i24 News - 09 December 2020

Israel, Korea to sign free trade agreement within days

Israel and South Korea are set to sign a free trade agreement (FTA) next week, according to Israel’s Foreign Affairs Ministry’s confirmation. The FTA will be signed over Zoom and in the presence of the ambassadors of the two countries and senior government ministers, according to Israeli business outlet Globes.

The two countries have reportedly been in discussions about an FTA for at least a decade, but Korean concerns about how such a move would play out in the Arab world precluded its signing. However, the agreement finally received the green light after the signing of the normalization deal between Israel and the UAE in September.

One of the most pronounced anticipated effects of the FTA will be the lowering of the price of car imports from Korea. "In 2018, 44 percent of the value of imports from South Korea was in automobiles, with an overall value of $758 million before tax," reported Globes.

South Korean car manufacturers Hyundai and Kia comprise approximately 33% of new cars on Israel’s roads. Chevrolet and Renault have some models that are made in Korea, although about half of the Hyundai and Kia cars imported into Israel are made in Turkey and Europe; with some of their parts being manufactured in Korea.

Globes maintained that "there is concern that the manufacturers and importers may raise prices and put some of the savings into their own pockets."

It is also thought likely that the FTA will bring down the price of electronic goods, particularly those manufactured by Samsung and LG.

There is also a hope that this most recent signing will act as an impetus for concluding similar FTAs being negotiated between Israel and Japan and Israel and China.