Trading Community Prefers Japan, Russia and GCC as Next FTA Partners

It appears that the free trade agreement (FTA) with Japan is the most wanted by the Korean trading community. In the survey of 762 trading companies conducted by the Korea International Trade Association, Japan (35.4%) was selected as the most preferred country for the next free trading partner, followed by Russia (11.4%), GCC (8.5%), and
MERCOSUR (8.0%).

The report titled “New FTA Strategy from the Perspective of Trading Community” published by the Institute for International Trade (President, Kim Geuk-soo, htt p:// suggests the list of countries for the next FTAs as well as the requests that
the trading companies are interested in based on the “New FTA Strategies” released by the Ministry of Trade, Industry and Energy in April, last year. The survey result shows that as Korea has completed the FTAs with the large economic regions such as the U.S.
and China, the trading companies expect to have the FTAs with Japan, which has large trading volume as well as market size, and the emerging countries with big potential. Large companies selected MERCOSUR and SMEs selected Russia as the second favorite
countries for the next FTAs, following Japan. On the other hand, regarding mega FTAs that Korea is currently negotiating or interested in participating, 52 percent of the respondents said that Korea should pursue the Korea-China-Japan FTA as a priority.

Majority of respondents said it is required to exert efforts to improve quality of the FTAs when negotiating the agreements. As things to consider when signing FTAs in the future, ‘the simplifi cation of the FTA use such as rules of origins (multiple responses, 58.8%)’ was the major concern, followed by ‘instant elimination of tariff s’, ‘improvement of customs procedure’ and ‘wider and higher level of opening’.

Meanwhile, 72.8 percent of participants said the FTAs that are currently in eff ect need to be improved. Particularly, 41.6 percent of them responded that the Kore-India CEPA should be revised. In fact, the use rate in export of the Korea-India CEPA was only 56.3 percent, which is signifi cantly low compared to other FTAs, followed by the Korea-U.S FTA (31.4%) and the Korea-ASEAN FTA (30.4%).

Lee Hye-yeon, a researcher at the FTA and Regional Studies department of KITA, said “In order for Korean companies to target overseas markets, Korea needs to actively work on the FTAs with the emerging countries which have large market size as well as high growth potentials such as Russia, GCC and MERCOSUR”. She also stressed “Pursuing the FTAs with many countries is important. However, in order to expand the companies’ use of FTAs, it is required to reflect the communities’ demands, such as securing practical market opening, simplifying procedures, etc. when negotiating”.

<Source: KITA>

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