Korea And New Zealand Execute Free Trade Agreement
kpopluv, Nov. 17, 2014, 8:54 a.m.
Korea and New Zealand have concluded a free trade agreement after more than five years of negotiations. The deal, signed Saturday by the leaders of the two countries on the sidelines of the G20 Summit in Australia, marks Korea's third FTA this year alone. New Zealand is Korea's 44th-largest trading partner with bilateral trade totaling US$2.88 billion last year. Korea's network of FTA partners now spans North America, Europe, Asia and Oceania.
Critics worry that increased imports of agricultural products from New Zealand, which already total more than $900 million each year, could hurt Korean farm goods. Tariffs on Korean exports to New Zealand will be completely removed within seven years of the FTA taking effect, raising expectations of increased shipments of electronics, machinery, automotive parts and other manufactured goods.
Tariffs on exports of Korean cars, petrochemical products and mobile phones have already been scrapped. The two governments excluded some agricultural and fisheries products like rice, apples, squid, peppers and garlic.
New Zealand raised the quota of Koreans eligible for so-called "working holidays," which enable young Koreans to study English and work a certain number of hours there, from 1,800 to 3,000. That could help offset the imbalance in trade benefits due to New Zealand's small population of just 4.5 million.
However, the projected influx of highly competitive dairy products from New Zealand is expected to deal a blow to Korea's dairy industry. Tariffs on 96.5 percent of dairy products from New Zealand will be abolished within 20 years.
On some 48 percent of products from New Zealand, including wine and sheep skin, tariffs will be scrapped immediately the FTA goes into effect.
The deal is also expected to increase the amount of beef imported from New Zealand, the country's third-biggest supplier after Australia and the U.S. Korea presently imposes a 40-percent tariff, but that will be abolished over 15 years. Tariffs on New Zealand cheese and butter will also go within seven to 15 years.