This Monday China and Korea have announced that they have reached a free trade agreement by which both of them will drastically reduce barriers to trade and investments between their economies, two of the largest and the most dynamic economies of the Asia-Pacific zone.
China is the largest exporter in the world and South Korea is the seventh in this same classification. The latter State has already signed free trade agreements with the US and the European Union, while Beijing has such pacts with Peru, Chile, Costa Rica, Southeast Asia countries, Pakistan, New Zealand, Iceland, and Switzerland. Peking is also negotiating other agreements with Australia, Norway and the Persian Gulf.
This would affect 17 commercial areas and it would exclude rice.
"This Monday China and South Korea leaders have declared the effective closure of the free trade agreement at a meeting in the Great Hall of the People in Beijing," said the South Korean presidential office by a news release in which the details of the agreement, that began being negotiated on May 2012, are not provided.
According to the South Korea Media, rice would be excluded from liberalization - as it is common in this kind of agreements signed by Seoul- while the trade barriers would be reduced or completely eliminated in 17 areas including electronic commerce and public purchases and awards. In 1992, South Korea and China normalized diplomatic relations and bilateral trade touched $230,000 million in 2013, according to the data provided by the South Korean government, which hopes to reach $300,000 million in 2015.
In these exchanges, South Korea enjoys a trade surplus since 1993 and last year, the country sold to China at a price of $ 62,800 million more than they bought it. For the South Korean analysts, the free trade agreement will have a very limited direct impact in the bilateral trade and economic growth in general, but it will help to strengthen the links with Beijing, North Korea the strongest ally.
The two Koreas are still technically at war because the conflict between them was ended in 1953 with a truce but they did not make peace. For years, the North Korean regime has threatened the region with its military nuclear program, a plan that it has been tried to deactivate by six-party negotiations, involving the United States, Russia and Japan participate, but they remain stagnant for several years.
The free trade is the protagonist of the APEC meeting.
It is expected that the president of both countries: the Chinese Xi Jinping, and the South Korean Park Geun-hye will officially sign the free trade agreement this Monday in the APEC meeting that will start this Monday.
However, according to some sources, the agreement would not be completed but they would have finished some of the main subjects. Actually, the Chinese news agency, called Xinhua, assures that they still have to adjust some issues. Moreover, this agreement will have to be approved by the South Korean Parliament, a difficult procedure.
The agreement has been reached when South Korea is still deciding if they want to be part of the Trans-Pacific agreement launched by the US by which they want to eliminate the trade barriers in a dozen of the Asia-Pacific region countries.
China is the host country of the APEC meeting that gathers the country leaders of the Asia-Pacific zone.
This initiative is the key point on the US President Barak Obama‘s trip to the zone and it runs counter to a Beijing’s idea that is looking for a free trade area in the region so he wants to take advantage of the APEC meeting that will gather 21 economic leaders of the region this Monday and Tuesday.
