Two sides seeking to sign agreement by end of June
By Yoon Ja-young
Korea has initialed a free trade agreement (FTA) with China.
The initialing came three months after the end of FTA negotiations; but the deal still needs approval from the respective legislatures.
The government wants to ratify the pact by the end of this year.
"The two countries agreed to work for the official signing of the pact within the first half of the year," said Deputy Trade Minister Woo Tae-hee, Wednesday.
Following the deal, Korea will eliminate tariffs on 92 percent of imported items from China within the next 20 years. China will scrap tariffs on 91 percent of items imported from Korea, within the same period.
The deal makes Korea the only major economy to sign an FTA with the world's three biggest economies ― the U.S., China and the EU.
The government said the deal would help Korea secure a foothold in a huge market whose GDP had been growing by more than 7 percent a year. Korean goods make up 9.7 percent of China's import market, followed by Japan at 8.3 percent and the U.S. at 7.8 percent.
"Just as China's joining of the World Trade Organization (WTO) turned out to be the best opportunity for Korea's economic development, the Korea-China FTA will become a second such opportunity for us," the Ministry of Trade, Industry and Energy said.
The FTA also includes 310 items made in the inter-Korean Gaesong Industrial Complex (GIC) in North Korea.
They will enjoy a tariff reduction or elimination the same as products "made in Korea" when exported to China. This compares with free trade deals Korea had signed with ASEAN, where only 100 items from the GIC were given such privileges.
The government said that sales of petrochemical, steel, machinery, fashion and consumer electronics products would get more opportunities to grow in the Chinese market.
But much of the automobile industry was excluded from the deal. Korean automobile companies are little affected by the tariff as most make cars in China.
Meanwhile, they had feared that global automakers making cars in Chinese factories would enter the Korean market if tariffs were eliminated.
While the government is trying to highlight the deal's positive side, small- and medium-sized enterprises (SMEs) that have focused on selling goods in the domestic market are expected to get a blow from Chinese competitors, as tariffs were lifted on most of the textiles and daily goods categories.
According to a Korea Small Business Institute report, SMEs making textiles, furniture and other daily goods are expected to suffer. The SMEs want government measures to support them.
Meanwhile, Korea has focused on protecting the agricultural market. Major items, including red pepper, garlic, onion, apple, beef and pork, were excluded from the deal.
The English version of the pact is available at www.fta.go.kr/cn/main.
By Yoon Ja-young
Korea has initialed a free trade agreement (FTA) with China.
The initialing came three months after the end of FTA negotiations; but the deal still needs approval from the respective legislatures.
The government wants to ratify the pact by the end of this year.
"The two countries agreed to work for the official signing of the pact within the first half of the year," said Deputy Trade Minister Woo Tae-hee, Wednesday.
Following the deal, Korea will eliminate tariffs on 92 percent of imported items from China within the next 20 years. China will scrap tariffs on 91 percent of items imported from Korea, within the same period.
The deal makes Korea the only major economy to sign an FTA with the world's three biggest economies ― the U.S., China and the EU.
The government said the deal would help Korea secure a foothold in a huge market whose GDP had been growing by more than 7 percent a year. Korean goods make up 9.7 percent of China's import market, followed by Japan at 8.3 percent and the U.S. at 7.8 percent.
"Just as China's joining of the World Trade Organization (WTO) turned out to be the best opportunity for Korea's economic development, the Korea-China FTA will become a second such opportunity for us," the Ministry of Trade, Industry and Energy said.
The FTA also includes 310 items made in the inter-Korean Gaesong Industrial Complex (GIC) in North Korea.
They will enjoy a tariff reduction or elimination the same as products "made in Korea" when exported to China. This compares with free trade deals Korea had signed with ASEAN, where only 100 items from the GIC were given such privileges.
The government said that sales of petrochemical, steel, machinery, fashion and consumer electronics products would get more opportunities to grow in the Chinese market.
But much of the automobile industry was excluded from the deal. Korean automobile companies are little affected by the tariff as most make cars in China.
Meanwhile, they had feared that global automakers making cars in Chinese factories would enter the Korean market if tariffs were eliminated.
While the government is trying to highlight the deal's positive side, small- and medium-sized enterprises (SMEs) that have focused on selling goods in the domestic market are expected to get a blow from Chinese competitors, as tariffs were lifted on most of the textiles and daily goods categories.
According to a Korea Small Business Institute report, SMEs making textiles, furniture and other daily goods are expected to suffer. The SMEs want government measures to support them.
Meanwhile, Korea has focused on protecting the agricultural market. Major items, including red pepper, garlic, onion, apple, beef and pork, were excluded from the deal.
The English version of the pact is available at www.fta.go.kr/cn/main.
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