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Seoul to tighten ties with Latin America

Korea Herald

Seoul to tighten ties with Latin America

By Kim Ji-hyun

11 November 2009

Korea wraps up today a high-level meeting with representatives of Latin American countries where discussion centered on how the two sides may pursue mutual interests.

This year`s forum kicked off yesterday with the participation of 12 Latin American nations including Mexico, Peru, Colombia and Ecuador. Ministers in charge of energy and commerce areas met with their counterparts.

Although not the first such forum, it has been only recent that exchange between Korea and Latin America began to pick up as the two regions began to awaken to the potential of the other.

"I don`t think it`s too late at all," said Germanico Pinto, Ecuador`s minister of non-renewable natural resources — in other words, oil and mines.

"We are witnessing a shift in how both Latin America and Korea view the world, and they now are no longer only focused on the United States, which is good for forming new relationships," Pinto said in an interview with The Korea Herald.

Exchange with South and Central Americas mostly involve offering technological prowess and experience — along with investment — in return for natural resources or the right to invest in such area. Last year, Latin America was where Korea recorded the highest trade surplus.

Building and operating refineries are one of Korea`s strong points, and Ecuador wishes to find financiers and industrial partners to build refineries, Pinto said.

Korea boasts a significant corporate presence in Ecuador, with Hyundai cars comprising over half the automobile market there.

But Ecuador is not content and hopes to woo more Korean investors to bolster its economy, which is plagued by political instability. There is now discussion of Korean private and public oil companies investing in mine development schemes in the Latin American country.

But on the issue of free trade agreements, Korea and Ecuador may not see eye to eye.

"We have no plans for an FTA with Korea because we do not believe in it," Pinto said.

Neighboring countries such as Colombia — not to mention a large part of the global economy — is seeking such a bilateral deal with Korea, but not Ecuador.

"We want a broader exchange. Exchange that is for the long-term, that goes beyond the financial ties of an FTA," the Ecuadorian minister said.

Korea has two FTAs — one with Chile and another with the ASEAN. A deal with the European Union has been signed, while a similar agreement with India is to go into effect in January. Ratification of an FTA with the United States is still pending.

President Lee Myung-bak has made it his personal and political mission to sign as many bilateral trade deals as possible during his term.

Korea is currently in talks for FTAs with Peru, Canada, Australia and New Zealand. FTAs are seen to account for over 50 percent of global trade, according to the World Trade Organization.

As the next chair of the Organization of Petroleum Exporting Countries for 2010, Ecuador projects "continued stable prices" for crude oil.

"There was some volatility, but seen from a broader timeframe, we have seen a stability," said Pinto. "And we believe this trend will continue, especially as the global economy improves."

Oil prices have a huge toll on the economy in Korea, which depends almost entirely on overseas sources of energy.

Korea also has other interests with Latin American nations, such as an FTA with Colombia and a trade pact with the nations of Mercosur, a regional trade agreement where Ecuador is an associate member, along with Bolivia, Colombia, Chile and Peru.