South Korea and Vietnam announce conclusion of FTA

South Korean automakers and suppliers likely to gain

South Korean president Park Geun-hye and Vietnamese prime minister Nguyen Tan Dung announced the conclusion of a free-trade agreement (FTA) yesterday (10 December) at the ongoing South Korea-Association of Southeast Asian Nations (ASEAN) summit in Seoul. According to the Korea Economic Daily, the agreement covers 17 areas including goods, services, manufacturing, investment, intellectual properties, and competition. Although detailed information is yet to be made available, media reports suggest that the two countries came to an agreement to provide access to markets that are not agreed in the South Korea-ASEAN FTA. In particular, Vietnam will reduce import tariffs on passenger cars with an engine capacity of more than 3 litres, freight trucks weighing between 5 and 20 tonnes, and automotive components. In return, South Korea will lower duties on Vietnamese fishery imports, among others. The FTA is expected to increase the Vietnamese market's rate of liberalisation by USD740 million to 92.2%, while the liberalisation ratio for South Korea is expected to rise by USD170 million to 94.7%.