A free trade pact with China is expected to raise South Korea's real economic
growth by 2.28 percent over 10 years on the back of increased trade between the
neighboring countries, a report showed Friday.
In early January, South
Korea and China agreed to start formal negotiations for a free trade agreement
(FTA) with the aim of launching talks before the end of June.
Once
Seoul smoothly completes its local procedures, it is possible that the two sides
could announce the start of formal trade talks in the first half of this year,
officials here said earlier.
At a public hearing held earlier in the
day on the proposed FTA with China, the state-run Korea Institute for
International Economic Policy (KIEP) said a low-level free trade pact with
China, which excludes "sensitive items" such as agricultural products, is also
expected to boost South Korea's economic growth by 0.95 percent in the five
years after the pact takes effect.
"China is expanding its domestic
market based on its huge population," Deputy Minister for Trade Choi Seok-young
said in a speech. "A bilateral free trade agreement between the two countries
will further boost investment and trade," he said.
China is South
Korea's largest trading partner and trade between the neighboring countries is
expected to reach US$300 billion by 2015.
Since 2008, South Korea and
China have held a series of joint feasibility studies on a possible free trade
deal and reached an agreement to exchange views on sensitive issues.
During the public hearing, participants also raised concerns that the FTA with
China would hurt the local farming industry, urging the Seoul government to be
cautious in its FTA negotiations with China.
According to a KIEP
report, damage to South Korea's farming industry from a free trade agreement
with China may reach up to $2.8 billion.
Production by the country's
agriculture and fisheries industries may drop 14.26 percent from their combined
output in 2005 if and when an FTA with China allows an inflow of cheap Chinese
products, the report said.
It said the production cut could reach up
to 20 percent from 2005 levels if the countries agree to remove import tariffs
on all agricultural products.
Such a drop in production means more
than 3.3 trillion won in lost sales for the country's farming industry annually,
which is nearly four times higher than the 815 billion won in estimated damage
from the Korea-U.S. FTA, the report said.
South Korea, which has major
free trade pacts with the U.S. and the European Union (EU), is now seeking to
secure such free trade pacts with many countries in a bid to enlarge what it
calls its "economic territory" in the world.
The free trade pact
between South Korea and the U.S. is set to go into effect on March 15. The free
trade accord was officially signed in June 2007 and was supplemented once in
late December 2010 with minor modifications that primarily pertained to the auto
industry.
The free trade pact with the EU took effect in July last
year.
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