[Asia Economy Reporter Ji-hwan Park] South Korea and Israel have officially signed a Free Trade Agreement (FTA). With this agreement, domestic key export items such as automobiles and parts can be exported to Israel duty-free.
On the 12th, Yoo Myung-hee, the Chief Negotiator of Trade at the Ministry of Trade, Industry and Energy, formally signed the Korea-Israel FTA with Amir Peretz, Israel's Minister of Economy and Industry, at the Lotte Hotel in Seoul.
South Korea is the first Asian country to sign an FTA with Israel. After declaring the start of FTA negotiations in May 2016, the two countries held six official negotiation rounds and reached a final agreement in August 2019. Following the completion of domestic procedures required for signing, the final signature was completed this time.
Under the FTA between the two countries, South Korea will eliminate tariffs on 95.2% of all products. Israel will remove tariffs on 95.1% of its products.
South Korea immediately abolished tariffs applied to key export items such as automobiles (7% tariff) and parts (6?12%), textiles (6%), and cosmetics (12%). According to the Ministry of Trade, Industry and Energy, grapefruit (30%, phased out over 7 years), medical devices (8%, up to 10 years), and compound fertilizers (6.5%, 5 years), which are sensitive items for South Korea but of interest to Israel, have secured considerable tariff elimination periods to protect the domestic market as much as possible.
However, tariffs on semiconductor manufacturing equipment, South Korea’s largest import item from Israel, will be eliminated immediately. Tariffs on electronic application devices, the second largest item, will be removed within three years.
The two countries adopted a negative liberalization approach and promised a level of openness exceeding the World Trade Organization (WTO) General Agreement on Trade in Services (GATS). 'Pre-establishment investment' will also be subject to national treatment and most-favored-nation treatment.
Additionally, although the stay period for Korean expatriates in Israel was limited to a maximum of 63 months, the agreement specifies that extensions are possible considering Israel’s economic contributions.
The two countries also agreed to promote technological cooperation in various fields such as aviation, healthcare and medicine, big data, and renewable energy through joint research and technology transfer, exchange of research personnel, and exchange of information on laws, systems, and intellectual property rights.
The government plans to proceed with the remaining procedures, including parliamentary ratification, aiming for enforcement within this year.
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