S Korea, Peru reach free trade pact to expand trade (3)

EXPECTED ECONOMIC EFFECTS

Upon the free trade pact, local experts are expecting that it will bring about an overall growth in competitiveness of South Korean goods in the South American market.

As the deal marks the second of a kind South Korea reached with a Latin American country, following the FTA with Chile signed in April 2003, it will upgrade South Korea's status in the market, experts said.

According to the Korea Trade-Investment Promotion Agency (KOTRA) , the country's trade promotion agency, South Korea's automobile, heavy machinery, TV and computer exporters are to reap gains from the deal as the tariffs on such products which amount to as high as 17 percent will be eliminated.

In particular, local automobile companies, whose total market share amount to 23 percent in the Peruvian market, will see a sales gain of 10 percent of above thanks to price competitiveness against their Japanese rivals.

The deal, above all, will contribute to South Korea's energy sector the most, local experts are saying in one voice, providing the country with a stable supply of energy resources.

According to local daily Hankyung, Peru is the second largest holder of copper and ranks third in terms of zinc and tin reserves.

As South Korea's imports from Peru are mostly allocated to the three natural resources, with the total imports of the three items taking up 86.3 percent of the total amount in 2007 and 2008, the country is expected to see the greatest benefit in the natural resources.

Also, South Korea will be able to increase its investment in resources development projects, with nine local companies, led by SK Energy Co., are already involved in resource development projects in Peru, South Korea's Yonhap News Agency said.

The South Korea-Peru FTA will also pave way for the country to strike a deal with another Latin American country, Mexico, with which South Korea has been holding negotiations.

Along with deals with South American countries, South Korea has so far inked free trade pacts with India, the Association of Southeast Asian Nations (ASEAN), Singapore and the European Free Trade Association (EFTA).

While the country plans to sign a trade pact with the European Union in September, South Korea is also expecting ratification of the South Korea-United States FTA from both countries.

Source:Xinhua
【1】 【2】 【3】