Korea, China Agree on Basic Guidelines for FTA Negotiations
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Korea, China Agree on Basic Guidelines for FTA Negotiations
Agrees to remove tariffs on 10,800 items, or 90 percent of trade goods

27(Fri), Sep, 2013





Woo Tae-hee, assistant minister of the Office of FTA Negotiations at the Ministry of Trade, 

Industry and Energy, explains the results of phase one negotiations on a 

free trade agreement between Korea and China on Sept. 6. 



 South Korea and China have wrapped up phase one negotiations on a bilateral free trade agreement (FTA) by agreeing to the modality for the next stage of negotiations.

Both sides agreed upon basic guidelines for their negotiations during the seventh talks of the phase one negotiations, which took place in China between Sept. 3 and Sept. 5, according to the Ministry of Trade, Industry and Energy (MOTIE).

Considering worries about the opening of agricultural products and fisheries as well as a few manufacturing items, the two countries agreed to set the scope of sensitive items for their protection by classifying goods on three stages — the normal track, the sensitive track, and the highly sensitive track — during the phase one negotiations before getting down to phase two overall item negotiations. 

Korea and China reached an agreement to liberalize 90 percent of the total goods being traded between the two countries and 85 percent of the value of imports, said Woo Tae-hee, assistant minister of the Office of FTA Negotiations at the MOTIE. They also agreed on the possible readjusting upward of the figures. 

Among topics they agreed to take up during the upcoming phase two negotiations are an outward processing zone on the Korean Peninsula, non-tariff barriers, the country of origin certificate, and customs clearance issues.





Woo Tae-hee, assistant minister of the Office of FTA Negotiations at the Ministry of Trade, 

Industry and Energy, explains the results of phase one negotiations on a 

free trade agreement between Korea and China on Sept. 6. 


The two sides agreed to introduce such trade relief tools as anti-dumping, countervailing duties and safeguard steps. 

The evaluations of the outcome of phase one negotiations were mixed. President Park Geun-hye predicted the Korea-China FTA to have a higher level of liberalization then 90 percent, which was lower than that of the Korea-U.S. FTA and Korea-EU FTA.

A civilian FTA committee composed of 42 organizations, including the Korea International Trade Association (KITA) and the Federation of Korean Industries (FKI), welcomed the result of the phase one negotiations, but expressed dissatisfaction with the liberalization levels. Prof. Chung In-gyo of Inha University's economics department said he gave a positive assessment that the liberalization levels surpassed the 80 percent range, but he said the figure should have gone beyond the 95 percent level as Korea and New Zealand agreed to during their FTA negotiations. They called for a raise in the liberalization levels during the upcoming phase two negotiations so that Korea can cash in on the Chinese market, which has emerged as a "huge global manufacturing mecca" with an annual average growth rate of 18 percent. 




Woo Tae-hee, assistant minister of the Office of FTA Negotiations at the Ministry of Trade, 

Industry and Energy, explains the results of phase one negotiations on a 

free trade agreement between Korea and China on Sept. 6. 



On the other hand, Prof. Ahn Se-young of the Sogang University International Relations Graduate School said he gave high marks to the Korean side for its negotiations with China, citing the fact that China has agreed on a liberalization rate of 50 percent during FTA negotiations with the Association of Southeast Asian Nations (ASEAN).

MOTIE officials said the Chinese side insisted on a liberalization rate ranging from 60 percent to 70 percent even during the sixth negotiations, but agreed to raise the figure to 90 percent during the seventh and final phase one negotiations. The 84.2 percent reached during FTA negotiations between China and Switzerland was the highest one besides the Korea-China FTA negotiations.

All eyes are now on the most contentious items put on the highly sensitive track. 

During their phase two negotiations, the two countries are to exchange a list of items classified on the normal track, sensitive track, and highly sensitive track categories. Tariffs on the items put on the normal track are to be removed immediately or within 10 years, while those on the sensitive track are to be liberalized during the period between more than 10 years and less than 20 years. 

The Korean side said 10 percent, or about 1,200 items, will likely be classified on the highly sensitive track, which are not subject to liberalization. MOTIE officials said the 10 percent share on the highly sensitive track is mindful of a strategy of protecting agro-fishery products, including rice. The Korea Rural Economic Institute estimated that Chinese agro-fishery products will surge between 105 percent and 209 percent in the wake of the implementation of the Korea-China FTA, resulting in a 1.2 percent drop in the production of the Korean agricultural sector. 

Prof. Ahn said China will likely demand that petrochemical products and automobiles be excluded from liberalization. He added that the two countries succeeded in overcoming the first hurdle of the phase one negotiations only one year and four months after they met at the negotiating table, but Korea will have to stage uphill battles with China over the highly sensitive items. 

   
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