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China, S Korea remain with tariff differences in FTA talks | 29 September 2014

China, S Korea Remain With Tariff Differences In FTA Talks

by Mary Swire
Hong Kong

The latest round of free trade agreement (FTA) talks between South Korea and China were said to have made some progress in other areas, but the two sides have still been unable to agree the scale and timing of tariff cuts on their respective ultra-sensitive goods.

Despite pressure following the meeting in July this year in Seoul between South Korean President Park Geun-hye and her Chinese counterpart, Xi Jinping, who had then agreed that the two countries would conclude the FTA by the end of 2014, the results from the five-day 13th round of negotiations, which was held in Beijing and finished on September 26, were therefore disappointing.

Although some agreement was reached during the meeting on certain customs issues, such as exempting shipments of less than USD700 from the submission of a certificate of origin and agreeing to complete customs procedures on shipments within 48 hours of arrival, other areas of accord in trade in goods matters are proving elusive.

FTA negotiations started in May 2012, and the two countries have already decided to eliminate tariffs on 90 percent of all goods, and 85 percent of imports by value. Duties on non-sensitive products will be cancelled either immediately or within ten years, and those on sensitive products will be abolished within 10-20 years after the FTA becomes effective.

However, the two sides continue to have had little joy in trying to narrow their differences on ultra-sensitive items, for which longer-term tariffs of more than 20 years will have to be allowed, and there still has been no indication of the basis on which a final agreement can be reached.

There remain particular concerns in China regarding opening its manufacturing sector to South Korean imports, and in South Korea on the effect of Chinese imports on its agricultural markets. The South Korean Government has already had to reiterate that any deal would need to protect its food producers.

In a statement following the latest meeting, the South Korean Ministry of Trade, Industry and Energy confirmed that those concerns have become the most challenging issue in the FTA negotiations between the two countries, and that, although talks are slowly closing the gap between the two sides, there are also issues in other areas that will need resolution.

China’s Ministry of Commerce (MOF) was also reserved in its comments on the meeting’s progress, in which it merely said that there had been a further in-depth exchange of views, and that that two sides would continue their negotiations in order to try and conclude an agreement in accordance with the target proposed by the two leaders.

However, while consultations will continue, there has been no decision announced on a date for the next round of talks.

China is already South Korea’s primary trading partner in terms of both imports and exports. According to Chinese Ministry of Commerce figures, total trade between South Korea and China reached over USD270bn in 2013, and the two leaders have set a USD300bn target for 2015.

 source: Tax News