These agreements show a solid trade picture between China and South Korea and can also be seen in part as a political rebuff for Japan and Taiwan, both of which are expected to lose some volume of trade with China as a result of this free trade agreement. China and South Korea are important trading partners – at $146.7 billion, China accounts for 25% of South Korea`s total export volume. Total bilateral trade in 2014 was approximately $235.4 billion. 16% of South Korea`s total incoming products during this period came from China. South Korea clearly makes products that China wants, and it enjoys a healthy trade balance with the PRC. The China-South Korea Free Trade Agreement covers 17 areas of trade in goods, services, investment and rules, including e-commerce, competition policy, government procurement, environment and other ”economic and trade issues of the 21st century”. In terms of tariff concessions, after the conclusion of the China-Korea Free Trade Agreement, Chinese products with zero tariffs will reach 91% of the fiscal target and 85% of imports after a transition period of up to 20 years, and South Korea`s zero-duty products will reach 92% of the tax target of 91% of the value of imports. In addition, a total of 310 items, including products manufactured in North Korea`s Kaesong Industrial Park, have received the qualification of Korean origin and are eligible for tariff preferences immediately after the entry into force of the China-Korea Free Trade Agreement. The Republic of Korea is a member of the World Trade Organization (WTO) and has signed subsidiary agreements, including TRIPS (Trade-Related Aspects of Intellectual Property) and the Agreement on Government Procurement. Korea has been a member of the Organisation for Economic Co-operation and Development (OECD) since December 1996.
On June 1, 2015, China and South Korea signed a free trade agreement, which entered into force on December 20, 2015. [5] [6] Three days ago, China and South Korea officially signed their draft free trade agreement in Seoul. Although they were agreed last year, the formal signing of these agreements took place only after the translations of the agreed content had been reviewed by both parties. This usually leads to a delay of 4-6 months. The agreement was reached more than six months ago, in November 2014. On the sidelines of the APEC meeting in Beijing, Xi and Park said negotiations have been reached on a deal that is expected to eliminate tariffs on 90 percent of goods traded between China and South Korea. Now that it has been formally signed, the free trade agreement is expected to come into force later this year once both lawmakers approve it. With regard to market opening, China and South Korea will treat each other`s financial companies entering their own capital markets, which means simplifying the relevant approval process and reducing barriers to entry into both sides` financial markets. The agreement also stipulates that Korean construction companies in the Shanghai Pilot Free Trade Zone can conclude cooperation projects in Shanghai without being limited by the share of foreign investment (foreign investment accounts for more than 50%). The Chinese side is considering allowing Korean travel agencies to recruit and visit South Korea in China. [8] Chris Devonshire-Ellis is a founding partner of Dezan Shira & Associates – a foreign direct investment practice that provides business start-up, business advisory, tax and compliance advisory, accounting, payroll, due diligence and financial audit services to multinationals investing in emerging Asia. Since its inception in 1992, the company has become one of Asia`s most versatile full-service consulting firms, with operational offices in China, Hong Kong, India, Singapore and Vietnam, as well as alliances in Indonesia, Malaysia, the Philippines and Thailand, as well as liaison offices in Italy, in Germany and the United States.
For more information, please email china@dezshira.com or visit www.dezshira.com. Negotiations on the agreement began in May 2012. [1] As of July 2014, there had been 12 rounds of talks. [2] The China-South Korea Free Trade Agreement holds promise for Chinese and South Korean companies and is expected to further boost trade. As part of the agreement, the two sides reduced tariffs on about 90 percent of all traded goods to zero. This sounds impressive, until you consider that the actual volume of goods between them is limited to a total of 852 items imported from China – mostly agricultural products – or seven percent of the total number of products shipped from China in 2013. The deal promotes 637 Korean items, mostly industrial products such as cars and steel, accounting for eight percent of all Korean products exported to China last year. The free trade agreement will also be implemented gradually over a period of two decades – it`s not a sudden overnight boon for free trade. An introduction to tax treaties across Asia In this issue of Asia Briefing Magazine, we look at the different types of trade and tax treaties that exist between Asian countries. These include bilateral investment treaties – which are somewhat old-fashioned but remain at the heart of bilateral trade between many small emerging economies – as well as double taxation treaties and larger free trade agreements that directly affect companies operating in Asia. The Ministry of Commerce in Seoul estimates that the agreement will increase trade between China and South Korea to more than $300 billion a year, up from $215 billion in 2012 when negotiations began. South Korea`s GDP is also projected to grow by about 1% over the next decade.
In China, its GDP is expected to grow by 0.3% over the same period thanks to the free trade agreement. .
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