Korean FTAs in Effect
The Korea-Vietnam Free Trade Agreement (FTA) went into effect on
December 20, 2015
Vietnam, with a population of 90 million and a domestic market composed of young consumers, is Korea’s third-largest export market. The Korea-Vietnam FTA will expand the level of product liberalization, open the service market and improve the investment environments of both countries.
Significance of the Agreement
Increase trade in key sectors
The Korea-Vietnam FTA will eliminate additional tariffs on products that were placed in the Sensitive List under the Korea-ASEAN FTA, reform the country of origin standard and expand trade in key export sectors including auto parts, textile, shoes and household appliances.
Establish a foothold for entering the Vietnamese market
As the youth (under 30s) accounts for 60 percent of the population in Vietnam, the Vietnamese market has a large growth potential. The Korea-Vietnam FTA will, therefore, help Korean companies to enter the Vietnamese market.
Importance of the Vietnamese Market
- Vietnam is Korea’s third-largest export market (2015) and fourth-largest foreign investment destination (2014). Korea has been recording trade surplus with Vietnam since the 1980s.
- With Vietnam’s proactive trade openness and investment policies, the demand for importing equipment and raw and subsidiary materials is on the rise. More Korean companies will be able to enter the Vietnamese market and the export of intermediate goods including parts and materials will also increase.