Trade talks between China and South Korea have been under way since May 2012. After the meeting between President Park Geun-hye and Xi Jinping at the Asia-Pacific Economic Cooperation summit in Beijing, South Korea declared that it had “effectively settled” terms on the trade pact. Technical and legal details are expected to be announced by the end of this year, but the pact’s overall content is clear – there will be significant tariff cuts on manufactured products between both countries.
Seoul’s trade ministry stated the deal would reduce annual tariffs by $5.4 billion, a prodigious reduction in comparison to the figures in the trade pacts South Korea signed recently with the US and the EU. It intends to grant tariff-free status to goods whose value currently makes up 77 percent of the imports from China. Approximately 66 percent of the China’s products imported from Korea will be tariff-free. Agricultural products will remain exempt from this deal due to intense pressure from farming lobbies. The final agreement is expected to be signed in the first half of 2015 and will be fully implemented by 2016.
While a more free trade generally raises consumer well being in the form of lower prices, the domestic producers of manufactured goods in Korea and China would not be as well off. Furthermore, this deal might be controversial in both countries as it could potentially result in greater short-term job losses. This fear is exemplified in the farmers’ vigorous lobbying against alleviating tariffs for agricultural products.
- Angela Weiqian Li