Vietnam South Korea Free Trade Agreement

With regard to distributor coverage, Korea liberalizes 96.48 per cent of the value of imports and, in return, 92.75 per cent of the value of imports from Vietnam is expected to be liberalized in 2012. The tariff line abolishes 95.43 per cent and 89.75 per cent of Korean and Vietnamese tariff lines respectively (links, 2015, p. 43). Nguyen Hong Anh, director of human resources at Binh Duong Garment Company, said the ICC is only the middle market because most Vietnamese exports are not actually sold to Korean consumers. With this agreement, Korean companies will seek partners in Vietnam to buy clothes, send them to the ROK and then export them to other countries. Gia Dinh Corporation President and CEO Nguyen Chi Trung also agrees that ROK COMPANY companies will benefit from the transfer of more of their production activity to Vietnam, while preferential treatment of the ICC is not essential for Vietnamese agricultural products. It should be noted that ROK is a major agricultural producer, so if it grants such treatment to Vietnam, it will impose technical barriers on Vietnamese products (Petri and Plummer, 2014, p.90). Bello, D.C., Barksdale Jr., H.C (2013). Exports to industrial fairs. Industrial Marketing Management, 15 (3), 197-206. The VKFTA agreement is a free trade agreement between the first bilateral free trade agreement between Vietnam and other economic partners, which essentially concluded the negotiations in 2014 and was officially signed in 2015.

In addition to concluding the free trade agreement, Prime Minister Dung and President Park agreed to deepen security and defence cooperation between their two countries. As part of the agreement, the two countries issued a statement on the South China Sea issue, calling on ASEAN and China to comply with the statement on the behaviour of the parties in the South China Sea and to establish a code of conduct for actions to be taken in the region. In return, South Korea will reduce tariffs on imports of agricultural products, seafood, clothing and textiles, as well as on mechanical products from Vietnam. In addition, South Korea will continue to open its markets to Vietnamese investment and services. Vietnamese products that are now allowed to be exported to South Korea include garlic, ginger, honey and shrimp. However, rice, which South Korea describes as a sensitive product, was not included in the agreement. In the presence of Prime Minister Nguyen Tan Dung, tomorrow, May 5, Minister of Industry and Trade Vu Huy Hoang and Minister of Trade, Industry and Energy Yoon Sang-jick Korea, representing the governments of the two countries officially signatories to a Vietnam-Korea Free Trade Agreement (VKFTA) As a comprehensive agreement with a high degree of commitment and a balance of benefits for both parties VKFTA is expected to bring too many positive benefits to Vietnam. Under the trade pact, the ROK will liberalize 97.2% of its imports (according to 2012 data), representing 95.4% of customs positions, including many of Vietnam`s main agricultural and fishing exports, such as shrimp, crabs, fish, tropical fruits and industrial products such as clothing, wood and mechanical products. Vietnam is the first partner in the free trade agreement with which ROK will open its market to sensitive products such as garlic, ginger, honey and sweet potatoes, which are generally taxed at rates ranging from 241% to 420%. This gives Vietnamese exports a considerable competitive advantage over similar products from China, Indonesia, Malaysia and Thailand. For example, in the first year, the ROK will release tariffs on 10,000 tonnes of Vietnamese breeds and increase to 15,000 tonnes per year over the next five years, while the quota for ten other ASEAN countries is only 5,000 tonnes per year (links, 2015, p.52). Vietnam Briefing is produced by Dezan Shira – Associates.

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