Korea, Asean move towards free trade pact |
ANN/The Korea Herald
In its rush to catch up in free trade agreements, South Korea is nearing a decision on a blockbuster pact with the 10-member Association of Southeast Asian Nations.
The economic bloc, which has a population of 500 million, is the No. 3 overall investment destination for Korean companies with a total of $11 billion poured into the region in the past 50 years. It also is a major supplier of energy and raw materials.
On Nov. 30, a Korea-Asean summit is expected to decide whether to adopt a timetable for negotiations. The plan, hammered out in six rounds of working talks since last October, calls for negotiations to start in January and an agreement by 2007.
Tariffs on non-sensitive items would be lifted two years later with the six richest Asean states: Singapore, Brunei, Malaysia, Thailand, Indonesia and the Philippines. Duties on the four poorest states - Cambodia, Laos, Myanmar and Vietnam - would be removed in 2014.
Given the diversity of Asean countries, in terms of stage of economic development, political systems and variety of sensitive sectors, it will require a great deal of time and effort to establish a single free trade agreement between Korea and the trading bloc, said Cheong Inkyo, research fellow at the Korea Institute for International Economic Policy.
"In this context, Korea believes that it may be necessary to pursue FTAs with individual Asean countries as well as with Asean as a whole. Therefore, Korea is pursuing the Korea-Singapore FTA, assuming that such efforts will eventually serve as building blocks for the establishment of a Korea-Asean FTA," he said.
Korea and Singapore hope to conclude their deal by the end of this year. Negotiations have been smooth so far.
"In selecting prospective FTA partners, Korea carefully takes into account all key factors such as economic benefits, political and diplomatic considerations, and domestic constraints, including the vulnerability of the agricultural sector. The issue of an trade deal with Asean has been given careful consideration, taking into account the regions strategic importance and close trade and investment relations with Korea," Cheong says.