period, with some major products including garment, steel, machines and equipment, computers and electronic components, each worth over US$1 billion.

Meanwhile, South Korea imported products from Vietnam with a total value of around US$4 billion in the same period, mostly crude oil, fishery, textile and garment products.