Korea signs an FTA with IsraelKorea has signed a free trade agreement (FTA) with Israel, branching out to new markets as uncertainties remain with its close trading partners.
The Ministry of Trade, Industry and Energy announced that Trade Minister Yoo Myung-hee signed an FTA with her Israeli counterpart Eli Cohen in Jerusalem on Wednesday. Under the deal, Israel will remove tariffs on 95.1 percent of Korean goods, while Korea will eliminate tariffs on 95.2 percent of products from Israel.
As the first Asian country to sign an FTA with Israel, the government said that it hopes to bolster its presence in the Middle Eastern country ahead of other regional rivals.
While Israel is not a major trade partner for Korea, sitting at 45th in terms of trade volume last year, trade has steadily grown in recent years. The trade volume between the two countries rose to $2.72 billion last year from $2.05 billion in 2015.
The deal is expected to help Korea’s auto and semiconductor industries.
Cars accounted for 50.1 percent of exports to Israel last year, while semiconductor manufacturing equipment made up 25.4 percent of Israeli goods imported to Korea.
A senior trade official also explained that the FTA will strengthen cooperation in terms of developing technologies in future industries such as aerospace and renewable energy. Through the free trade deal, the two governments also agreed to double the size of the existing Korea-Israel Industrial Research and Development Foundation Fund to $4 million per year.
The Korea Institute of Industrial Technology and Israel’s Weizmann Institute of Science also signed a memorandum of understanding in commemoration of the FTA to strengthen joint research and support companies in the two countries to diversify supply lines for high-tech material and equipment.
The latest agreement wraps up Korea’s 18th free trade negotiation since it first established free trade relations with Chile in 2004. Korea currently enjoys free trade with 52 countries.
Korea has ramped up efforts in free trade to combat growing trade friction in major markets.
Exports in the first half of this year fell 8.5 percent from the same period a year earlier, rocked by headwinds such as the U.S.-China trade conflict.
The two countries are Korea’s largest trading partners in terms of volume.
Export restrictions from Japan, Korea’s third largest trade partner, since last month have further weighed on the already difficult situation.
The government is currently working to finalize trade deals with Malaysia, Indonesia and the Philippines.
Korea has also signed an FTA in principle with the United Kingdom in June in preparation for the country’s expected withdrawal from the European Union later this year. Korea’s free trade deal with five Central American countries, signed last year, will go into effect in October.
The FTA with Israel will go into effect after it receives approval from the legislative bodies of both countries.
BY CHAE YUN-HWAN [email@example.com]