30 November 2015•Update: 30 November 2015
By Alex Jensen
SEOUL
South Korea placed its free trade agreement with China in Beijing’s hands Monday, after lawmakers held up the South’s side of the bargain.
Seoul’s National Assembly approved the deal by 196 votes to 33 despite local farmers’ concerns, leaving the FTA only in need of Chinese ratification -- which is considered a formality after the two nations officially agreed terms in June.
The South Korean parliamentary body also consented to expanding the 2013 free trade deal with Turkey in order to include the investment and service sectors, as well as FTAs with Vietnam and New Zealand.
But it is the China agreement that is likely to factor most heavily in the fortunes of South Korea’s export-dependent economy, which was hit last month by the biggest fall in outbound shipments in more than six years.
Seoul is expecting the deal to increase gross domestic product by 0.96 percent over a decade, according to the ratification bill -- indeed China already imports more South Korean products than anyone else, while the South is Beijing’s third-biggest trade partner.
Within 20 years of the FTA’s implementation, tariffs will have been dropped on more than 90 percent of goods from both sides and South Korea’s trade ministry is expecting their annual bilateral trade to exceed $300 billion, representing a 40 percent increase from 2012.
Despite that obvious benefit, along with the potential creation of tens of thousands of jobs, South Korea’s main opposition NPAD party forced a late debate over the deal’s impact on local agriculture.
As a result, Seoul will financially prop up farmers and fishermen with a fund worth more than $860 million and further benefits such as fuel subsidies.
