South Korea and Cambodia agreed Thursday to launch official negotiations for a bilateral free trade agreement (FTA), paving the way for Asia's No. 4 economy to penetrate deeper into the Southeast Asian market and boost its virus-hit exports.
The announcement came more than a year after Cambodian Prime Minister Hun Sen proposed to make preparations for a free trade deal during his summit with South Korean President Moon Jae-in in Phnom Penh in March 2019.
The two countries have carried out a joint feasibility study over the first five months of this year.
"Amid the spread of COVID-19, it has become more important for South Korea to expand cooperation with Southeast Asian countries," Trade Minister Yoo Myung-hee said in a statement.
"We are pleased to launch FTA negotiations with Cambodia, which can potentially rise as the new hub of production and trade in ASEAN," Yoo added. "The two countries will make efforts to come up with a meaningful result within this year."
Seoul and Phnom Penh are likely to hold their first round of talks in July.
The trade volume between the two countries reached an all-time high of $1 billion in 2019, up 6 percent from a year earlier, according to the data compiled by the Korea International Trade Association.
South Korea's shipments to the Southeast Asian nation reached $697 million in 2019, up 5.5 percent on-year. The trade surplus reached $361 million.
The increase was significant as South Korea's annual exports fell more than 10 percent on-year in 2019 amid the trade row between the United States and China.
South Korea mostly ships cargo trucks, beverages and knitted textiles to Cambodia, while importing clothes and shoes.
The move comes in line with South Korea's efforts to clinch separate FTAs with all members of the Association of Southeast Asian Nations (ASEAN).
The country already has one with the Asian economic bloc, but it is seeking to clinch individual agreements as well to set more details and ease its trade dependency on the United States and China.
In January, Seoul and Manila held the fifth round of official negotiations for their FTA. Talks with Malaysia are also in progress.
South Korea already holds separate FTAs with Vietnam and Singapore.
The Comprehensive Economic Partnership Agreement (CEPA) with Indonesia is also waiting for an official signing ceremony.
Cambodia is the 58th-largest export destination for Asia's No. 4 economy.
But the latest COVID-19 pandemic has made it important for South Korea to lower any types of barriers.
The country's outbound shipments fell 10.9 percent in June, marking the fourth consecutive month of decline amid the fallout from the new coronavirus pandemic.
Seoul, meanwhile, aims to conclude the Regional Comprehensive Economic Partnership (RCEP) that also covers ASEAN members by the end of this year. When concluded, it will create a mega economic bloc that accounts for a third of the world's gross domestic product. (Yonhap)