South Korea and New Zealand formally signed a free trade agreement (FTA) on Monday.
New Zealand is South Korea’s 40th largest trading partner, while Korea is currently New Zealand’s 6th largest export market. Bilateral trade between the two countries totaled US$3.26 billion in 2014, with South Korea’s exports to New Zealand amounting to US$1.73 billion.
At the signing, President Park Geun-hye described the agreement as a milestone for upgraded bilateral cooperation in various areas, including economy, culture, manpower, security, information and communication, and international cooperation. New Zealand Prime Minister John Key also praised the agreement for its economic openness and potential for New Zealand’s further market integration into the Asia-Pacific region.
Under the agreement, New Zealand will remove tariffs on all South Korean goods seven years after the implementation. South Korea will reciprocate by abolishing tariffs on 96.4 percent of shipments from New Zealand within 15 years of when the pact takes effect. South Korea, New Zealand’s third-largest beef export market, will scrap the 40 percent tariff levied on its beef within 15 years and the 45 percent tariff on kiwis within six years.
Both sides have agreed to immediately lift tariffs on washing machines. Tariffs on cars (5 to 12.5 percent), construction machinery (5 percent) and trucks (5 percent) will be eliminated over the next three years.
However, they agreed to exclude some 199 items that are considered very sensitive in Korea from the negotiations, mostly agricultural goods. They include rice, a key staple in Korea, honey, apples, pears, persimmons, chili pepper, garlic, and squid.
Meanwhile, the deal is to expand human exchanges in agriculture, livestock, and Oriental medicine. According to the Blue House, the possible imbalances in the two countries’ trade will be ameliorated by expanding exchange programs. New Zealand will offer an extended working holiday program by issuing 3,000 working holiday visas per year for Korean youths from 18 to 30 years old, up from the current 1,800. It will also give work visas to 200 Korean experts in the farming, fisheries, and forestry industries including traditional herbal doctors and biotechnicians with training and research opportunities in New Zealand. An eight-week language program for 150 Korean students from farming and fishing villages will also be offered. By strengthening co-operation, the two sides will seek new opportunities, making inroads into emerging markets.
At the summit, the two leaders agreed to build an institutional framework for bilateral cooperation in the maritime industry, weapon systems, information technology, and health care. Especially in maritime affairs, Park requested Key to help Korean fishing fleets, including trawlers, continue their operations in NZ’s exclusive economic zone.
Park also asked Key to support Korea in the Trans-Pacific Partnership (TPP), the Washington-led regional free trade agreement. The TPP, currently involving 11 other countries is expected to create one of the world’s largest economic blocs when it is contracted. Key answered Park by saying that New Zealand will keep South Korea informed on the progress of the TPP negotiations.
Since Seoul and Wellington began talks on the free trade pact in 2009, the two sides have gone through difficulties in narrowing down the differences to complete negotiations. The formal signing has come about after the 2014 G20 summit held in Australia. Now the deal waits for parliamentary ratification in both countries to be implemented.
Link to original article location: http://www.businesskorea.co.kr/article/9764/knz-fta-new-zealand-now-south-koreas-13th-free-trade-partner#sthash.HniTlpS7.dpuf