EDITORIAL from the Korea Times on Aug. 7)

New partnership with India

A partnership agreement between South Korea and India is expected to open a new
horizon in bilateral economic cooperation. The two countries will sign a
Comprehensive Economic Partnership Agreement (CEPA) today, concluding more than
three years of negotiations.

The signing has significant implications as the pact
is seen as a free trade deal. Under the accord, Korea and India will get rid of
or reduce tariffs on goods over the next 10 years, while opening their services
and investment sectors.
The CEPA comes after Korea signed a free trade agreement with Chile, Singapore,
the European Free Trade Association (EFTA), the Association of Southeast Asian
Nations (ASEAN), and the United States. The country has recently concluded
another FTA with the European Union (EU). Thus, the nation has laid the
groundwork for a free trade network with the world's major markets, including the
Americas, Europe and Asia.
When FTAs with the U.S. and the EU as well as the CEPA with India take effect,
South Korea's trade with free trade partners is likely to be 35.3 percent of its
total trade, almost a threefold growth from the current 12.1 percent. This means
that Korean-made products will improve its competitive edge, aided by lower
tariffs and easier access to lucrative markets. Of course, the country will have
to open its market wider to foreign goods, services and investment. However, as
an export-oriented economy, Korea has no other choice but to promote free trade.
Therefore, it is important for the country to forge mutually beneficial ties with
its free trade partners. Especially, India has great potential to develop
collaborative relationship with Korea that can supplement each other's industrial
and economic structure. India is one of the so-called BRIC countries, including
Brazil, Russia and China. India has a population of 1.2 billion, the world's
second largest after China. The International Monetary Fund (IMF) predicted the
South Asian country will enjoy a strong economic growth of 6.5 percent this year
and 5.4 percent in 2010.
The Korea Institute for International Economic Policy (KIEP) forecast that the
CEPA will help increase Korea's exports to India by 80 percent or $2.8 billion
annually, while its imports from the partner will rise by 30 percent or $500
million. Two-way trade stood at $15.5 billion last year with South Korea
recording $2.3 billion in trade surplus. The state-run think tank also said the
pact is likely to boost the nation's gross domestic product (GDP) by 1.3 trillion
won and create 48,000 jobs.
Korea and India should focus on long-term benefits rather than short-term gains,
because the partnership accord calls for a lower level of market opening and a
slower pace of tariff phase-out than free trade agreements with other countries.
Thus, it is necessary for Korean companies to take advantage of India's potential
for production and consumption. Korea can benefit from its strong automobile,
parts, machinery and electronics sectors.
It is also worth noting that India has agreed to recognize goods produced at the
Gaeseong complex, an inter-Korean industrial zone in North Korea, as South
Korean-made. Such an agreement is the first of its kind with any trading
partners. The CEPA is also expected to facilitate the influx of Indian scientists
and engineers, especially those specializing in the IT sector, into South Korea.
To ensure the success of the bilateral partnership, both India and Korea should
double their efforts to smoothly translate the accord into action and step up
cooperation not only in economy and trade but also in politics, diplomacy,
defense, security, culture and education.
(END)