Key Pushes For New Zealand-South Korea FTA

In his remarks to the Kiwi Chamber of Commerce while in Seoul, New Zealand’s Prime Minister John Key pushed for a completion of his country’s free trade agreement (FTA) with South Korea.

Key confirmed that he and South Korean President Lee Myung-bak had reconfirmed their commitment to enhance the economic cooperation between the two countries, originally made at their meeting in July 2010. At that meeting, the leaders discussed progress in their FTA negotiations, which had begun the previous year, and reaffirmed their expectation to conclude it as early as possible.

However, talks have stalled since then, and Key made a call in his speech for the FTA to be completed this year so as to ensure that total trade between New Zealand and South Korea continues to grow in value.

Bilateral two-way trade has reached NZD3bn (USD2.5bn), so that South Korea is now New Zealand’s fifth-largest trading partner, but the fact remains, he said, that “we can do better".

"The share of imports into each other’s market is slipping relative to each of our key competitors. To put it more simply, trade between our two countries is simply not growing as fast as our trade with other countries,” Key observed.

Key pointed out that imports from countries with which New Zealand already has FTAs – such as China, the 10 Association of Southeast Asian Nations, Brunei, Singapore and Chile – are growing much faster than imports from South Korea; and, while New Zealand’s exports to South Korea are growing, "our share of South Korea’s imports has roughly halved since 2000".

In his opinion, the reasons for this are clear – “as we both move to provide preferential access to other countries through bilateral and regional trade agreements, our exporters are each becoming relatively less competitive in each other’s markets. We need to address this. As New Zealand and South Korea negotiate FTAs with a wider range of countries, this trend is only going to accelerate.”

Completing a bilateral FTA would, he concluded, “create business and economic links that would drive growth and innovation. And it would ensure that, as we continue to reduce tariffs for other countries with which we have FTAs, our exporters will not be edged out of each other’s markets.”

March 28, 2012

Source: Tax News