The bilateral free trade deal between South Korea and China will equally benefit the two countries as they both obtained what they were looking for, officials here said Monday.
Under the tentatively reached free trade agreement (FTA), South Korea will eliminate its tariffs on 79 percent of all products, or 9,690 items, imported from China within 10 years following the implementation of the deal, according to the Ministry of Trade, Industry and Energy.
Such a schedule compares with that of China, which will eliminate its import duties on 71 percent, or 5,846, of products shipped from South Korea over the same period.
The details of the proposed FTA were released shortly after the two countries announced a de facto final deal in their FTA talks that were first launched in May 2012.
"South Korea will have signed an FTA with all three major economies of the world that include the United States and the European Union once the Korea-China FTA is implemented," the ministry said.
"It will not only help boost the countries' annual bilateral trade volume to over US$300 billion by 2015 but also help bring South Korea's per capita income to over $30,000 by enabling South Korean firms to advance into the Chinese market that is growing at a tremendous speed ahead of, and on relatively better terms, than their global competitors," it added.
Within 20 years after the FTA goes into effect, South Korea will eliminate its tariffs on 92 percent of all goods, or 11,272 products, from China, with China eliminating its own import duties on 91 percent, or 7,428 products, from South Korea.
South Korea's deputy trade minister said there was little possibility of having to make future changes in major clauses of the current agreement.
"A substantial conclusion of negotiations can be seen as a complete conclusion. You may take this to mean that all remaining issues have been resolved at least for now," Woo Tae-hee told a press briefing.
The deputy trade minister had led the South Korean delegation in the FTA talks until they were upgraded to top trade ministers in the latest round that began on Thursday.
A major remaining issue for South Korea was the level of its market liberalization for agricultural and fishery products.
Ministry officials said market opening for agricultural goods under the Korea-China FTA will be minimal when compared to the other major FTAs that South Korea has signed.
Under the China deal, South Korea will eliminate its import tariffs on 40 percent of agricultural and fishery products, in terms of value, shipped from China. The figure compares with 92.5 percent and 98.4 percent under the country's bilateral FTAs with the United States and Australia, respectively, according to the trade ministry.
In addition, 30 percent of all agricultural and fishery products, in terms of value, have been permanently excluded from market liberalization in any future negotiations, it added.
"Having 30 percent of goods permanently excluded from market opening is unprecedented in all 12 other FTAs the country has signed, and this also means all key items, including rice, pepper, pork and beef, that have been considered the most sensitive here have been excluded from market liberalization," the ministry said.
Woo added that the 30 percent exclusion will affect 614 goods out of the total 1,611 products shipped from China.
"Under the country's FTA with the United States, only 11 agricultural and fishery products were excluded from market opening," he said.
Other fisheries items, often caught illegally, were also excluded from market opening, a move partly aimed at curbing illegal fishing by Chinese boats in waters shared by the two countries, officials from the Ministry of Oceans and Fisheries said.
They include yellow corbina, hairtail or cutlassfish and flatfish.
"This is the first and only FTA in the world that specifically states that any catch from illegal fishing will not be subject to preferential tax rates," a ministry official told reporters.
Apart from its direct impact on the South Korean economy, the FTA with the world's second-largest economy is expected to help strengthen South Korea's role and status in the international community.
"The Korea-China FTA is expected to become a chance for the country to act as a linchpin between countries in the region as they move to boost their economic cooperation and form an economic bloc in the Asia-Pacific region," the ministry said.
"It is not a matter of which side will benefit more from the FTA because I believe the agreement will have a political impact on the entire Northeast Asian region and the Korean Peninsula. I believe the FTA will also help secure peace and stability in the Northeast Asian region," Woo said.
The deputy trade minister said all products manufactured in the inter-Korean joint industrial complex, the Kaesong factory park in North Korea's eponymous border town, will also benefit from the Korea-China FTA when they are shipped to China.
"Unlike South Korea's FTA with the United States, in which products from the Kaesong complex are subject to benefits of the FTA only after a review and approval by a joint committee, or the FTA with the European Union, in which products subject to such benefits are listed, all products from the Kaesong complex that are exported to China will benefit from lowered import tariffs under the Korea-China FTA," he told the press briefing.
South Korea and China are currently involved in three-way negotiations with Japan for a trilateral FTA. The three are also taking part in negotiations for a regional free trade deal, known as the Regional Comprehensive Economic Partnership (RCEP), which involves 13 other nations, including Australia, New Zealand and India.
"I believe the Korea-China FTA may help boost our leverage in negotiations for a Korea-China-Japan FTA and the multilateral negotiations for the RCEP," the deputy trade minister said. (Yonhap)
