Tuesday, August 31, 2010
The governments of South Korea and Peru announced today that they had successfully concluded the negotiations for the signing of a Free Trade Agreement (FTA).Another article here has more information. From that article:
The agreement was announced in a ceremony in the Palace of Government in Lima by the Peruvian president Alan Garcia, who was accompanied by South Korean diplomats and officials.
"This is a very long-term alliance with Korea and I'm certain it will give fruit in the coming years, but will become stronger and more solid over the coming decades", he said.
Garcia said that the FTA will allow Peru to increase its trade with the Asian country by 7 billion dollars, by 2016.
"We are starting on a global level of imports and exports of $1.4 billion, and repeating just this we would be talking about $7 billion of commerce with Korea", he said.
The negotiations which began in March 2009 had five rounds and two mini-rounds, in which they addressed market access, rules of origin, temporary entry and cooperation.
Commercial exchange between Peru and Korea as of December 2009 was $1.348, with Peruvian exports accounting for $748.7 million, and imports from Korea $599.6 million.
Peruvian exports for the most parts are copper, zinc, lead, iron and concentrates, plus well-prepared and preserved shellfish, non-decaffeinated coffee, frozen squid, fish meal and fine-haired combed yarn.
In smaller portions, Peru also exports natural colourants, clothing, textiles, fabrics, fish livers and eggs.
From Korea, Peru mainly imports transistors and televisions, high density polyethylene, automobiles and transport vehicles.
The state agency Proinversión said that direct Korean investment in Peru in December 2009 had surpassed $40 million, and was distributed in the sectors of transport, finance, industry, commerce and petroleum.
The FTA with South Korea will join a series of similar commercial agreements that Peru has signed with countries such as China and the United States, and with blocs such as the European Union and the European Free Trade Association.
- The agreements will have to be ratified by both countries as well. Doubt that will be a problem as there isn't exactly any anti-Peruvian sentiment in Korea (in contrast there was quite a bit of opposition to the FTA with the US), and nor does Korea appear that large to Peru in comparison with the other countries it has signed agreements with.
- There is currently a 9% tax in Peru on South Korean automobiles and that will be gradually lowered, while those on large sedans will be removed immediately, and medium-sized vehicles over five years.
- Tariffs on colour TVs from Korea (one of the main products exported to Peru) will be eliminated immediately. Those on washing machines will be removed in four years, and refrigerators in ten.
- A 2% tariff on Peruvian coffee will be eliminated as soon as the agreement goes into effect.
- A 22% tariff on squid will be eliminated over a decade. This is probably one of the areas that Koreans wouldn't like (assuming they are paying attention) as they eat quite a bit of squid, and a lot of it comes from the seas around Korea itself. Not sure how much of it is already imported though. If Koreans already eat more squid than they can produce themselves then it won't be much of a problem.
General economic information:
GDP: South Korea $832.5 billion, Peru $126.8 billion
GDP per capita: South Korea $17,000, Peru $4,400