Korea signs FTA with 5 Central America nations
According to the Korean Ministry of Trade, Industry and Energy on Wednesday, the FTA agreement was reached after two years and eight months of negotiations with the five countries.
“The FTA agreement between Korea and the Central American countries will be an opportunity to form a wider strategic partnership,” said Trade Minister Kim Hyun-chong.
The FTA is expected to go into effect in the first half of this year.
While most of the tariffs are expected to be lifted when the FTA takes effect - including on automobiles, steel, synthetic resins, cosmetics and drugs - agriculture products have not been included in the agreement, including rice, peppers and garlic.
Tariffs on pork will be lifted gradually after 10 to 16 years while the Korea will lift import tariffs on beef from the Central American countries after 19 years.
The FTA is expected to give Korea better access to the Central American market than Asian competitors including China, which has a FTA with Costa Rica, and Japan, which has none.
“While there are growing concerns over intensifying trade protectionism, this FTA provides an opportunity for an alternative route to other American markets,” said a ministry official.
According to a study by the Korea Institute for International Economic Policy, the FTA with the Central American countries will contribute to raising Korea’s GDP 0.02 percentage points over the next 10 years and create over 2,300 jobs.
The manufacturing sector will enjoy production increases equivalent to 2.57 trillion won over the next 15 years.
President Moon Jae-in recently ordered the government to diversify Korea’s export markets as trade tensions with the United States rise as a result of the “America First” policy championed by President Donald Trump.
Since the beginning of this year, the United States has raised the tariffs on washing machines and solar panels, major Korean exports to North America.
The U.S. Commerce Department recently proposed higher tariffs and quotas on steel and aluminum while Trump has threatened so-called reciprocal taxes on imported goods as retaliation against trade partners, including Korea, for causing the United States’ ballooning trade deficit.
BY LEE HO-JEONG [firstname.lastname@example.org]