China-South Korea FTA to open up broader opportunities for businesses

The free trade agreement between China and South Korea was signed on June 1 and is expected to come into effect by the end of this year.

Experts say the FTA will give both countries new opportunities to speed up cross-border trade in many areas, including food, clothes, cosmetics and more.


The China-South Korea FTA covers 17 fields, including e-commerce and government procurement.

Once it goes into effect, South Korea will eliminate tariffs on 92 percent of all products from China within 20 years. In return, China will abolish tariffs on 91 percent of all South Korean goods.

Jiu Ri Import and Export, a company in Weihai, east China’s Shandong Province, has been selling South Korean food, such as biscuits, drinks and chocolates, for over ten years.

SOUNDBITE(CHINESE)LIN XUGUANG, Chairman of Jiu Ri Import and Export Co.:
“In the first half of this year, our sales revenue increased by 40% year-on-year. I think it’s mainly thanks to the China-South Korea FTA. I believe the influence will be more obvious in future.”

As some South Korean products, including cosmetics, clothing, and electronic devices are popular in China, experts say the FTA could bring down prices and benefit enterprises on both sides.

SOUNDBITE(CHINESE)LIN XUGUANG, Chairman of Jiu Ri Import and Export Co.:
“Take this drink for example, if we import it from South Korea, we have to pay 35% tariff and 17% added-value tax. When the FTA comes into effect, its price will be reduced by half.”

At present, enterprises from both countries have to change their money into the U.S. dollar for trade.

After the FTA gets launched, they can trade directly with their respective currencies, which could help save cost.

SOUNDBITE(CHINESE)LIN XUGUANG, Chairman of Jiu Ri Import and Export Co.:
“Suppose we import 100 containers of goods from South Korea each month. Without the currency exchanges, we can save 100,000 yuan every month. That’s 1.2 million yuan per year.”

China is South Korea’s biggest trading partner, and South Korea is China’s third largest.

Two-way trade reached nearly 300 billion U.S. dollars in 2014.

After the FTA is implemented, bilateral trade is expected to hit 400 billion dollars in five years’ time.

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