South Korea, Turkey FTA Effective On May 1

The free trade agreement (FTA) between South Korea and Turkey, which was signed on August 1 last year, will go into effect on May 1, following its ratification by the countries' parliaments.

Both countries are hoping that the FTA will strengthen their economic and trading relationship, which is currently dominated by South Korea's exports to Turkey, particularly its exports of automobiles, steel, petrochemicals and televisions. Turkey's existing import tariff on such industrial products will be eliminated in phases over seven years, while both sides will cancel their tariffs on agricultural products over ten years.

Turkey will be hoping, in particular, that its agricultural and textile exports should be able to benefit from the FTA. The agreement will put Turkish exporters on an equal footing with those from the European Union and the United States, who already benefit from effective FTAs with South Korea.

After declaring the launch of FTA negotiations in March 2010, South Korea and Turkey held only four formal rounds of negotiations before reaching an agreement. South Korea sees Turkey as a substantial domestic market with the second largest population in Europe and with great potential for South Korean products. It is also viewed as a geopolitically important country connecting Europe, Asia, the Middle East and Africa.

While the FTA, in its present form, only covers the liberalization of their trade in goods, the two countries intend that a further treaty on services trade and investment will be negotiated one year after the current agreement comes into effect.

April 2, 2013

Source: Tax News