SEOUL: South Korea has concluded negotiations for a free trade agreement with six Central American countries. The FTA will eliminate tariffs on 95 percent of goods and is expected to pave the way for South Korean companies to make inroads into Central American markets in various sectors. The Ministry of Trade, Industry and Energy said Thursday that the deal with El Salvador, Honduras, Nicaragua, Panama, Guatemala and Costa Rica, was made 17 months after the two sides declared the onset of the negotiations for the bilateral pact. Under the agreement, the two sides promised to abolish tariffs on 95 percent of goods made from each country within ten years after the agreement goes into effect.
The six Central American countries also promised to extensively open their markets for South Korea’s main export items as well as cosmetics, medicines and car components. In return, South Korea said it will free up the imports of raw sugar, as well as tropical fruits.
As a boon for South Korean farmers, the two sides excluded rice from the items subject to the agreement, while agricultural goods such as pepper, garlic and onion have been exempt from the concession of the tariff. The two sides also agreed to open up each other’s government procurement markets, making it possible for South Korean energy, infrastructure and construction companies to make inroads into Central American markets.
Seoul’s deputy trade minister highlighted the anticipated impact of Asia’s first FTA with the central American countries. “With the deal, we have gained an upper hand over China and Japan over Central America. We have also secured the possibility to advance to the South American market or North American market by teaming up with the Central American partners.”
The six Central American countries have approximately five-thousand U.S. dollars of average per-capita gross domestic product(GDP) and their combined trade with South Korea is a meager four billion dollars. The South Korean government is hoping to have the deal signed and ratified by the first half of next year.
