Government to Promote Expansion of FTA Network with Five Latin American Countries

Review of Official Negotiations for Pacific Alliance (PA) Associate Membership
Also Considering Resumption of SECA Negotiations with Ecuador

The trade ministers' meeting between Korea and the four Pacific Alliance (PA) countries.
[Photo provided by the Ministry of Trade, Industry and Energy]

[Asia Economy Sejong=Reporter Lee Junhyung] The government is pushing to expand its free trade agreement (FTA) network with five Latin American countries, including Ecuador and the Pacific Alliance (PA).

The Ministry of Trade, Industry and Energy announced that Yeo Hang-gu, the head of trade negotiations, held a virtual trade ministerial meeting with the Pacific Alliance and Ecuador on the morning of the 26th in Washington, USA. On the same day, Director Yeo officially launched negotiations to join the Pacific Alliance as an associate member. The Pacific Alliance is a representative regional economic bloc in Latin America formed in 2012 by four countries: Chile, Colombia, Mexico, and Peru. If Korea joins as an associate member, it will effectively form an alliance and conclude FTAs with the four Pacific Alliance countries.

Discussions were held on resuming the Strategic Economic Cooperation Agreement (SECA) negotiations with Ecuador, which had been suspended since 2016. Korea held five rounds of SECA negotiations with Ecuador in 2016, but talks were halted due to differences over Ecuador’s excessive demands for special treatment as a developing country. Director Yeo pointed out that the negotiations were suspended due to differences in positions between the two countries at that time. He then proposed discussing ways to closely resume negotiations in the future, based on compliance with international norms. When negotiations resume, cooperation on new trade issues such as supply chains, digital transformation, and climate response will also be discussed, considering the changed trade environment. Cooperation will also be strengthened on common goals such as joining the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) as an associate member of the Pacific Alliance. Ecuador is a candidate country for associate membership negotiations with Korea and submitted its official CPTPP membership application last month.

The Pacific Alliance and Ecuador together have a total gross domestic product (GDP) of $1.9 trillion and a population of 250 million. The Pacific Alliance, in particular, is a regional economic community advocating openness and pro-investment policies and is regarded as the world’s eighth-largest economic bloc. The external trade volume of the four Pacific Alliance countries accounts for 59.7% of their GDP.

At the Pacific Alliance trade ministers’ meeting, Director Yeo emphasized the significance of Korea’s associate membership and urged the official start of negotiations. He also proposed strengthening supply chain stability and resilience through FTAs with the mineral-rich Pacific Alliance countries amid the growing importance of supply chains, and laying the groundwork for enhanced cooperation on digital and climate change issues. The Ministry of Trade, Industry and Energy explained that such cooperation could also activate the participation of Korean companies in Latin American countries’ digital transformation and Green New Deal projects.

The Pacific Alliance will hold a summit on the 27th to decide the negotiation guidelines, including Korea. The Pacific Alliance plans to reflect matters related to the start of negotiations with Korea in the summit declaration based on the results discussed in high-level talks. The Korean government will continue to discuss matters related to the start of negotiations through additional consultations with the Pacific Alliance and Ecuador. It will also continuously promote supply chain stabilization and support for corporate entry by expanding the Latin American FTA network, a promising market.