South Korea has clinched a free trade deal with Cambodia, the latest in a series of free trade pacts aimed at revitalizing exports. South Korean Trade Minister Yoo Myung-hee and her Cambodian counterpart Pan Sorasak held a virtual meeting and declared that Seoul and Phnom Penh have completed FTA negotiations.
“The FTA will pave the way for the two countries to overcome challenges from the Covid-19 pandemic, and seek sustainable economic growth,” Yoo said. Cambodia is South Korea’s 60th-largest export destination. Major exports include beverages, textiles and cargo trucks. South Korea mostly imports clothes and shoes from the Southeast Asian nation. The two countries plan to hold an official signing ceremony in the near future. The pact also needs a parliamentary approval.
South Korea and Cambodia launched feasibility studies on the FTA after holding a summit in March 2019. The first round of negotiations kicked off in July last year. Under the deal and also when combined with the upcoming Regional Comprehensive Economic Partnership (RCEP), Cambodia will lift tariffs on 93.8% of all products, with South Korea eliminating duties on 95.6%.
South Korea has been rolling out what it calls New Southern and New Northern Policies, which center on expanding trade ties with emerging nations and reducing its reliance on China and the United States, which take up roughly 40% of annual exports.
South Korea already held an FTA with the Association of Southeast Asian Nations (ASEAN), but it has been pushing for separate agreements as well to seek closer ties. Seoul kicked off FTAs with Singapore in 2006 and Vietnam in 2015.
ASEAN comprises Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Thailand, Singapore and Vietnam. The country’s exports to the bloc, meanwhile, edged down 15.2% on-year, in January to US$ 8 billion amid the pandemic. Seoul currently awaits the official launch of the RCEP later this year, which covers ASEAN and its dialogue partners – China, Japan, Australia and New Zealand.
South Korea and Indonesia signed the Comprehensive Economic Partnership Agreement (CEPA) last year, which now awaits parliamentary approval. The CEPA is equivalent to a free trade agreement but focuses on a broader scope of economic cooperation. It is negotiating with Malaysia and the Philippines as well. Last year, South Korea’s outbound shipments came to US$ 512.8 billion, down 5.4% from 2019.