ID :
74117
Fri, 08/07/2009 - 09:40
Auther :

News Focus) Trade deal to help Korean firms tap Indian market

( SEOUL, Aug. 6 (Yonhap) -- A trade pact with India is expected to help South
Korean companies accelerate their inroads into Asia's third-largest economy and
solidify their presence there, experts said Thursday.

South Korea and India agreed to eliminate or cut tariffs on goods over the next
10 years with the latter phasing out or reducing tariffs on 85 percent of South
Korean goods. The so-called Comprehensive Economic Partnership Agreement (CEPA),
to be signed on Friday, covers services and investments as well as competition
and other issues.
The two countries started their negotiations in March 2006, and initialed the
bilateral trade pact in February this year. Both sides expect the accord to take
effect on January 1 after South Korea's parliament ratifies the deal in October.
"It is very meaningful that South Korea forged a trade pact with India, one of
the BRIC group," said Park Dae-shik, vice executive of the Federation of Korean
Industries -- South Korea's largest business lobby. "The deal will help further
increase bilateral trade."
Indeed, the deal is the first of its kind between South Korea, Asia's fourth
largest economy, and the BRICS group of fast-growing developing economies,
comprising of Brazil, Russia, India and China.
South Korea will be the second country after Singapore with which India has
signed such a treaty.
India, the world's 10th largest economy, is also in negotiations with the
European Union and Japan over similar trade deals, but their negotiations are
proving protracted. The country, whose population tops 1.2 billion, has not yet
launched negotiations with China or other countries.
Hyundai Motor Co., South Korea's largest automaker, and other electronics makers
such as LG Electronics Co. are already selling their products in the world's
second most populated country.
Hyundai Motor, which operates an auto plant in India, sells around 300,000
vehicles in India annually. LG Electronics also has plants that produce home
appliances and computers in India, and POSCO, South Korea's leading steelmaker,
is seeking to build a plant in India as well.
"The tariff removal rate under the CEPA with India is relatively lower than the
provision under most other free trade agreements," Myong Jin-ho, a researcher at
Seoul-based Institute for International Trade. "But the accord with India will
help more South Korean companies have a chance of making inroads into the market
in advance outpacing their rivals."
Overall, the CEPA is expected to boost bilateral trade by as much as US$3.3
billion annually, according to estimates by the state-run Korea Institute for
International Economic Policy (KIEP).
Two-way trade increased 39 percent to $15.56 billion last year, with South Korea
logging a surplus of $2.39 billion.
South Korea exported $3.6 billion of goods to India, and imported $1.6 billion in
the first six months of this year, according to the ministry.
"The overall economic impact (of the CEPA) will be larger than expected in the
long-run," said Choi Kyong-lim, the director general at the ministry's FTA policy
division.
Under the deal, tariffs on South Korean auto parts, the country's biggest trading
item, are to be reduced to as low as 1 percent over an eight-year period from the
current average of 12.5 percent. But both sides agreed to exclude fisheries and
some agricultural products -- including dairy, beef and pork -- from tariff
concessions.
The CEPA is the latest in a series of free trade agreements that South Korea has
concluded. Last month, South Korea concluded its two-year free trade negotiations
with the European Union (EU).
India will be the sixth country that South Korea has signed a trade pact with.
Seoul already has agreements with Chile, Singapore, the European Free Trade
Association and the Association of Southeast Asian Nations.
South Korea is in free trade negotiations with 11 countries such as Canada,
Mexico and Australia to boost its export-dominated economy.
Last month, South Korea concluded two-year free trade negotiations with the
European Union.
A free trade pact was signed with the United States in 2007 but needs
ratification by the legislatures of both countries.
sam@yna.co.kr
(END)

X