MOSCOW, November 15 (Sputnik) — The PM of New Zealand and the President of South Korea have reached an agreement on a free trade at the sidelines of the G20 Summit in Brisbane after five years of negotiations between the two nations.
New Zealand PM John Key and the President of South Korea Park Guen-hye announced Saturday they have achieved a breakthrough deal on free trade during the major international event in Australia, ending five years of talks which had been on an indefinite hiatus for 4 years of the process. The concluded agreement provides that volumes of trade between Seoul and Wellington will expand significantly from the current $3.16 bn.
The free trade agreement (FTA) negotiations resumed in 2013 when the volume of bilateral trade reached $2.88 bn, according to the New Zealand figures. The agreement will benefit New Zealand first and foremost, as Seoul is Wellington’s 5th largest trade partner, while New Zealand is only a 44th most important trade partner to South Korea.
The negotiations had stalled during the period of 2010 to 2013, mostly due to South Korea’s reluctance to open its market to the influx of cheaper New Zealand agricultural goods. However, the measures of monetary easing, being undertaken now by the Bank of Korea, will significantly decrease the possible negative impact of imported foods for the Korean producers, as the weaker won will make up for the cancelled customs tariffs.
"The FTA will put New Zealand exporters back on a level playing field with competitors from Korea's other FTA partners, such as the United States, Chile and the European Union," PM Key said as quoted by AFP.
The two sides agreed upon the removal of tariffs on roughly 96% of the mutually traded goods for 20 years after the agreement is signed. The formal enactment of the agreement is expected early next year. Rice apples, garlic and chili pepper are excluded from the deal. Korea has insisted on protecting its domestic industry of rice and other sensitive foods produce against cheaper New Zealand imports.
New Zealand exports lumber, milk foods, greengrocery and aluminium to Korea, while South Korea trades electronics, automobiles and machine tools. This agreement is expected to significantly increase profits of New Zealand’s red meat industry. It is noteworthy that New Zealand’s exporters had to pay $229 mln in tariffs to Seoul yearly, including 89% on butter, 45% on green grocery and 40% on beef, according to Radio New Zealand.
In turn, New Zealand will remove tariffs on South Korean washing machines, tires, automobile spare parts, heavy construction machinery and freezing equipment.
