HSBC suggests trade between Korea and China will quickly grow if, as expected, a new free trade agreement (FTA) comes into force in 2015 after more than 30 months of negotiations.
A new report from HSBC predicts the FTA will come into effect “as early as mid-2015” with China expected to immediately remove tariffs worth 6% of its annual imports. Eventually the FTA is expected to boost Korea’s GDP by as much as 3.3%.
“Korea and China concluded negotiations of their bilateral free trade agreement on November 10, 2014,” said HSBC economist Ronald Man. “China is Korea’s largest export partner and accounted for 26% of Korea’s exports in 2013. This share is larger than the combined equivalent of the US and Europe.”
Once the FTA goes into force, tariffs on USD$8.7bn of annual merchandise exports from Korea to China will be removed. China will remove tariffs from 91% of its goods and Korea will remove 92% of its tariffs.
Man said the industries that would probably benefit the most in Korea from the removal of Chinese import tariffs were footwear/ headgear and transportation.
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