Korea, India enter era of free trade

Korea and India will sign a free trade agreement today after about three years of negotiations, signifying a significant achievement for Asia`s fourth-largest economy in concluding trade pacts with major economies.

"We have completed a very important deal with a major economy ahead of other leading economies," Choi Kyong-lim, director general for FTA policy at the Ministry of Foreign Affairs and Trade, said at a news briefing on the bilateral accord in Seoul yesterday.

The targeted time frame for implementing the accord is January 1, 2010, the official said.

The Comprehensive Economic Partnership Agreement (CEPA) will allow both sides to eliminate and reduce tariffs on major industrial goods, including auto parts and machinery, while expanding opportunities for investments and exchanging services.



The ministry said the trade deal was similar in essence to the FTAs Korea signed with the United States and other trading partners, but that just the phasing-out period of the duties was slower.

The government said the slower removal rate is not a disadvantage, as India`s pursuit of a bilateral trade accord with other major economies like China, the European Union and Japan is more complicated and demands more time.

Goods made at the Gaesong complex, a South Korean-built industrial zone in North Korea, will be regarded as being made in South Korea under the deal, according to the ministry.

South Korea will be the second country after Singapore with which India has signed such a treaty. The Comprehensive Economic Cooperation Agreement between India and Singapore took effect in August 2005.

Overall, the Korea-India CEPA is expected to boost bilateral trade by as much as $3.3 billion annually, according to estimates by the state-run Korea Institute for International Economic Policy (KIEP). Two-way trade reached $15.56 billion last year, with South Korea posting a surplus of $2.39 billion.

(sohjung@heraldm.com

By Yoo Soh-jung