South Korea, China Holding 'Final' FTA Negotiations

It is hoped that the next round of free trade agreement (FTA) negotiations – the 14th – beginning in Beijing on November 6 between South Korea and China will be the last, and that the full text of the agreement can thereby be concluded before the upcoming Asia-Pacific Economic Cooperation meetings, also in Beijing.

Given the importance of the talks, they are to be attended, for the first time, by both ministers ultimately responsible for trade treaties, South Korea's Trade Minister Yoon Sang-jick and China's Minister of Commerce Gao Hucheng.

According to a release from the South Korean Ministry of Trade, Industry and Energy, they will discuss all of the FTA's 22 chapters, 16 of which have been, or are close to being, concluded.

However, while there still remains work to be done before concluding areas in the agreement, such as liberalizing services, non-tariff barriers and rules of origin, perhaps the most important chapter, that on the liberalization of trade in goods, is also still some way from finalization.

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 cancelled 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 continue to have had little joy 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 still has been 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.

FTA negotiations between the two countries started in May 2012, but there was pressure following a meeting in July this year in Seoul between South Korean President Park Geun-hye and her Chinese counterpart, Xi Jinping, who then agreed to conclude the treaty by the end of 2014.

China is already South Korea's primary trading partner in terms of both imports and exports. According to Chinese Ministry of Commerce figures, total trade between South Korea and China reached over USD270bn in 2013, and the two leaders set a USD300bn target for 2015.

Source: Tax News