SEOUL: The free trade agreement (FTA) between China and South Korea will officially come into force from Sunday, providing an opportunity for the two countries to push forward their already-close cooperation partnership further.
Seoul’s trade ministry said Saturday that the free trade accord will take effect from Dec. 20. It is widely anticipated here to expand presence of South Korean companies in the world’s largest consumer market and boost bilateral relations in trade and economy.
China is South Korea’s largest trading partner, with Chinese exports accounting for over a quarter of the total during the January-November period of this year alone. South Korea stands as China’s third-biggest single-country partner of trade.
Under the deal, both countries will eliminate tariff on more than 90 percent of traded goods within 20 years after the implementation. As the FTA gets effective before the end of this year, the tariff cut will enter the second year in less than two weeks after the implementation.
According to Seoul’s estimates, South Korean manufacturers are forecast to see exports to China grow US$1.35 billion thanks to the implemented FTA within a year.
If the liberalized trade reaches its goal 20 years later, South Korean companies are expected to reduce tariff costs by up to US$5.44 billion annually, much higher than tariff savings of US$930 million from the South Korea-US FTA and US$1.38 billion from the South Korea-EU FTA.
South Korea expected the FTA with China to help raise its real GDP by 0.96 percentage points, create 53,800 jobs and enhance consumer benefits by US$14.6 billion.
