Korea-Chile FTA still boosting bilateral trade

Back in 2003, Chilean wine was a rare treat for Korean wine connoisseurs. Seven years later, approximately one in five bottles of wine on the shelves of local stores is from Chile, giving Chilean wine a higher trade volume than French wine.

In Chile, Korean cars, which were a rare sight on Chilean roads a decade earlier, are now among the best-selling cars in the country. Three Korean sport-utility vehicles - the Tucson and the Santa Fe, both from Hyundai Motor, and the Sportage from Kia Motors - have swept the top three spots in Chile’s SUV market.

According to a report released yesterday, the free trade agreement between Korea and Chile has accelerated bilateral trade between the two countries over the past six years.

The Korea International Trade Association released its report on the Korea-Chile FTA on the occasion of the sixth anniversary of the country’s first trade pact with another country. The deal went into effect on April 1, 2004.

KITA said that from 2004 until 2009, trade with Chile jumped 22.5 percent annually on average, compared with an average 10.7 percent annual growth in its trade with other countries. Korea’s exports to Chile outpaced its imports from the Latin American country, rising 27.6 percent and 19.6 percent, respectively, each year on average.

The Korea-Chile pact also played a positive role in domestic production and employment, KITA said.

Exports to Chile induced production worth $4.49 billion in Korea last year, 3.4 times the figure recorded in 2003, and created 23,708 jobs in Korea last year, 3.9 times as many as in 2003, the group said.

The market share for Korean products in Chile, however, has recently been on the decline, KITA said, due in part to Chile’s FTAs with China and Japan, which were signed later than the one with Korea and on terms that were more favorable to Korea’s two rivals.

“The government needs to strengthen its efforts to improve the terms of the FTA with Chile,” said Myoung Jin-ho, a researcher with the International Trade Research Institute, an affiliate of KITA.

By Moon Gwang-lip [joe@joongang.co.kr]