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Cabinet to finally approve FTA with Korea
20 Aug '08
2 min read
A proposal for free trade agreement (FTA) between Thailand and Korea was submitted to the cabinet on August 19 which will pave the way for the two countries to sign the pact at the ASEAN economic ministers' meeting scheduled for August 25-27 in Singapore.
Sources informed Fibre2fashion that the proposal was accepted by the cabinet and will be followed by a signature ceremony at the end of this month which will formally join Thailand and Korea as a party to the Asean-Korea free trade agreement (AKFTA).
FTA talks between Asean and Korea were initiated in 2005 and came into effect in 2006. However, all the ASEAN members signed the contract except for Thailand which declined the proposal due to certain dispute regarding treatment of certain products by Korea.
Thailand finally concluded the trade talks under AKFTA last December after Seoul allowed an extension for import tariff reductions on certain Thai goods from 2010-12 to 2016-17. Another reason for agreeing to this pact was also that those who did not ink the AKFTA in August 2006 lost their competitiveness to other ASEAN members.
For instance, yarn from Thailand faced 20 percent tariff in South Korea while other ASEAN countries only had to pay a 5 percent charge due to which a lot of goods lost their competitive advantage.
Products given an extension for tax cuts or waiver include raw hides, tanned leather and leather goods. This apart, export of yarn would also benefit from this tariff cut.
Bilateral trade between the two countries reached US $7 billion last year with South Korea emerging to be the eighth largest trading partner of Thailand. Signing of this FTA is likely to further bolster trade ties between the two countries.
Sources informed Fibre2fashion that the proposal was accepted by the cabinet and will be followed by a signature ceremony at the end of this month which will formally join Thailand and Korea as a party to the Asean-Korea free trade agreement (AKFTA).
FTA talks between Asean and Korea were initiated in 2005 and came into effect in 2006. However, all the ASEAN members signed the contract except for Thailand which declined the proposal due to certain dispute regarding treatment of certain products by Korea.
Thailand finally concluded the trade talks under AKFTA last December after Seoul allowed an extension for import tariff reductions on certain Thai goods from 2010-12 to 2016-17. Another reason for agreeing to this pact was also that those who did not ink the AKFTA in August 2006 lost their competitiveness to other ASEAN members.
For instance, yarn from Thailand faced 20 percent tariff in South Korea while other ASEAN countries only had to pay a 5 percent charge due to which a lot of goods lost their competitive advantage.
Products given an extension for tax cuts or waiver include raw hides, tanned leather and leather goods. This apart, export of yarn would also benefit from this tariff cut.
Bilateral trade between the two countries reached US $7 billion last year with South Korea emerging to be the eighth largest trading partner of Thailand. Signing of this FTA is likely to further bolster trade ties between the two countries.
Fibre2fashion News Desk - India
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