The free trade agreement between Korea and Vietnam that saw a de facto conclusion on December 10 will likely open up the markets for home electronics and automotive parts for Vietnam and tropical fruits and frozen garlic for Korea. With this, Vietnam became the 15th nation that signed an FTA with Korea. This is the fifth under the current government since early 2013 after Australia, Canada, China, and New Zealand.
The latest deal has increased the ratio of liberalization for Vietnam to 92.2 percent from 86.2 percent and that for Korea to 95.4 percent from 91.3 percent. In addition, it will allow Korean exporters to gain high price competitiveness against Japanese rivals that have benefited from the Japan-Vietnam FTA signed in 2009.
The major items to benefit for Korean exporters include automotive parts, passenger cars (over 3.0 liters), rice cookers, refrigerators, and air-conditioners. Import duties for most other auto parts and mobile devices will be phased out within five years. The duties for rice cookers, refrigerators, air-conditioners, microwave ovens, washing machines, and color TVs will be abolished within ten years in stages. Duties for cosmetic items will also be eliminated within ten years.
As for farmers and small apparel makers, it is likely to be harmed by the new free trade agreement. Although farm goods such as rice, chili pepper, and onions are excluded entirely from the talks, tropical fruits like mango, banana, and pineapple as well as fruit juices will be imported duty free within ten years from the time the agreement takes effect. Apparel items such as men's trousers and shirts, women's suits, coats, jackets, blouses, and cotton yarn will be imported duty free as soon as the agreement takes effect.
As for the imports of shrimp, it will be imported under a tariff-rate quota basis. Up to 15,000 tons of shrimp ($140 million) will be imported without duties. Given last year's import volume for frozen and processed shrimp was worth $124 million, virtually 100 percent of the imports will be brought in duty free.
