Yi Whan-woo is a Korea Times journalist primarily covering finance. He writes in-depth articles on macroeconomy and financial markets and previously covered sports, politics, diplomacy and inter-Korean affairs, among others. Feel free to contact him at yistory@koreatimes.co.kr.
Korea, New Zealand embrace free trade pact
.jpg?w=728)
President Park Geun-hye and New Zealand Prime Minister John Key make a joint announcement on a Korea-New Zealand free trade agreement (FTA) in Brisbane, Australia, on Saturday. The countries struck the deal on the sidelines of the Group of 20 meeting. / Yonhap
By Yi Whan-woo
Dairy, meat industry likely to suffer; auto parts makers, builders to benefit most
By Yi Whan-woo
The successful conclusion of Korea Korea-New Zealand free trade agreement (FTA), Saturday, is anticipated to further enhance Seoul’s exports to Wellington, especially in the areas of manufactured goods.
But it also could deal a blow to Korean farmers because it would open doors for New Zealand, one of the world’s leading dairy and meat exporters.
The bilateral deal will take effect next year, according to the government.
It said the two countries will remove tariffs on the majority of all products they trade within 20 years once the FTA is ratified by their respective parliaments.
Korea is New Zealand’s 41st-largest trading partner while the latter is the former’s 44th-largest. Bilateral trade between them totaled $2.8 billion last year.
The two trading partners started their formal free trade negotiations in June 2009. And they struck the agreement on the sidelines of the G-20 summit in Brisbane, Australia.
The G-20 member states include both advanced and emerging economies; New Zealand is not a member but was invited to the meeting as a guest.
“The FTA will provide a basis to further expand and develop bilateral investment and trade," President Park Geun-hye said in a joint news conference with New Zealand Prime Minister John Key.
Key also welcomed the agreement, calling it a “win-win deal.”
Under the agreement, New Zealand will immediately scrap imports tariffs on 92 percent of products, including tires and washing machines. It will then remove tariffs on 100 percent of goods and services, such as auto parts, construction equipment and refrigerators, within three years after the FTA takes effect.
The deal will allow Korean goods to compete in New Zealand on a more equal footing with other countries. New Zealand has so far signed FTAs with 15 other countries, including China, Australia, Hong Kong and Taiwan.
Korea will immediately lift tariffs on 48.3 percent of goods purchased from New Zealand. It will remove import tariffs on 96.5 percent of the products, including butter, within 20 years of the FTA implementation.
For meat and cheese, the country will remove import tariffs within 15 years, once the deal takes effect.
It will maintain tariffs on some 199 items. They are all agricultural products, including natural honey, apples, pears, hot peppers, and garlic.
Meanwhile, Korea and New Zealand agreed to exclude rice, a key staple food for Koreans, from the deal.
The ruling Saenuri Party welcomed the deal, although it said crucial measures are needed to protect dairy and beef farmers.
“The President hit a high note in her summit diplomacy by signing FTAs in a row with Australia, Canada and New Zealand, respectively,” said party spokesman Park Dae-chul.
“The Korea-New Zealand FTA is anticipated to boost the country’s economy. The government, however, should make sure to minimize the damage to the local dairy and beef farming industry in competition with New Zealand,” Park said.
The main opposition New Politics Alliance for Democracy (NPAD) said the President hastily decided upon the FTAs.
“We’re concerned that she hurriedly struck FTAs with our trading partners whenever she visited those countries,” a party spokesman Yoo Ki-hong said. “It is likely local farmers will suffer from the Korea-New Zealand FTA. We’ll ask the government to take measures to prevent this from happening.”