Free trade plans with China announced
Hankyoreh, Seoul
Free trade plans with China announced
Tariffs and OPZs to be key negotiating points
By Park Min-hee, Beijing correspondent
3 May 2012
On May 2, South Korea and China formally announced the beginning of negotiations toward a bilateral free trade agreement.
The two countries reached a preliminary agreement to apply preferential tariffs for items produced at the Kaesong Industrial Complex in North Korea.
Following a trade ministers’ meeting in Beijing on Wednesday, South Korean trade minister Park Tae-ho and Chinese commerce minister Chen Deming declared South Korea-China FTA negotiations under way, with the first round to take place this month. In a joint statement, Seoul and Beijing announced they will consider applying favorable tariffs under the proposed FTA for items produced in outward processing zones (OPZs).
Choi Seok-young, the South Korean representative for FTA negotiations, said these terms “designate OPZs within the Korean Peninsula, including the Kaesong Complex.
"We anticipate this will not only boost economic growth but also improve inter-Korean relations along with encouraging reforms and openness from North Korea," Choi said.
This is the first time South Korea has agreed to preferential tariff rates for the Kaesong Complex prior to beginning FTA negotiations with another country. The suggestion reportedly came from the South Korean side.
The two countries plan to hold negotiations in two stages in order to protect vulnerable sectors on each side that would be put at risk by an FTA. In the first stage, an agreement would be reached on the protection methods for sensitive items and the course of negotiations for the different areas. The second stage would be the actual negotiations.
Choi said, "We decided not to hold the second stage negotiations if an amicable agreement cannot be reached in the first stage, so we have established a safeguard."
South Korea considers its agriculture and fisheries sectors to be sensitive, while China seeks protection for its automotive and petrochemical sector. Experts are predicting these to be the most difficult hurdles in the negotiations.
Chen said the first negotiations would be held in May and expressed his hope that they would be completed within two years. At the same time, the South Korean government reportedly expressed the position that no prior agreement had been reached on a deadline for the negotiations and that it did not intend to be bound by one.
At a January summit between Presidents Lee Myung-bak and Hu Jintao, the two sides agreed to begin FTA negotiations in the near future, but didn’t set a specific date.
