FTAs with China, New Zealand and Vietnam startAfter free trade agreements (FTAs) with China, Vietnam and New Zealand came into force at midnight on Saturday, exporters will benefit from immediate tariff elimination on more than a thousand products and additional tariff reductions from January.
The three FTAs were all ratified by the National Assembly on Nov. 30.
According to the Korea Customs Service on Sunday, the first beneficiary of the Korea-China FTA was a company that exported 2,650 tons of sulfur to Beijing after midnight on Saturday. As the $1.20 per ton tariff on sulfur has been lifted, the company could save $3,180.
The China trade deal eliminates tariffs on $73 billion in Korea’s exports to China and $42 billion of its imports from the country.
Tariffs on a total of 958 Korean products, including sulfur, have been eliminated. Aerospace fuel and high-frequency medical equipment are major export products expected to benefit from the immediate tariff lifting. From Jan. 1, a total of 5,779 products will be subject to tariff reductions.
Under the trade pact with New Zealand, tariffs on 2,013 products, including washing machines and tires, were eliminated on Sunday. And 1,036 products will receive tariff cuts starting on Jan. 1.
Including textiles and automobile parts, 272 products being exported to Vietnam will enjoy cuts as well.
As of October, exports to the three countries accounted for 26 percent of the country’s total export volume, according to data by the Ministry of Trade, Industry and Energy.
The three deals are expected to raise the country’s real GDP by 1 percentage point for the next 10 years and improve the trade balance by $641 million, the ministry said. Over 55,000 jobs will be created over the period. Exports are forecast to grow by $5 billion every year, it said.
“Tariff elimination and additional reductions would help expand exports to the countries in the short run,” a ministry official said. “Exports of cosmetics, fashion items, home appliances and high-end food are expected to rise in particular.”
Under the Korea-China FTA, Korean business will get easier access to the Chinese services market - including law, construction, retail and entertainment - in two years.
About 4,000 Korean businesses in Vietnam will get new investment protection. Korea has made $18.9 billion worth of investments as of 2014 and is the largest investor in the country.
With New Zealand, Korea will start various exchange programs, including expansion of a working holiday program to send up to 3,000 Koreans to the country from next year.
BY SONG SU-HYUN [email@example.com]
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