Yonhap reported that South Korea and Peru signed a free trade deal, Seoul's latest trade pact that could pave the way for Asia's fourth largest economy to tap deeper into the South American region.
The countries struck their free trade agreement in August 2010. Peru marks the second South American country with which South Korea has sealed such a trade pact. In April 2003, South Korea signed a similar trade deal with Chile, Seoul's first free trade partner.
Seoul's trade ministry said in a statement that "The FTA is expected to boost trade and economic cooperation between the two countries as well as lay the foundation for Korean firms' stable investment in energy and resources in Peru."
Under the deal, both countries will eliminate all tariffs within 10 years after the deal takes effect.
First, tariffs on South Korean automobiles with engine displacements of 3,000 cubic centimeters or more and tariffs color TVs will be abolished right after the deal takes effect.
Tariffs on South Korean automobiles with engine displacements of less than 3,000 cubic centimeters will be scrapped in five years. Tariffs on Peruvian coffee will also be abolished right after the deal comes into effect.
Both countries also agreed on protection measures such as import safeguards. In addition, the two sides agreed on recognizing goods made at an inter Korean industrial park in North Korea as originating from South Korea.
Seoul's trade ministry said it will push to win parliamentary approval for the deal as early as possible. The FTA will come into force 60 days after both sides notify each other that their domestic procedures have been completed, or at an agreed upon date.
South Korea and Peru have held five rounds of free trade negotiations so far after launching talks in Seoul in March 2009. Bilateral trade reached USD 1.98 billion in 2010 with South Korea's exports to the South American country reaching USD 944 million.
The ministry said that the Peruvian economy has expanded at an annual rate of more than 6% over the past five years. Resource rich Peru will provide good business opportunities to South Korean firms.
South Korea mainly imports resources such as zinc and iron, and exports such goods as cars and petrochemicals. Experts said the FTA with Peru is expected to help South Korean companies accelerate their inroads into the South American country and gain greater access to resource development projects there.
In particular, exports of autos, heavy machinery, TVs, computers and other products whose tariff rates are up to 17% are expected to increase sharply after the deal comes into effect. Currently, South Korean automakers, led by Hyundai Motor Co, claim 23% of the Peruvian auto market.
The experts also said the free trade deal may help South Korea secure stable supplies of energy resources and accelerate its move to develop resources in the country.
Peru holds roughly a third of the world's key resources, such as zinc. South Korea's annual imports of key resources, such as copper, amount to about USD 900 million. Nine South Korean companies, led by SK Energy Co, are already involved in resource development projects in Peru.
The signing of the Peru FTA comes as South Korea is also seeking to forge free trade pacts with many other countries in an effort to power its export driven economy. South Korea currently has free trade pacts with India, the Association of Southeast Asian Nations, Singapore and the European Free Trade Association, which includes Switzerland, Norway, Ireland and Liechtenstein.
The country is set to implement a similar trade pact with the European Union this year, although the deal still needs approval from South Korea's parliament. A free trade pact between Korea and the United States was signed in 2007 but still awaits ratification in both countries.
(Sourced from www.yonhapnews.co.kr)
