The third round of free trade agreement (FTA) negotiations between South Korea and China took place in Wei Hai, China, on August 22-24, 2012, and made some progress.

The Chinese Minister of Commerce Chen Deming and South Korea’s Trade Minister Park Tae-ho announced the official launch of negotiations for a bilateral goods and services FTA after a meeting in Beijing on May 2 this year, and following the completion of joint feasibility studies. It was then hoped that the talks could be concluded quickly, possibly within two years.

In the latest round of negotiations, the two countries worked to draw up the guidelines for negotiations in the fields of goods, services, origins, customs clearance and trade facilitation. Furthermore, they held a meeting of experts in the areas of government procurement, intellectual property rights, e-commerce and competition policies, to exchange technical views on the direction of future negotiations in those fields.

The two sides agreed to categorize goods according to the extent of their sensitivity - regular, sensitive, and ultra-sensitive - and on the definitions of regular and sensitive items. They have both also agreed to remove tariffs on products on the regular list within 10 years after the implementation of the FTA.

It has been expected that discussion on sensitive goods would be extremely challenging. Agriculture and fisheries are obviously the most sensitive sectors for South Korea, with a very substantial increase in Chinese imports being predicted if tariffs are reduced. However. China is also said to be categorizing, in particular, its manufacturing sector, including automobiles and machinery, as a very sensitive area.

Nevertheless, both countries still appear to be recognizing the very real benefits if a deal can be finally reached. In 2011, bilateral trade between China and South Korea was said to have reached over USD245bn, and estimates have put a figure of at least USD300bn by 2015, even without the FTA. China has become South Korea’s largest trading partner, while the latter also ranks as China's fourth-largest foreign investor.

The two sides have tentatively agreed to hold the fourth round of FTA negotiations in South Korea in October this year.

August 29, 2012

Source: Tax News

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