Vietnam starts FTA talks with S. Korea
By Tran Thu - The Saigon Times Daily
HCMC – Minister of Industry and Trade Vu Huy Hoang and his South Korean counterpart Bark Tae Ho on Monday announced the official launch of the Vietnam-Korea Free Trade Agreement (FTA) negotiations.
Under this agreement, many items will enjoy deeper and faster tax cuts than in the prevalent South Korea-ASEAN FTA.
The first round of negotiation will be held soon to discuss the detailed scope and coverage, structures, and modalities of the negotiations.
According to a press release of the Asia-Pacific Market Department under the trade ministry, at a meeting in Hanoi on Monday, the two ministers committed to pay due consideration to the sensitivities of each country and the development gap between the two countries.
Both sides agreed that the possible scope and coverage of the FTA should include trade in goods, trade in services, investment, rules, economic cooperation, and other issues of mutual interest.
The ministers hoped that the Vietnam-Korea FTA would play a pivotal role in accomplishing the objective of raising the bilateral trade volume to US$20 billion by 2015 from US$17.8 billion in 2011.
In addition, the bilateral FTA would contribute to the further development of political, economic and cultural relations between the two countries and to the reinforcement of the Vietnam-Korea strategic and cooperative partnership established in October 2009.
Earlier, on the sidelines of a workshop on the Korea-ASEAN FTA, Sim Jin Su, director of the Industrial Support Division under the FTA Promotion and Policy Adjustment Authority, said the FTA between the two countries will involve more sectors with a large number of products to enjoy stronger tax cuts than the Korea-ASEAN FTA.
According to this workshop, sensitive products to South Korea are farm produce while those sensitive to Vietnam are motorbikes and auto spare parts.
Under the Korea-ASEAN FTA, South Korea committed to lift 90.8% of the tariff lines on the normal products of Vietnam, 7% on the sensitive products and 3% on the extremely sensitive products. By 2010, South Korea had fulfilled its commitments on tariff removal for Vietnamese goods.
Vietnam’s export to South Korea is going smoothly. However, the country still imports much from South Korea, resulting in a huge trade deficit incurred by Vietnam.
According to General Department of Customs, in the first six months of 2012, Vietnam imported over US$7.2 billion worth of products from South Korea, up 18% year-on-year.
The most common items imported from South Korea in the year’s first half were computers, electronics products and components (US$1.3 billion), machinery and equipment (US$829 million) and fabrics (US$672.8 million).
In 2011, the two-way trade volume between Vietnam and South Korea reached US$17.8 billion, in which Vietnam imported US$13.1 billion worth of products, said the general customs department.
As of June 20, 2012, there were 3,050 valid South Korea-invested projects in Vietnam, with a total registered capital of US$24 billion, making South Korea the second biggest investor in Vietnam, according to the Foreign Investment Agency under the Ministry of Planning and Investment.