Following the implementation of the Korea-U.S. Free Trade Agreement, about a third of the country’s international trade will involve countries with which Korea has entered into FTAs.

While the figure has risen quite rapidly, it remains far below the global average.

According to a report by the Korea International Trade Association’s Institute for International Trade, on average countries conduct 49.2 percent of trade with those with whom they have trade pacts.

Current negotiations

With the country still behind others in regard to trade agreements, Korea has been conducting several negotiations simultaneously, including negotiations over agreements with six countries and the Gulf Cooperation Council. The countries engaged in talks with Korea are Australia, Canada, Colombia, Mexico, New Zealand and Turkey.

Of these, negotiations with Australia and Colombia are closest to a conclusion.

Australia and Colombia

The negotiations for a Korea-Australia FTA began in March 2009, and the two sides have since met five times.

While it has been more than a year since the last round of talks, held in May 2010, the two sides are said to be open to discussing “a small number of remaining issues,” according to Deputy Trade Minister Choi Seok-young.

At a press briefing in October, Choi also said that the two sides are negotiating talks headed by director-general level officials “in the near future.”

With the value of Korea-Australia trade coming in at nearly $27.1 billion in 2010, Australia was Korea’s seventh-largest trade partner in that year, with raw materials including coal and various metals taking up the bulk of shipments to Korea.

Until Oct. 10, negotiations with Colombia had been on hold for one year with the two sides failing to narrow differences on automobiles, as well as agricultural and electronic goods.

While Colombia ranks relatively low among Korea’s trade partners with bilateral trade in 2010 coming in at about $1.8 billion, the Latin American nation has been one of the more active negotiators in recent months.

The process gained significant momentum following visits by Colombian Minister of Trade, Industry and Tourism Sergio Diaz-Granados in July and then by President Juan Manuel Santos in September.

A month after the Colombian president’s visit, during which he and President Lee Myung-bak shared views that the talks should be concluded within the year, the fifth round of talks were held in Seoul from Oct. 10-14.

Future negotiations

In addition to the ongoing negotiations, Korea is currently making preparations to resume or begin 12 FTA talks.

Those in preparation include trade pacts with the Southern African Customs Union, which consists of the Republic of South Africa, Botswana, Lesotho, Swaziland and Namibia, and with MERCOSUR ― Argentina, Brazil, Paraguay and Uruguay.

Korea is also conducting director general-level talks with Japan to seek ways to resume negotiations that have been stalled since the sixth round in November 2004.

Also underway are studies for a trade pact with China, and a three-way pact between Korea, China and Japan.

Results to date

Although the country’s first FTA, with Chile, came into effect in 2004, Korea’s efforts at forming bilateral trade accords began in 1998 as the country looked to free trade deals as the means to protect its interests against increasing trade regionalism.

Korea’s activities regarding trade pacts picked up pace in 2003 when such accords became central to the government’s trade policies.

Since then, Korea has focused on major economies and countries rich in natural resources.

So far, FTAs have proven to be beneficial to Korea’s international trade, on which it is heavily dependent for economic growth.

According to the Ministry of Finance and Strategy, the Comprehensive Economic Partnership Agreement with India has resulted in the bilateral trade growth rate doubling in the first year of its implementation. The pact went into effect in January 2010 during which trade between Korea and India grew 40.8 percent compared to the previous year. From 2000-09, trade with India grew at an annual average of 20 percent.

While not as dramatic, other pacts have resulted in the rate of trade expansion growing.

The Finance Ministry’s data showed that trade with ASEAN nations has increased by an annual average of 12 percent between 2006 and 2010, while overall trade volume increased at 9 percent each year.

By Choi He-suk  (cheesuk@heraldcorp.com)