South Korean carmakers are anticipated to grab a larger share of the Central American auto market once Seoul signs a multilateral free trade agreement with the countries in the region, a report said Wednesday.
In June, South Korea kicked off negotiations with six Central American countries -- Guatemala, Costa Rica, El Salvador, Honduras, Nicaragua and Panama -- to hammer out a multilateral free trade deal.
According to the report by the Korea International Trade Association, South Korean auto firms will likely benefit from an FTA with the Central American nations as these countries currently do not own local auto production facilities and depend wholly on imports.
"Once related tariffs are eliminated, there will be an opportunity for South Korean firms to expand their share in the Central American car market," the report said. "Asia's No. 4 economy will be able to narrow down the market share gap with that of the United States."
The United States, which currently holds the highest market share in the Central American car market, has already signed an FTA with the region, which took effect in 2006.
In addition to the auto market, an FTA with the Central American countries is expected to boost South Korea's exports related to infrastructure construction as well as consumer goods including food and beverages, the report said.
South Korean exports to the six Central American countries came to US$3.76 billion last year, with imports amounting to $1.24 billion, according to the report.
"South Korea is the first Asian country that the six Central American nations are looking to sign a free trade deal with," a KITA official said. "In order to dominate the region's markets before rivals such as China or Japan, Seoul should quickly push ahead with the FTA." (Yonhap)