Korea and Peru will sign a free trade deal next week, the latest trade pact that could pave the way for Asia’s fourth-largest economy to tap deeper into the South American region, Seoul’s trade ministry said Wednesday.

The trade ministers from both sides will sign the free trade agreement (FTA) in Seoul on Monday, the ministry said. Both countries struck the deal in August last year.

Peru marks the second South American country with which Korea has sealed such a trade pact. In April 2003, Korea signed a similar trade deal with Chile, Seoul’s first free trade partner.

“The Korea-Peru FTA is mutually beneficial to both sides, and will further contribute to promoting the prosperity and development of both countries,” the ministry said in a statement.

Under the deal, both countries will eliminate all tariffs within 10 years after the deal takes effect.

First, tariffs on Korean autos with engine displacements of 3,000 cc or more and color TVs will be abolished right after the deal takes effect.

Tariffs on Korean automobiles with engine displacements of less than 3,000 cc will be scrapped in five years, according to the ministry.

Tariffs on Peruvian coffee will also be abolished right after the deal comes into effect, it said.

Both countries also agreed on protection measures such as import safeguards.

In addition, the two sides agreed on recognizing goods made at an inter-Korean industrial park in North Korea as originating from Korea.

The countries have held five rounds of free trade negotiations so far after launching talks in Seoul in March in 2009.

Bilateral trade reached $1.98 billion in 2010 with Korea’s exports to the South American country reaching $944 million.

The Peruvian economy has expanded at an annual rate of more than 6 percent over the past five years. Resource-rich Peru will provide good business opportunities to Korean firms, the ministry said.

Korea mainly imports resources such as zinc and iron, and exports such goods as cars and petrochemicals.

In an effort to power its export-driven economy, Korea is also seeking to forge free trade pacts with many other countries.

Korea currently has free trade pacts with India, the Association of Southeast Asian Nations (ASEAN), Singapore and the European Free Trade Association (EFTA), which includes Switzerland, Norway, Ireland and Liechtenstein.

The country is set to implement a similar trade pact with the European Union (EU) this year, although the deal still needs approval from Korea’s parliament.

A free trade pact between Korea and the United States was signed in 2007 but still awaits ratification in both countries. 

(Yonhap News)