South Korea and Vietnam sign free trade agreement
The Hankyoreh | 6 May 2015
South Korea and Vietnam sign free trade agreement
The Ministry of Trade, Industry and Energy (MTIE) announced the signing of a free trade agreement with Vietnam on May 5.
The agreement was signed in Hanoi by South Korean Minister Yoon Sang-jik and his Vietnamese counterpart, Minister of Industry and Trade Vu Huy Hoang, with Vietnamese Prime Minister Nguyen Tan Dung observing.
The FTA with Vietnam is South Korea’s fifteenth to date, with greater levels of product liberalization than a previous FTA with the ASEAN countries (including Vietnam) that went into effect in June 2007, the MTIE said.
The administration predicted the agreement would lead to a rise in exports to Vietnam not only for major items such as fibers and textiles, but also home appliances, cosmetics, and automobile parts.
With the agreement, tariffs are to be abolished for pork, tropical fruit, garlic, and ginger within ten years, and for natural honey, red beans, and sweet potato starch within 15 years. Rice was not included in the agreement’s provisions.
The administration also said openness levels for red peppers, onions, green tea, and squid would be no greater than in the existing South Korea-ASEAN FTA.
Vietnam became South Korea’s third-largest export market (after China and the US) in the first quarter of 2015, with US$6.58 billion in sales. It was up all the way from sixth place the year before, when its US$22.3 in annual exports ranked it behind China, the US, Japan, Hong Kong, and Singapore.
“Vietnam’s industry for component materials is still weak, and it‘s difficult for them to procure them on their own,” said the Institute for International Trade at the Korea International Trade Association. “We can expect the increase in intermediate goods exports to Vietnam to continue.”
Around 4,000 South Korean businesses are currently operating in Vietnam. A total of US$18.9 billion in South Korean investments in Vietnam were reported for 2014, making South Korea the country’s single largest investor, the MTIE added.
The FTA is set to pass through National Assembly ratification before taking effect.
By Song Kyung-hwa, staff reporter
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