Korea seals FTA with Central America nations
According to the Ministry of Trade, Industry and Energy on Wednesday, Trade Minister Joo Hyung-hwan met with his counterparts from the six countries in Nicaragua on Wednesday local time, and announced that they agreed to a comprehensive Korea-Central America FTA.
They plan to sign a final version of the deal by the first half of next year. It will go into effect after it is ratified by the countries’ legislatures.
The government expects the deal will help Korean automakers and steelmakers export to those countries, while the Central American countries can export more coffee and tropical fruits to Korea without worrying about tariffs.
“The world is experiencing anti-trade sentiment, as was seen in Great Britain leaving the European Union and the idea of protectionism, which was one of the key issues in the recent election in the United States,” said Joo. “However, Korea and six Central American countries came to agreement in a very short period of time, showing the importance of free trade to the whole world. Those countries have high potential of growing from now on and I expect the deal will help Korean companies exporting and receiving more investment from overseas.”
Negotiations on the FTA began in June 2015.
Under the agreement, the Central American countries will eventually remove tariffs on more than 95 percent of Korean products entering their countries. Korea’s major exports such as automobiles and steel are covered, as are products such as cosmetics and pharmaceuticals, the Trade Ministry said.
Korea will remove tariffs on coffee, sugar and tropical fruits right away. The deal didn’t include some sensitive agricultural products, including rice, pepper and garlic.
The deal also includes deregulating services investments.
The government said Korea can benefit by entering the infrastructure sector in the six countries, which is currently dominated by Brazilian and Spanish companies.
The Korea International Trade Association (KITA), the largest trade organization in the country, welcomed the deal, saying that it will help Korean companies export.
“The six countries in the Central American manufacturing sector, including automobiles and auto parts, depend heavily on imports and the free trade agreement will expand chances for local manufacturers in those markets,” said KITA in a report released on Wednesday. “Their GDP per capita is only about $4,987 at the moment but they have high potential to grow. We believe Korea’s exports of automobiles and steel will increase.”
However, KITA expressed concerns that the Central American countries need to solve corruption issues and improve unstable financial sectors for Korean companies to maximize the benefits from the deal.
BY KIM YOUNG-NAM [firstname.lastname@example.org]