Viet Nam – South Korea Free Trade Agreement (VKFTA)
On occasion of special Summit to celebrate 25th anniversary of ASEAN – Korea dialogue establishment, in the witness of Prime Minister of the Government of the Socialist Republic of Vietnam Nguyen Tan Dung and President of Korea Park Geun Hye, on December 10th, 2014, in Bussan, Korea, Minister of Industry and Trade of Vietnam Vu Huy Hoang and Minister of Trade, Industry and Energy of Korea Yoon Sang-jick signed MOU on Vietnam – Korea FTA negotiation conclusion (VKFTA).
Officially launched in Hanoi on August 6th, 2014, after 8th official negotiation rounds and middle-term meetings, two sides basically agreed on the body of a comprehensive agreement with high level of commitment and benefit balance. The Agreement covers trade in goods (tariff elimination and reduction), trade in service (annexes on telecommunication, finance..), Investment, Intellectual Property, Sanitary and Phyto-sanitary (SPS), Rule of Origin, Custom Facilitation, Trade Safeguard, Technical Barriers to Trade (TBT), E-Commerce, Competition, Institutional, Legislative and Horizontal Issues, Economic Cooperation.
Tariff reduction and elimination by Korea are expected to offer new opportunity for export of Vietnam’s important export-categories such as agro-products, pivotal aqua-products of shrimp, fish, tropical fruits, industrial products of garment, mechanical instruments. Korea also commits to grant market access in service and investment and agreed to promote economic cooperation, technical support in diversified sectors. Korea, for the first time, opens its market for products of high sensitivity such as garlic, ginger, honey, shrimp, offering considerable opportunities for Vietnam in competition with other suppliers from the region.
Vietnams commits to offer concession for Korea in categories of industrial products such as garment materials and accessories, plastic materials, electronic accessories, trucks and cars having capacity of 2500cc and more, car-parts, electrical home appliances, steel products, and cables.
In term of trader coverage, Korea liberalizes 96.48% of import value, and, in return, 92.75% of import value from Korea in 2012 is scheduled to be liberalized by Vietnam. In term of tariff line, 95.43% and 89.75% of the tariff lines are committed to be eliminated by Korea and Vietnam, respectively.
All other commitments on service, investment, intellectual property, competition, trade safeguard, dispute settlement, economic cooperation, sanitary and phyto-sanitary measues, technical barriers to trade ensure benefit-balance and in conformity with domestic legal regulation, having no negative impacts on other ongoing FTA negotiations.
Tebether with the benefits in export promotion, VKFTA is expected to improve import efficiency, especially materials for production of the pivotal exports including garment, footwear, electronics, lessing the dependence on other import source, promoting reform and transform of economic structure, increasing percentage of high value added exports. With commitments on service, investment, transparent policy environment, fair competition in accordance to the international regulations, the Agreement is expected to attract investment from Korea, especially in high-technology, manufacturing and processing industries, and, at the same time, to promote economies linking, to enhance people to people exchange, to consolidate and tighten Vietnam – Korea strategic cooperation relation.
Remaining technical issues are expected to be finalized for completing required internal formalities for sign in the beginning of 2015.