South Korea Strikes Free Trade Deal With ASEAN

by Mary Swire, Tax-News.com, Hong Kong

17 May 2006

Ministers from the Association of South East Asian Nations (ASEAN) and the government of South Korea have reached an Agreement on Trade in Goods under the ASEAN-Korea Framework Agreement on Comprehensive Economic Cooperation which will see virtually all import tariffs removed on two way trade by the end of the decade.

Under the agreement, Korea and ASEAN are committed to eliminating 90% of import tariffs by 2010 with flexibility until 2012 for a certain number of products. Another 7% of imports are to have their tariffs lowered to 0-5% by 2016.

The remaining 3% of products, which are of a politically "sensitive" nature, will remain eligible to receive protection through various measures, such as exemption from concessions, long-term tariff reduction schemes, and tariff rate quotas.

The trade ministers of the two parties had reached an initial agreement on the main text of the Agreement on Trade in Goods at the Korea-ASEAN summit meeting that was held last December in Kuala Lumpur, Malaysia. During the recent round of negotiations held in Phnom Penh, Cambodia, the two parties were able to conclude all parts of the Agreement on Trade in Goods by reaching a final agreement on the tariff concession schedules and the annexed text on rules of origin. The final text was signed at the ASEAN Economic Ministers’ (AEM) Retreat in Manila in the Philippines on Wednesday.

The agreement is expected to come into effect this year, following domestic ratification.

Due to what have been described as "domestic political circumstances," Thailand did not participate in the conclusion of the tariff concession schedules for goods.

The ASEAN membership currently comprises Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand and Vietnam.

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