During a meeting on January 21 in Seoul between South Korea's Deputy Prime Minister and Minister of Strategy and Finance, Hyun Oh-seok, and the Vietnamese Deputy Prime Minister Nguyen Xuan Phuc, it was agreed to accelerate the on-going negotiations for a free trade agreement (FTA) between the two countries.

While praising South Korea-Vietnamese relations, which were first established in 1992, Hyun specifically mentioned the progress that has been made on the bilateral FTA negotiations, saying that he looked forward to the signing of the formal agreement. In reply, Phuc agreed that both countries should work to ensure that an FTA is signed within 2014.

The two countries agreed to begin FTA talks following a joint study on its feasibility, which was completed in October 2011, and a first round of talks was held in September 2012. The FTA is expected to improve on the existing agreement between South Korea and the Association of Southeast Asian Nations (ASEAN), of which Vietnam is a member. The South Korea-ASEAN FTA in goods took effect in 2007, with further treaties on services and investment following in 2009.

It was confirmed that South Korea-Vietnam trade volume has increased by 44 times since 1992, increasing from USD490m that year to USD21.67bn in 2012. There is a total trade target between the two countries of USD70bn by 2020. Vietnam is already South Korea's third largest trading partner within the ten ASEAN countries.

South Korea's major exports to Vietnam have included steel products, electronics, textiles and petrochemical products. However, while Vietnam would be likely to gain more from a bilateral FTA in terms of trade volume, the FTA is likely to exclude rice from tariff reductions, as that remains a very sensitive item for South Korea.

Source: Tax news

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