KVFTA increases bilateral trade

12:35 | 10/07/2016 Cooperation

(VEN) - The Republic of Korea-Vietnam Free Trade Agreement (KVFTA) took effect last December, contributing to increasing bilateral trade and economic cooperation. South Korea currently is Vietnam’s third largest trading partner and top foreign investor.

KVFTA increases bilateral trade

Major trading partner

Trade between Vietnam and South Korea has grown by an average 23.4 percent annually over the past decade. Last year South Korea continued to be one of Vietnam’s three largest trading partners, with bilateral trade reaching US$34.4 billion, a rise of 29.2 percent compared with 2014. In the first four months of 2016, trade between the two countries reached US$12.7 billion, up 13 percent compared with the same period last year.

Vietnamese exports to South Korea include products such as textiles and garments, crude oil, seafood, fibers, timber and wood products. Many kinds of Vietnamese products have been firmly positioned in the South Korean market. South Korean exports to Vietnam include products such as computers, electronic products and components, machinery and equipment, and telephone components.

South Korea has invested in Vietnam for more than 27 years and in October 2014 became the largest foreign investor in the country. Statistics show that in the first four months of this year South Korea invested more than US$48 billion in Vietnam through 5,213 projects.

Speaking at a recent workshop held in Hanoi to discuss access to the South Korean market and cooperation opportunities between businesses of the two countries, Vietnam Trade Promotion Agency Deputy Director Do Kim Lang said Vietnamese exports to South Korea continued to rise despite the global economy showing signs of decline, promising further increases in bilateral trade. So the US$70 billion bilateral trade target set for 2020 was believed to be feasible and could even be achieved ahead of schedule thanks to the positive impacts of the KVFTA.

Increasing bilateral trade

Korea Importers Association Chairman Myoung-jin Shin said, “Vietnam currently is South Korea’s second largest trading partner among ASEAN member countries. It is also one of the four strategic export markets for South Korean products.”

South Korea forecasts that trade between the two countries would increase by US$150 million per year within 15 years following the implementation of the KVFTA. This forecast was made based on deeper tariff cuts committed in the KVFTA compared with the FTA between South Korea and ASEAN. Specifically, Vietnam and South Korea pledged to cut 89.2 percent and 95.4 percent of tariff lines respectively. South Korea will offer Vietnam five percent more tariff cuts than its rivals such as China, Indonesia, Malaysia, and Thailand, helping enhance the competitiveness of Vietnamese goods in the South Korean market. Moreover, Vietnamese and South Korean goods supplement, but not compete with each other – which offers good conditions to promote bilateral trade.

The KVFTA addresses factors such as rules of origin, customs facilitation, trade defense, sanitary and phytosanitary measures, and technical barriers to trade. The business communities of the two countries can make the most of the FTA to bring bilateral economic cooperation to  new highs.

Korea Importers Association Chairman Myoung-jin Shin:

Since the KVFTA took effect, Vietnamese agricultural exports to South Korea have grown 37 percent, much higher than expected (fruit and vegetable exports up 26 percent).

 

Nguyen Huong

 

Theo ven.vn