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South Korea’s recent FTA signing with Colombia will help fuel the long-stalled series of FTA drives by Korea into the South American region thus expanding bilateral trade benefits between the two nations.
The two countries wrapped up the FTA negotiations in 30 months since the talks were launched in December 2009. The Korea-Colombia FTA will come into effect as early as this year.
The mutually agreed terms of the Korea-Colombia FTA cover a total of 22 categories, including goods, rules of origin, custom clearance, sanitary and phytosanitary (SPS) standards, technical barriers to trade (TBT), trade remedies, investment, services, temporary entries, communications, e-commerce, government procurement, intellectual property rights, and cooperation.
Under the agreement, Korea will remove tariffs imposed on 96.1 percent of Colombian goods and the partner will abolish tariffs levied on 96.7 percent of Korean imports for 10 years after effectuation of the trade deal. The current 35 percent tariffs on Korean automobiles will be gradually scrapped over the next 10 years and tariffs on Korean SUVs (Sport Utility Vehicles) will be removed within nine years.
The Korean government currently imposes two to eight percent tariffs on coffee imported from Colombia, and these tariffs will be terminated either immediately or eased gradually. Tariffs on flowers and bananas will be removed in three to seven years and five years, respectively.
For beef, which has posed a major obstacle in FTA negotiations, only two kinds of boneless parts and three special beef parts that do not contain specified risk material (SRM), or prions, will be subject to tariff cuts, and tariffs on the beef parts will be abolished over the next 19 years. Other beef parts were not included in the negotiations.
Also, 153 agro-fisheries items were excluded from the trade pact. The two countries have agreed to remove tariffs on 284 sensitive agro-fisheries items in more than 10 years.
Korea’s outbound shipments to Colombia reached $1.61 billion as of 2011, while imports from Colombia amounted to $380 million. Although Colombia is not one of Korea’s major trade partners, trade between the two nations has been growing at a rapid pace. Korea mainly exports automobiles and car components to Colombia, and imports coffee, crude oil, and ferro alloys from Colombia. Once the bilateral trade agreement goes into effect, the two countries’ mutual trade volume is expected to rise further significantly.
Korea is currently involved in further FTA talks with four other countries, facilitated by its full blown FTA agreements with nine countries worldwide, which means it is a strategically important trade partner in the region for Korea and thus it can serve as Korea’s crucial foothold for penetrating into the Latin American market.
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