The Korea-Turkey Free Trade Agreement will enter into force officially on May 1, the Ministry of Trade, Industry and Energy announced on Monday.
“Once the FTA takes effect in May, Korea and Turkey will eliminate tariffs on all industrial goods within seven years,” a ministry official said.
The trade deal was officially signed on Aug. 1, 2012, but its implementation had been delayed until its approval by Turkey’s parliament. South Korea’s National Assembly ratified the bilateral FTA late last year.
“Amid a steady surplus in trade with Turkey, the country’s exports to Turkey will further expand with the removal of import tariffs on all industrial products, including automobiles, plastic and auto parts, which are key exports to Turkey, within the next seven years,” the ministry said in a press release.
Some goods like agricultural goods, over which both countries have social and economic sensitivity, however, will get an extended period until the tariff cuts.
As a follow-up to the tariff reduction on industrial goods, the two nations will also immediately start negotiations on areas of services and investments to conclude the talks within a year.
“The trade pact with Turkey will be a comprehensive one at the end, including areas of trade in goods, services and investments,’’ the official said.
When it comes to benefits from the FTA with Turkey, the ministry, most of all, underlined the expected trade expansion to Turkey and its adjacent Eurasian market.
“Despite the global economic downturn, Turkey has shown strong economic growth and it has geographical advantage, which will offer an array of business opportunities to local companies,” the ministry said. Korea has sought a trade pact with Turkey since 2010 as the country is conveniently situated by Europe, the Middle East and central Asia.
The ministry estimated the reduction of customs duty on goods will increase Korea’s GDP by 0.01 percent for the first five years of the effectuation and an additional 0.03 percent in 10 years.
In 2012, Turkey was South Korea’s 25th-largest trading partner with $4.55 billion worth of goods shipped there, while imports from the European country amounted to $672 million.
The launch of the ninth’s trade pact confirmed the new government’s drive to seal free trade deals with other countries to prop up the export-driven Korean economy. Korea has launched nine FTAs with Chile, Singapore, the European Free Trade Association, the Association of Southeast Asian Nations, India, the U.S., the European Union, Peru and Turkey.
Korea, China and Japan ended their first round of trilateral trade talks last week, outlining detailed rules for future negotiations.
By Seo Jee-yeon (firstname.lastname@example.org