China and South Korea have signed a free trade agreement that will remove most tariffs between the largest and fourth-largest economies in Asia where bilateral trade is already worth more than U.S.$200 billion.
The pact — largely agreed in November and signed by Chinese Commerce Minister Gao Hucheng and his South Korean counterpart Yoon Sang-jick yesterday — aims to gradually remove tariffs on more than 90 percent of traded goods within 20 years.
China is South Korea's top trading partner as well as its biggest export market, and two-way trade stood at around U.S.$235.3 billion in 2014, according to Seoul figures.
South Korea is also one of the biggest foreign investors in China, pumping in some US$1.6 billion in the first quarter of this year.
Pending mandatory parliamentary approval, the FTA will allow small and medium-sized South Korean firms greater access to China's vast consumer market and help create more than 50,000 jobs, South Korea's trade ministry said.
"In particular, exports of consumer goods in fashion, cosmetics, home appliances and high-end food products will increase greatly," the ministry said.
The agreement will remove tariffs on 71 percent of South Korean exports to China in 10 years and 91 percent in 20 years.
South Korea will in return remove tariffs on 79 percent of Chinese imports in 10 years and 92 percent in 20 years.
Negotiations for the agreement, which began in May 2012, have often been marred by angry protests from South Korean farmers who feared an influx of cheap Chinese imports.
The final pact excludes many of South Korea's major farming and fisheries goods, such as rice, beef, pork, pepper and squid.
By the same token, China excluded or delayed the opening of its relatively less-developed manufacturing segments such as the auto and display panel sectors.
President Xi Jinping and South Korean President Park Geun-Hye exchanged letters to confirm their support for the FTA.
Xi said it will be a leap forward in the bilateral trade relationship, substantively benefiting the people of both countries and further contributing to the economic integration of East Asia and the Asia-Pacific region, as well as to global economic development.
Park described the deal as a historic landmark which will deepen the bilateral strategic cooperative partnership and serve as a framework for future cooperation.
Also, a total of 310 products manufactured in the Kaesong Industrial Complex in North Korea would be subject to preferential tariffs after the FTA implementation, allowing for more benefits to the inter-Korean industrial park than any other free trade pacts that South Korea has signed.
