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Seoul to Start Free Trade of Goods With ASEAN in 2006
Feb 28, 2005
South Korea will start free merchandise trade with the 10-member Association of South East Asian Nations (ASEAN) next year, while talks on free cross-border investment and services trade will continue.
The agreement came at the first round of talks between the two sides in Jakarta, Indonesia, last week. President Roh Moo-hyun is expected to sign the merchandise free trade agreement (FTA) with ASEAN leaders in a summit meeting on Dec.12, according to the Ministry of Foreign Affairs and Trade (MOFAT) Sunday.
The agreement with ASEAN will become the nation's third for the duty-free flow of goods after those with Chile and Singapore.
South Korea and ASEAN representatives will hold four more rounds of talks to establish a specific timetable for cutting tariffs on merchandise, an MOFAT official said.
If talks proceed on schedule, the tariff-free trade of goods between South Korea and ASEAN will start sometime next year after the parliaments of the two sides ratify the accord, he added.
Unlike previous FTA talks, Korea has been engaged in two-track discussions with ASEAN due in part to the different levels of development among ASEAN economies. The initial focus on merchandise will be followed by free cross-border services and investment.
Once the accord is signed in December, duties on 80 percent of products traded between the two sides will be removed by 2009 when a comprehensive FTA including goods, services and investment will be signed," Kim Han-soo, chief of the FTA bureau at the MOFAT, said.
``This liberalization schedule is a year or two faster than that between China and ASEAN, '' he added. China will start free trade with ASEAN from July but a comprehensive FTA involving merchandise, services and investment will only be signed by 2010.
In the first round of FTA talks with ASEAN in Seoul, the Korea government asked for preferential treatment for products manufactured in the Kaesong Industrial Complex in North Korea, giving Kaesong products the same status as goods produced in South Korea.
The government has made efforts to include a ``Kaesong provision'' in all FTA negotiations to boost inter-Korean economic cooperation.
The government has actively been pursuing an agreement with ASEAN, the nation's fifth-largest trading partner, as part of efforts to ease the country's growing dependence on the Chinese economy. ASEAN absorbed 9.7 percent of Korea's trade last year.
Bilateral trade reached $44.7 billion last year, with exports accounting for $23.1 billion.
ASEAN has also been seeking FTAs with Korea's competitors. It concluded negotiations for goods liberalization with China last year, will finalize an FTA with India this year, and is set to kick off FTA negotiations with Japan in April.
It launched FTA talks with Korea this year in accordance with the ``Joint Declaration on Comprehensive Cooperation Partnership between Korea and ASEAN'' signed by the two heads of state at the Korea-ASEAN summit meeting held in Vientiane, Laos, in November 2004.
ASEAN, one of the world's top three economic blocs with the European Union and the North American Free Trade Agreement, comprises Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam.