South Korea's Trade Minister Yoon Sang-jick has confirmed that the conclusion of a bilateral free trade agreement (FTA) with China can be expected this year, and, possibly, even before the Asia-Pacific Economic Cooperation summit due to begin on November 10 in Beijing, despite little progress on tariffs having been made in recent negotiating rounds.
He indicated that significant progress will be made in the FTA talks in the foreseeable future, as South Korea is willing to proceed quickly in wrapping up the terms of an agreement. Pressure for its conclusion is being seen following the meeting in July between South Korean President Park Geun-hye and her Chinese counterpart, Xi Jinping, who agreed in Seoul that their two countries would conclude an FTA by the end of 2014.
FTA negotiations started in May 2012, and the two countries have already decided to eliminate tariffs on 90 percent of all goods, and 85 percent of imports by value. Duties on non-sensitive products will be canceled either immediately or within ten years, and those on sensitive products will be abolished within 10-20 years after the FTA becomes effective.
However, the two sides have had little joy, so far, in trying to narrow their differences on ultra-sensitive items, for which longer-term tariffs of more than 20 years will have to be allowed, and there has been, as yet, no indication of the basis on which a final agreement can be reached.
There remain particular concerns in China regarding opening its manufacturing sector to South Korean imports, and in South Korea on the effect of Chinese imports on its agricultural markets. The South Korean Government has already had to reiterate that any deal would need to protect its food producers.
The 13th round of FTA talks is to be held before the end of this month, and it will be seen then whether the two Presidents' political pressure will provide the necessary impetus to motivate their trade ministers to deliver positive results.
According to Chinese Ministry of Commerce figures, total trade between South Korea and China reached over USD270bn in 2013, and the two leaders have set a USD300bn target for 2015. China is already South Korea's primary trading partner.
It is also still hoped that a final agreement could provide an added impetus to the talks on the proposed tripartite FTA between South Korea, China and Japan, and to the conclusion of the Chinese-led Regional Comprehensive Economic Partnership, which is planned to bring the Association of Southeast Asian Nations' existing FTAs with China, South Korea, Japan, India, Australia, and New Zealand into a single improved agreement by the end of 2015.
Source: Tax News
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