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China, South Korea boost economic ties with FTA
21
Dec '15
China and South Korea will cut tariffs on certain traded goods as the free trade agreement (FTA) between the two countries came into force on Sunday (December 20).

The FTA aims to eliminate all tariffs eventually with gradual removal of barriers through the years. The two countries concluded talks on the FTA in November 2014.

Seoul believes the FTA will enable South Korean companies to expand substantially in the world's largest consumer market and boost bilateral relations in trade and economy.

China is South Korea's largest trading partner, with Chinese exports accounting for over a quarter of the total during the January-November period of this year alone. South Korea is China's third-biggest single-country trading partner.

Under the deal, both countries will eliminate tariff on more than 90 per cent of traded goods within 20 years after the implementation. As the FTA gets effective before the end of this year, the tariff cut will enter the second year in less than two weeks after the implementation.

According to Seoul's estimates, South Korean manufacturers are forecast to see exports to China grow $1.35 billion thanks to the implemented FTA within a year.

If the liberalized trade reaches its goal 20 years later, South Korean companies are expected to reduce tariff costs by up to $5.44 billion annually, much higher than tariff savings of $930 million from the South Korea-US FTA and $1.38 billion from the South Korea-EU FTA.

Textile is one of the major items in the Sino-Korean FTA and Taiwan had already expressed concern that the trade agreement could slash its exports to China.

After the FTA was signed last year, the Taiwan Textile Federation (TTF) said 85 per cent of South Korean textile exports to China may be granted duty-free status in the future. At that time, TTF conservatively estimated the loss to Taiwanese textile exports to China could be $324 million or even more, once the FTA between South Korea and China is implemented.

Taiwan mainly exports fibres, yarns and fabrics to China, while South Korea ships fibres, apparels and accessories among the major items. (SH)

Fibre2Fashion News Desk – India

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