Accelerating Vietnam-Korea FTA Negotiations

At the seminar, Mr Choi Kyonglim, Deputy Minister of Foreign Affairs and Trade of Korea said that Vietnam-Korea relations have developed rapidly in all fields and to a new height which is the strategic partnership. The two countries have set a target to bring bilateral trade to US$20 billion by 2015. The seminar was an opportunity to make new direction of development cooperation in the future. In addition, Vietnamese businesses will also have the opportunity to exchange and process specific issues of cooperation in the fields which are strength of the two countries, as well as handle problems in investment.

 

South Korea is the second largest investor in Vietnam with an investment capital of US$20.5 billion and more Korean companies are planning to invest in Vietnam. That the two countries sign the FTA will create opportunities for trade and investment of Korean businesses into Vietnam to be expanded in many fields besides energy, infrastructure, agriculture, fisheries or ODA.

 

Deputy Minister of Industry and Trade, Nguyen Cam Tu said that the FTA will help Vietnamese enterprises better compete in this market, creating opportunities to promote exports to South Korea as well as expanding into other markets .

 

Vietnam-Korea bilateral trade relation has increased 36 times in the last 19 years, from US$0.5 billion in 1992 to US$18 billion in 2011. Last year, South Korea was the 4th largest trading partner of Vietnam and Vietnam was the 8th largest export market of South Korea. The structures of the two countries’ goods are clearly complementary, not competing directly. Specifically, Vietnam imports from South Korea mainly machinery and equipment, textile materials, footwear, petroleum, steel, plastics, chemicals, transport and exports to South Korea minerals, raw materials, agricultural and forestry products, textiles, furniture, etc. Many agricultural products, aquatic products, and Vietnamese textile fibers can have tax cuts and enter faster the Korean market faster thanks to the bilateral FTA. Now that a number of Vietnamese agricultural products have advantages such as: tea, pepper, coffee, fruit ... but the Korea's commitment to this group is still very limited, many Vietnamese products don’t meet quarantine requirements so the results in exports to South Korea have not been as expected.

 

Vietnam is the third largest trading partner of Korea in ASEAN, after Indonesia and Singapore. In the list of major importing countries from South Korea in 2011, Vietnam ranked 8th. Two-way trade turnover of Vietnam - South Korea (from January to October 2012) reached US$17.6 billion (compared to US$499 million in 1992 when the two countries formally established diplomatic relations).

 

In investment, as of October 20^th 2012, Korea had had 3,134 investment projects in Vietnam, with registered capital of nearly US$24.5 billion, ranked second in total 95 countries and territories investing in Vietnam. Direct investment activities of Korean investors in Vietnam took place in 18 subjects, most concentrated in the processing, manufacturing and real estate business ... More than 2,600 South Korean companies are doing business in Vietnam, employing about 400,000 employers with the large-scale production facilities, such as electronics and steel. However, compared to other Asian countries, the current standard and speed of trade liberalization in Vietnam are still low, leading to more limited activities affecting potential exchange and trade between Vietnam and Korea. So, the two countries need to speed up the process for early conclusion of FTA negotiations.

 

Mr Ha Chan Ho, Korean Ambassador to Vietnam also said that signing the FTA will create opportunities for trade, investment of Korean businesses in Vietnam to be extended. Vietnam-Korea FTA agreement is very significant when building a new general framework of cooperation of the two countries' relations in the 21^st century. South Korea is also actively promoting the preferential free trade through FTA.

 

According to Mr Bui Huy Son, Director of the Asia-Pacific market, the Ministry of Industry and Trade, Vietnam-Korea cooperation has made positive strides in the past and towards the future based on the mutual trust. On December 22nd 1992, the two countries established diplomatic relations at ambassadorial level, and in August 2001, the two sides established a comprehensive partnership in the 21st century and in September 2009 the two countries upgrades relations to “strategic cooperative partnership.” The year 2012 also marked 20 years of diplomatic relations between Vietnam-Korea (12/1992-12/2012), many cultural, artistic, economic cooperation and investment activities have been organized jointly continuous and effectively by the two countries.

 

Mr Son also emphasized, in addition to the mainstream sector, South Korea is an important market for Vietnam's labour exports. By 2011 there had been about 60,000 Vietnamese workers in this country.

 

It is known that South Korea currently has FTAs ​​with many countries (in the framework of bilateral and multilateral). Vietnam is one of the 13 countries are in the process of FTA negotiations with this country. Earlier, Vietnam and South Korea have applied the Korea-ASEAN FTA into force in 2007, according to which two countries' trade volume increased by an average of 28.5 percent. On August 6^th 2012 the two sides announced the official launch FTA negotiations Vietnam - Korea. Last September, the first round was conducted. Expected second round of talks will take place in 2013.