China and South Korea yesterday formally signed a free-trade agreement (FTA) that is to remove most tariffs between Asia’s largest and fourth-largest economies, whose trade is already worth more than US$200 billion.
The pact — largely agreed upon in November last year — aims to gradually remove tariffs on more than 90 percent of traded goods within 20 years. China is South Korea’s top trading partner as well as its biggest export market, and two-way trade stood at about US$235.3 billion last year, according to state data in Seoul.
South Korea is also one of the biggest foreign investors in China, pumping in about US$1.6 billion in the first quarter of this year.
Photo: EPA
South Korean President Park Geun-hye, in a letter to Chinese President Xi Jinping (習近平), called the accord a “historic milestone” that would further cement ties.
“The Korea-China FTA will ... take the bilateral ties that had been built over the years to a whole new level,” Park said in the letter delivered to visiting Chinese Minister of Commerce Gao Hucheng (高虎城).
Pending mandatory legislative approval, the pact is to allow small and medium-sized South Korean firms greater access to China’s vast consumer market and help create more than 50,000 jobs in South Korea, the nation’s Ministry of Trade, Industry and Energy said.
“In particular, exports of consumer goods in fashion, cosmetics, home appliances and high-end food products will increase greatly,” it said in a statement.
The deal is to remove tariffs on 71 percent of South Korean exports to China in 10 years and 91 percent in 20 years. In return, Seoul is to remove tariffs on 79 percent of Chinese imports in 10 years and 92 percent in 20 years.
Talks for the agreement, which began in May 2012, have often been marred by protests by South Korean farmers who feared cheap Chinese imports.
The final pact excluded many of South Korea’s major farming and fisheries goods, like rice and squid.
By the same token, China excluded or delayed the opening of its relatively less-developed manufacturing segments, such as the auto sector and display panel production.
Kim Hyuung-joo, an analyst at the LG Economic Research Institute, said the arrangement might eventually bring more harm than gain to South Korea.
“I do not think South Korea’s well-protected agriculture sector will be able to improve competitiveness in 10 or 20 years,” Kim said. “[However,] the sectors that China managed to protect, like LCD panels or automaking, will surely improve their productivity and competitiveness,” he added.
Some goods produced in a North Korean factory park run jointly with the South are covered in the deal, South Korea’s trade ministry said.
In all, 310 products made at the Kaesong Industrial Park, just north of the border, are to benefit.
Kaesong products were not included in South Korea’s trade deals with the US and EU.
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