South Korea Signs FTA With China

South Korea's Minister of Trade, Industry, and Energy, Yoon Sang-jick, and China's Commerce Minister, Gao Hucheng, signed the free trade agreement between their two countries on June 1 in Seoul.

Negotiations on the FTA only began in May 2012, but were completed by November last year following a meeting in Beijing. As the most substantial FTA South Korea has signed, its Government is now looking to make the agreement effective as soon as possible.

In fact, the Ministry of Trade, Industry, and Energy confirmed on June 5 that it had already presented a bill for approval to the South Korean National Assembly, together with two other bills to approve South Korea's recently signed FTAs with Vietnam and New Zealand. It is hoped that all three agreements will be in operation by the end of 2015.

In their FTA, China and South Korea have agreed to eliminate import tariffs on over 90 percent of all products traded between them and over 85 percent of their annual trade by value. Import 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 of the FTA becoming effective.

However, the two sides also decided to exclude certain ultra-sensitive items from the agreement. For example, South Korea has only agreed to a part-opening of its agricultural sector, while continuing to exclude such products as rice, pork, and beef, and trade barriers for both countries' automotive industries have been maintained.

China is already South Korea's primary trading partner, receiving over a quarter of its exports. Total trade between South Korea and China is said to have reached some USD290bn last year and is targeted to reach well over USD300bn annually after the FTA goes into effect.

Both countries remain involved in negotiations for a trilateral FTA with Japan, and in talks for the Regional Comprehensive Economic Partnership between the Association of Southeast Asian Nations and China, South Korea, India, Japan, Australia, and New Zealand – its bilateral FTA partners.

Source: Tax News