Korea-Asean trade pact to take effect on June 1

A merchandise free trade agreement between Korea and five member countries of the Association of Southeast Asian Nations will take effect tomorrow, officials said yesterday.
Korea and nine out of the 10 member states of Asean, except Thailand, reached the agreement last year, aimed at liberalizing merchandise trade by 2010. The free trade pact, Korea’s first deal with an economic bloc, was ratified by the National Assembly on April 2.
The five countries are Vietnam, Myanmar, Singapore, Malaysia and Indonesia, said the Ministry of Foreign Affairs and Trade. The pact with Brunei, the Philippines, Cambodia and Laos is expected to go into effect in July or August when the countries complete internal procedures.
Asean is Korea’s fifth-largest trading partner, and more than 2 million Koreans travel to Asean countries each year. Two-way trade reached $53.5 billion in 2005, accounting for 9.8 percent of Korea’s total trade, while Korean firms invested over $12.5 billion in the countries that year.
Under the agreement, Korea and Asean will liberalize merchandise trade by 2010. Korea will abolish tariffs on 4,742 items by then.
A majority of the tariffs that will be abolished, 70 percent, will be scrapped on June 1, according to officials.
Korea has signed FTAs with Chile and Singapore. Last month in Seoul Korea held the first round of talks with the European Union for a similar trade pact. It is also pushing for a pact with Canada and is set to conduct a second feasibility study with China this year.
Korea and the United States reached a landmark free trade accord in April. But the U.S. is likely to request renegotiation of that pact next week, said a Korean official.
The U.S. Congress passed a bill last month calling on trade officials to include tougher labor and environmental standards when signing trade pacts with foreign countries.
“I think the U.S may demand it [renegotiation] in early June,” Kim Jong-hoon, Korea’s top negotiator for the free trade talks, said in an interview with a radio program.
He said Seoul does not expect new requirements on issues such as autos and agriculture from Washington. The two countries started their talks on Tuesday in Washington to finalize a legal review process for the FTA text.