Pioneering Indian free tradeYesterday Korea signed a Comprehensive Economic Partnership Agreement, a detailed treaty that has effects akin to a free trade agreement, with India. It was the result of three years and six months of negotiations that started in February 2006. Now Korea is a country with free trade agreements with six countries and regional bodies, and the first country to agree on a CEPA with India.
It is true that the range of openness under the agreement is smaller at 85 percent and the speed of opening will be slow, with tariff reductions taking eight to 10 years under this agreement. However, it is highly significant that we are the first to open the door to this huge consumer market, which combines the consumption power of 1.2 billion people, the fourth largest in the world. It should be of special note that India developed at an average of 8 percent annually over the past five years, and its imports are rapidly growing by more than 20 percent per year.
This not only indicates that the immediate effects of the deal will be large, but also that there is much greater potential for growth. With the recent CEPA, Korea has the chance to win an advantageous position in a huge new market before Japan or the EU, which are still negotiating, or China, which is currently conducting joint research.
The Korea&India CEPA not only includes trade in products, but also calls for barriers to fall in service and investment fields.
This raises the prospect that internationally competitive experts such as computer programmers, business consultants and English teachers could flow into Korea, and the number of investment ventures in manufacturing, a Korean strength, entering from India could show a large increase.
Expansion of trade, investment and human resource exchanges will bring financial interdependence to the two countries and strengthen their political and diplomatic relations. Considering the unchallenged position and influence of India in international society, expansion of diplomatic cooperation with India is just as important as financial gain.
The CEPA has many expected effects, but there can be no actual profits without ratification in the National Assembly. The Korea&U.S. free trade agreement is currently useless because it has not yet been ratified by the legislature.
The Korea&India CEPA ratification agreement bill will be presented at the regular session of the National Assembly in September. I hope the National Assembly will simultaneously take care of the Korea&India CEPA and Korea&U.S. free trade agreement to maximize the effect on our GDP and allow local companies to acquire new markets.