Vietnam- South Korea Getting Ready to Sign FTA

On August 6, 2012 in Hanoi, representatives of Vietnam and South Korea officially pronounced the start of FTA negotiations. In September 2012, the first round of negotiations was opened. The second round of negotiations is expected to take place in 2013. The Vietnam-Korea FTA will include deeper and faster tax cuts for more products than the South Korea - ASEAN FTA.

 

Delivering a speech to the seminar, Kim Jong Sang, head researcher of emerging markets at KOTRA, affirmed, "Vietnam - South Korea FTA will bring benefits to both countries, expand bilateral trade and investment and promote economic cooperation and regional integration for businesses. Besides, the agreement will help strengthen political, economic and cultural relations between the two countries." For Vietnam, the FTA signing will be an opportunity for its exports to enter South Korea (including agricultural products, apparel and seafood) thanks to lower tariffs and higher competitive advantages than other countries. Furthermore, South Korea also inked FTAs with the US and the EU. Therefore, the Vietnam - South Korea FTA will again help Vietnamese businesses enjoy certain advantages in their market expansion strategies to the US and the EU. In addition to expected trade cooperation expansion, the FTA will also help boost investment between Vietnam and South Korea. From these practical benefits, he recommended that South Korea and Vietnam make an effort to accelerate negotiation rounds for early signing of the FTA, thus increasing mutual benefits an

Twenty years after Vietnam and South Korea established diplomatic relations, South Korea has always been an important trading partner, and is the fourth largest export market and the second largest import market of Vietnam. In recent years, Vietnam has played an important role as an overseas satellite production base for South Korean industry. Since the establishment of diplomatic ties, bilateral trade turnover has kept rising, from US$500 million in 1992 to US$17.8 billion in 2011. South Korea is the largest investor in Vietnam with 2,823 projects worth US$23 billion. Currently, South Korean investments are concentrated in manufacturing and mining in Vietnam. Together with trade and investment, cooperation in culture, education and people-to-people exchange is constantly developing.

d opening up more opportunities for exchange and commercial and economic cooperation in the future.

Ms Jang Mi Yeon, Deputy Director of FTA Division at the Ministry of Knowledge Economy (MKE), South Korea, said no specific commitments have been made because the Vietnam - South Korea FTA is still under negotiation. However, the FTA is expected to quicken the lifting of tariff lines imposed on sensitive and highly sensitive items. She added that Vietnam and South Korea have already established a comprehensive partnership and many South Korean investors are now doing business in Vietnam. For that reason, the FTA signing serves a very important role for South Korea and the country expects to sign the agreement as soon as possible.

 

A representative of Ministry of Strategy and Finance, South Korea, said Vietnamese businesses have enjoyed preferential tariffs when exporting goods to the South Korean market because of the ASEAN - Korea FTA. However, tariffs under the Vietnam - South Korea FTA will be lower than those under the ASEAN - South Korea FTA. Moreover, the two countries aim to bring bilateral trade turnover to US$20 billion by 2015, and the continued trade and investment liberalisation of the Vietnam - South Korea FTA will play an important role in accomplishing this goal. He also recommended that the Vietnam - South Korea FTA will open up many opportunities but also bring challenges for the Vietnamese economy because of competitive pressures arising from the FTA-committed opening. Hence, Vietnam should have support policies and increase the competitiveness of small and medium enterprises when it joins FTA.