South Korea and India signed an ambitious free trade agreement Friday that slashes tariffs, encourages investment and promotes exchange of skills in a bid to double fast-growing commerce between two of Asia’s biggest economies over the next decade.
South Korean Trade Minister Kim Jong-hoon and India’s Minister of Commerce and Industry Anand Sharma signed what the two sides formally called a Comprehensive Economic Partnership Agreement, but which in reality is a free trade deal.
Incheon International Airport, Seoul, South Korea
“This is a historic occasion,” Sharma said at a joint press conference with Kim.
Kim said it was South Korea’s first free trade accord with one of the fast-growing BRIC countries — Brazil, Russia, India and China. Sharma said it was India’s first comprehensive trade agreement with a major economy. Bilateral trade between the two countries reached $15.6 billion dollars last year, according to South Korea, and has been steadily growing. In 2002, it amounted to just $2.6 billion.
“We will be able to have access to one-sixth of the global market,” Kim said, adding the agreement “will open a significant opportunity as well as strengthen our relationship with India into the future.”
Sharma said the economic relationship between the two countries “has enormous potential to grow” and could double over the next 10 years.
“That’s what we will be aiming at,” he said. “This is just the beginning.”
The deal calls for abolishing or cutting tariffs for 90 percent of Indian goods in terms of value and 85 percent of South Korean products and increases investment opportunities, Seoul’s Ministry of Strategy and Finance said in a statement. It also allows for greater human resources exchange between the countries, the ministry said, paving the way for Indian computer and software experts as well as English teachers to gain access to the South Korean market.
“India has great competitiveness in terms of its IT professionals and so they will be able to come to Korea to contribute to the growth of the national economy in Korea,” Kim said. “English teachers from India will be able to contribute to the development of education in Korea as well. “
Lotus Temple, New Delhi
Major South Korean corporations such as Samsung Electronics Co., Hyundai Motor Co., LG Electronics Inc. and steelmaker Posco are already active investors in India. Negotiations for the deal began in February 2006.
Though the agreement has been signed, several steps remain on the South Korean side for it to take effect, such as ratification by the National Assembly, according to the ministry. India, however, has completed all necessary procedures for the deal to take effect, the ministry said. The latest deal highlights South Korea’s national strategy of aggressively pursuing free trade agreements.
Seoul signed a free trade deal with the United States in 2007, though it has yet to be ratified by legislatures in both countries amid political sensitivities and suspicions regarding free trade among some lawmakers. Seoul also has a free trade agreement with the Association of Southeast Asian Nations and said last month it has concluded negotiations with the European Union. South Korea’s biggest trading partners include China, the EU, the U.S., ASEAN and Japan.
Above news source: AFP