FTA talks to begin with the Mercosur nationsThe Korean government announced it will start negotiating a free trade agreement with the so-called Mercosur countries: Argentina, Brazil, Paraguay and Uruguay.
Korea’s Trade Minister Joo Hyung-hwan, who is currently visiting Argentina, signed a joint statement to initiate negotiations with Susana Malcorra, foreign minister of Argentina, on Thursday. Argentina is currently the chair of the Mercosur sub-regional bloc.
“The Mauricio Macri administration in Argentina, which was launched in December 2015, has been more open to the idea of free trade and there is rising interest from Korean companies to enter emerging markets in South America,” said Lee Kyung-ho, a director at the Korea’s Ministry of Trade, Industry and Energy in a press release on Friday.
“The Korean government will finalize the review process in the first half of this year to start negotiating a trade agreement with the four countries of Mercosur as early as June. The region has a high chance of growing fast economically in the near future.”
According to the Trade Ministry, the population of Mercosur member states account for 70 percent of the total population of South America, or about 290 million. And their combined GDP is about $2.7 trillion, accounting for 76 percent of the total GDP of the continent.
Trade between Korea and Mercosur member states peaked in 2011 at $20.8 billion, but has been falling since.
It dropped to $10.3 billion last year. The Korean government said a free trade agreement with the countries will expand the trade, along with investments, significantly.
Research done by Inha University in Korea last year showed that the country’s exports to the Mercosur countries will grow by $2.7 billion annually if a trade agreement deal is signed.
“There are no trade agreements signed with Mercosur outside of Latin America, and the deal will help Korean companies enter the market at an early stage,” said Lee.
The European Union is the only other institution that is negotiation a trade agreement with Mercosur member states.
The Korean government said the GDP market size of the countries that have signed free trade agreements with Korea will grow from 77 percent of the world’s total to 82.1 percent if it signs deals with Mexico and the Mercosur countries.
Korea’s decision came as protectionist trade policies are rising around the world. Seoul hopes to diversify its export markets through more trade agreements.
The announcement, in fact, came a day after the U.S. Trade Representative questioned the free trade agreement between the U.S. and South Korea, citing a dramatic increase in the trade deficit.
The Trade Ministry announced Friday that Joo Hyung-hwan will visit the United States from Sunday to Wednesday.
Joo will meet with the new administration’s key trade policymakers, including Commerce Secretary Wilbur Ross and Senator Ron Wyden, ranking member on the Senate Committee on Finance.
“We plan to develop a trade cooperation channel with the new administration in the United States and to describe the benefits of the two countries’ free trade agreement,” said Park Chan-ki, a director at the Korean Trade Ministry.
BY KIM YOUNG-NAM [firstname.lastname@example.org]