China agrees to waive some tariffs

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China agrees to waive some tariffs

Seoul and Beijing have agreed in principle to allow preferential tariffs on goods produced in the inter-Korean industrial complex in the North Korean border city of Kaesong under their bilateral free trade pact, officials here said yesterday.

The two sides have been in negotiations over the free trade deal since May, expecting the talks to take two years to conclude. China is South Korea’s largest trading partner, with bilateral trade expected to reach $300 billion by 2015.

During their latest round of negotiations, the two countries agreed to remove tariffs on each other’s products within 10 years of the implementation of their free trade accord.

“Although details have not yet been decided [on Kaesong-made products], both countries agreed to add a clause regarding the so-called outward-processing zones in the text,” said an official at the Ministry of Foreign Affairs and Trade.

The industrial complex in the North was born out of the inter-Korean reconciliation in 2004 that boomed following the first summit of the two Koreas in 2000. The complex was designed to combine cheap North Korean labor with South Korean capital and technology.

As of May, 51,452 North Koreans worked at about 123 small labor-intensive South Korean plants in the complex, according to government data.

South Korea’s free trade pacts with Singapore and the 10-member Association of Southeast Asian Nations recognize some products made in the Kaesong complex as being South Korean.

Similar trade deals with the U.S. this March and the European Union in July last year, however, took a vague approach to the issue.

The agreements call for the establishment of a committee to discuss whether the Kaesong industrial zone should be given preferential treatment a year after the FTA takes effect.

Yonhap

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