Monday, January 4, 2016

[Amazing Korea] S. Korea-China FTA makes Korea a FTA powerhouse

With China added following the ratification of a bilateral free trade agreement (FTA), South Korea would be the only economy in the world to own free trade arrangements with the three major economic blocs- European Union, China and the United States. The list of FTAs would top 50 for Asia`s fourth largest economy. 

Korea is also considering joining the multilateral free trade platforms such as the trilateral FTA with China and Japan, China-led Regional Comprehensive Economic Partnership, and the Trans-Pacific Partnership (TPP) led by the U.S. and Japan. A bilateral FTA with China places Korea at the hub of global and regional free trade zones. 

Through the FTA global network, Korean companies would have competitive edge in international commerce and be are freer than foreign rivals in market access, said Chung In-gyo, an economics professor at Inha University. 

A FTA with China would be most beneficial as the world’s second largest economy is Korea’s largest export destination. The country`s exports to China reached $114.5 billion and imports $75.1 billion in the first 10 months of this year, far outpacing trade with the U.S. and Japan. 

The FTA would eliminate tariffs for the bulk of the shipment to China that takes up a quarter of total Korean exports. Korea would save $8.7 billion in tariffs in the first year of FTA and $45.8 billion for the next 10 years, according to the estimate by the Ministry of Trade, Industry, and Energy. 

“Korea would be able to better tap the burgeoning consumer market of China through improved price competitiveness and availability of Korean products through the FTA,” the ministry said. 

The flood of cheap Chinese agricultural products could hurt the domestic farming industry, but at the same time serve as the tipping point for the local industry to hone quality and competitiveness and increase revenue base. 

Under the deal, Beijing will eliminate tariffs on 91 percent of agricultural imports and 99 percent of fishery imports from Korea. Local industry could eye bigger revenue through exports of quality products to China. 

The three economic zones are Korea’s biggest market and manufacturing base. The government should come up with various support measures for small- and mid-sized companies so that they too can make most of the FTA benefits, Chung said.

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