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By Korea HeraldPublished : Nov. 10, 2014 - 19:38
South Korea’s economic territory will expand to take up about 72 percent of the world’s gross domestic product once the free trade agreement with its biggest trade partner China takes effect, industry sources said on Monday after both sides struck a deal.
The trade deal covers nearly all economic areas, including products, services, investment, finance and communications. The two countries agreed to exclude rice, a key staple food for both.
Experts believe the most significant part of the deal was the lowered trade barriers for Korea’s main export items ― industrial products.
“The free trade deal with China was a necessity for Korea which relies for more than 80 percent of its GDP on trade,” said Kim Dae-jong, Sejong University professor.
“The Korea-China FTA is estimated to increase 2-3 percent of Korea’s total GDP, with especially electronics, electrical, machinery and chemical sectors benefiting.”
China is the country’s largest trading partner, with bilateral trade reaching $228.9 billion in 2013 ― accounting for 21 percent of South Korea’s total trade valued at $1.08 trillion, government data showed.
Under the deal, China agreed to eliminate tariffs on up to 91 percent of goods over the next 20 years, while South Korea agreed to do so on 92 percent of goods.
The Korean government stressed that the openness of the agricultural market to China is at the lowest level compared other free trade deals, but the damage to some industry sectors is highly expected.
Bilateral trade in 70 percent of farm and fisheries goods will be liberalized, while a total of 610 agricultural items such as beef, pork, apple and garlic were also excluded from the deal.
According to the Ministry of Agriculture, Food and Rural Affairs, the amount of farm and fisheries import from China surged 67 percent to $4.7 billion in 2013 from $2.8 billion in 2008.
The two sides excluded cars from the concession list and agreed to cut the duties on liquid crystal displays within the next 10 years.
“This FTA was focused on supporting small and mid-sized companies rather than the automobile, LCD and semiconductor sectors which are pushing ahead with localization in China,” said Woo Tae-hee, Korea’s top negotiator for the FTA talks.
The communications and finance sectors in Korea were widely anticipating the deal as it marks the first FTA where China included the services sector.
Monday’s deal came after lengthy 30-month negotiations that dragged on due to contrasting interests in the agricultural sector.
For Korea, it is the 13th free trade deal. The nation has similar trade pacts with many of the world’s largest economies such as the United States, the European Union, ASEAN and India.
By Park Han-na (hnpark@heraldcorp.com)
The trade deal covers nearly all economic areas, including products, services, investment, finance and communications. The two countries agreed to exclude rice, a key staple food for both.
Experts believe the most significant part of the deal was the lowered trade barriers for Korea’s main export items ― industrial products.
“The free trade deal with China was a necessity for Korea which relies for more than 80 percent of its GDP on trade,” said Kim Dae-jong, Sejong University professor.
“The Korea-China FTA is estimated to increase 2-3 percent of Korea’s total GDP, with especially electronics, electrical, machinery and chemical sectors benefiting.”
China is the country’s largest trading partner, with bilateral trade reaching $228.9 billion in 2013 ― accounting for 21 percent of South Korea’s total trade valued at $1.08 trillion, government data showed.
Under the deal, China agreed to eliminate tariffs on up to 91 percent of goods over the next 20 years, while South Korea agreed to do so on 92 percent of goods.
The Korean government stressed that the openness of the agricultural market to China is at the lowest level compared other free trade deals, but the damage to some industry sectors is highly expected.
Bilateral trade in 70 percent of farm and fisheries goods will be liberalized, while a total of 610 agricultural items such as beef, pork, apple and garlic were also excluded from the deal.
According to the Ministry of Agriculture, Food and Rural Affairs, the amount of farm and fisheries import from China surged 67 percent to $4.7 billion in 2013 from $2.8 billion in 2008.
The two sides excluded cars from the concession list and agreed to cut the duties on liquid crystal displays within the next 10 years.
“This FTA was focused on supporting small and mid-sized companies rather than the automobile, LCD and semiconductor sectors which are pushing ahead with localization in China,” said Woo Tae-hee, Korea’s top negotiator for the FTA talks.
The communications and finance sectors in Korea were widely anticipating the deal as it marks the first FTA where China included the services sector.
Monday’s deal came after lengthy 30-month negotiations that dragged on due to contrasting interests in the agricultural sector.
For Korea, it is the 13th free trade deal. The nation has similar trade pacts with many of the world’s largest economies such as the United States, the European Union, ASEAN and India.
By Park Han-na (hnpark@heraldcorp.com)
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Articles by Korea Herald
