According to CCTV Finance Channel report, China and Korea formally assigned a Free Trade Agreement (FTA) on June 1st this year and it’s predicted to be enforced in the end of this year. When it comes into effect, the tariff of the most products of these two countries will be eliminated. The report pointed out that, China-Korea FTA concept Stocks are very popular right now, especially the Cosmetic market, and the Price of stocks of the related companies rose 50%. Because of the China-Korea FTA, 6.5%-10% of Korean cosmetics will be gradually eliminated importing tariffs, and the sale price will hopefully be reduced to 80%. The investors believe in the competitiveness of the Korean cosmetics. In addition, tourism, aviation and transportation related stocks also boosted because of China-Korea FTA.
China and Korea respectively have strong comparative advantages on trade in goods, so the tariff concession on goods trade is the negotiation focus. The build of China and Korea free trade region will help Chinese textiles and agricultural products trade companies obtain more market share in Korea.
China is Korea’s biggest overseas investment destination country. The amount of the export to China take up 26% in its whole exportation, while Korea is the third big exporting country to China. After the FTA, through the 20 years of transition, China’s zero-tariff products will achieve 91% of tax item, 85% of importing volume, and Korea’s zero-tariff products will achieve 92% of tax item, 91% of importing volume.
At present, the total volume of China and Korea bilateral trades come to 300 hundred billion dollars in 2014. The construction of China and Korea free trade region will promote trade facility on a large scale. Some experts predict that the bilateral trade scale will exceed 400 billion dollars. The FTA of China and Korea contains goods trade, service trade and investment, involving E-commerce, competition policy, government procurement, environment, twenty-first Century economic and trade issues. At the same time, both parties commit to negotiate on pre-access national treatment and the negative list especially in trade in service after the FTA assigned.
In recent years, China and Korea's economic and trade and cultural exchanges are very active. Although China and Korea FTA may have a certain impact on certain specific industries of the two countries, the agreement benefits to the economic growth and the promotion of trade and regional economic development of China and Korea. Tariff reduction makes it more easily for Chinese people to access to Korean products and services. There will be more Korean companies invested in China in the near future, Chinese worker will have more opportunities to work in the Korean enterprises. FTA are playing a positive role in the promotion of China-Korean cooperation in trade and economics.
By Wan Xing
Category: Monthly Events