Korean FTAs in Effect
The Korea–ASEAN FTA, the first FTA with a large economic alliance,
went into effect on June 01, 2007.
The Korea-ASEAN FTA shows that Korea’s FTA policies are set on their way in earnest. Given that ASEAN is one of our five largest trading partners, the Korea–ASEAN FTA will bring greater benefits in terms of economic effectiveness as compared to the previous FTAs with Chile, Singapore, and EFTA. With the Korea-ASEAN FTA, Korea can emerge as the leader integrating the East Asian economies, combining the Northeast and the Southeast Asian markets.
1. Significance of the Agreement
- Korea’s first FTA with a huge economic alliance (ASEAN, a huge market with a total population of 600 million in 10 member countries, is one of our five trade markets along with the United States, China, Japan, and the EU.)
- Qualitatively improved FTA as compared to the China–ASEAN FTA (the Korea–ASEAN FTA negotiation started three years later than that of the China–ASEAN FTA. However, as compared to the China–ASEAN FTA that agreed the products in normal track were to be liberalized not later than by 2010, we achieved a performance that did not lag behind that of China in terms of the pace of implementation by making an agreement on the complete elimination of tariffs on normal track products.)
- Recognizing the products from the Kaesong Industrial Complex as of Korean origin (it is meaningful in the sense that the products from the complex will compete with those of ASEAN countries and that the Agreement laid the groundwork for Korea to keep the principle about the products from the complex in our future pursuits of FTA).
- Preoccupation of the ASEAN market by Korean companies (the Agreement will allow Korean companies to preoccupy the ASEAN market at a time when its significance as an export market is increasingly highlighted, owing to its increased domestic purchasing power.)
2. Importance of the ASEAN Market
- ASEAN, the Association of Southeast Asian Nations, comprise 10 member countries including Indonesia, Malaysia, the Philippines, Singapore, Thailand, Brunei, Vietnam, Laos, Myanmar, and Cambodia and has built an extensive cooperative system across economic, social and cultural sectors as a representative international organization of Southeast Asia (a total population of 600 million and a total area of about 450 km²). Currently, the association is leading the economic cooperation of East Asia in the form of ASEAN+1 or ASEAN+3.
- It has been continuously predicted that Southeast Asia would form a multidimensional cooperative structure with its center on ASEAN in economic integration through FTAs and other measures. The initiative of ASEAN under the current structure of the economic cooperation of East Asia focusing on the institution is predicted to be further strengthened, under the assumption that FTAs within the region would be vitalized and that the economies of Cambodia, Laos, Myanmar, and Vietnam (CLMV) would continuously grow.
- Although ASEAN has been mainly recognized as a low income–based roundabout production base or a market for purchasing raw materials, local investment in the domestic market is gradually expanding as their local purchasing power has been strengthened by the rapid economic growth of Southeast Asian countries.