A free trade deal with China would help Korea expand its gross domestic product by nearly 3 percent, a think tank said Sunday, citing more exports to the fast-growing market through lowered trade barriers.
According to a report by the Samsung Economic Research Institute, Korea’s GDP is expected to grow 2.72 percent more if Seoul and Beijing complete a free trade agreement intended to cut or remove tariff barriers between the two countries.
The GDP expansion would come mostly from increased exports to the Chinese market by Korea’s automobile, textile and petrochemical companies, the report said.
That is much higher than a 0.56 percent gain and a 1.02 percent growth in GDP expected from Seoul’s FTAs with the United States and the European Union, experts said.
“An FTA is expected to boost Korea’s exports to China by more than 30 percent,” the report said.
The report, however, expressed concerns that a Korea-China FTA would hurt the farming industry here, among other factors, as imports of produce from the neighboring agricultural powerhouse are expected to jump under a no-tariff environment.
Korea and China had been slow for many years in seeking a free trade pact as both sides remain apart on the benefits for their economies.
In May last year, the two countries completed a nearly four-year joint feasibility study on a possible bilateral free trade agreement and reached an agreement to exchange their views on sensitive issues that arose.
Trade officials from both countries also held preliminary talks on their free trade agreement in Beijing last year.
China is the largest buyer of Korean-made goods and has contributed to Seoul’s sizable trade surplus in recent years, while Korea is China’s third-largest trading partner after the United States and Japan.