Korea, Vietnam conclude FTA negotiations

South Korea and Vietnam concluded negotiations on a free-trade agreement on December 10, 2014 that will liberalize nearly all imports and exports between the two countries. The conclusion comes after two and a half years of negotiations, since August 2012. The announcement came on December 10 when President Park Geun-hye held a summit with Vietnamese Prime Minister Nguyen Tan Dung, who came to Korea to attend the two-day special summit between Korea and the 10-member Association of Southeast Asian Nations (ASEAN).

Korea.net reports that the deal covers a total of 17 areas spanning the whole economy, including products, services, investment and intellectual property rights.

Korea.net also stated that:

As of last year, Vietnam is Korea’s ninth-largest trading partner. The deal with Vietnam is expected to bring substantial benefits to both countries.
According to the agreement, Vietnam will open its markets for 200 additional Korean products, increasing by 6 percent the amount of trade between the two countries that was agreed upon by the Korea-ASEAN FTA. This is expected to increase Korea-Vietnam trade to some USD 740 million per year.
With the increased volume of trade, Korea’s liberalization rate has increased to 94.7 percent, three percentage points higher than the prior 91.7 percent, while Vietnam’s is at 92.2 percent, six percentage points higher than its prior 86.2 percent.
In particular, Vietnam has agreed to remove tariffs on 5-ton and 20-ton trucks, an item not included in the Korea-ASEAN free trade deal. The country agreed to open its markets for passenger cars with engines larger than three liters and for automobile parts, as well as for cosmetics and household appliances. Vietnam also decided to open its markets for e-commerce, a new section included in the Korea-Vietnam FTA for the first time.
Korea agreed to apply duty-free policies toward items that account for USD 170 million of trade per year, a figure that counts for three percentage points of Korea’s total trade. The duty-free items include up to 15,000 tons of shrimp, worth USD 140 million.
Seoul will also open its markets for 495 additional Vietnamese goods, including crushed, dried and frozen garlic and ginger, while excluding other agricultural products such as rice.
Finally, the government agreed to open some markets in the service sector, including construction, landscape architecture and equipment rental.