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FTA with ASEAN benefits Kaesong products

Korea Times

FTA With ASEAN Benefits Kaesong Products

By Ryu Jin, Staff Reporter

6 December 2005

Goods made in the North Korean border city of Kaesong will likely benefit from a free trade agreement (FTA) to be signed between South Korea and the Association of Southeast Asian Nations (ASEAN) next year, a senior presidential aide said Tuesday.

``It means that the products made in Kaesong will be treated as `Made in Korea’ in the trade agreement so that they can enjoy such benefits as preferential tariffs,’’ the official said on condition of anonymity. ``It is all but certain they will be included in the agreement.’’ Said Chung Woo-sung, presidential advisor for foreign policy.

South Korea is expected to sign a ``framework agreement’’ for the FTA with the 10-member regional organization when President Roh Moo-hyun attends the ASEAN+3 summit in Kuala Lumpur, Malaysia, next week.

A kind of joint declaration signed between leaders from each side, the framework agreement forms the basic structure of the South Korea-ASEAN FTA, which the two sides have agreed to conclude by 2006, according to diplomatic sources in Seoul.

Comprising various domains such as goods, service, investment, dissolution of trade disputes and basic economic cooperation, the framework agreement is hoped to expedite the country’s fourth FTA, following those with Chile, Singapore and the European Free Trade Association.

South Korea and the ASEAN have engaged in intense negotiations for an early conclusion since last year with the aim of striking a deal on goods by the first half of next year. But they have differed on the status of the products made in the North Korean border city.

Seoul wanted to see the goods from the Kaesong Industrial Complex, a symbolic site for the inter-Korean economic cooperation, treated the same as those made in South Korea. But ASEAN has been reluctant to grant such an advantage as its goods have to compete with the Kaesong products based on relatively low wages.

``We have gained approval from almost all the countries except a couple of nations which we had no opportunity to persuade,’’ Chung said. ``It was all cleared when leaders from the Southeast Asian nations visited Pusan for the Asia-Pacific Economic Cooperation (APEC) forum last month.’’

But he added that the status of the Kaesong products would not be specified in the framework agreement. ``It will be included in the clause on the place of origin when we sign an agreement on goods, which we expect in the first half of next year.’’

The official said Roh would propose a project for cooperation in the field of information-technology (IT) during the ASEAN+3 summit, which includes South Korea, China and Japan.

Roh will leave for a nine-day tour to Malaysia and the Philippines on Thursday. He will make a state visit to Malaysia till Sunday, attend the ASEAN+3 and the East Asia Summit (EAS) in Kuala Lumpur Dec. 12-14, and then fly to Manila for a two-day visit to the Philippines.