15th FTA
Minister of Trade, Industry & Energy Yoon Sang-jik and Vietnamese Industry & Trade Minister Vu Huy Hoang signed the Korea-Vietnam FTA in Hanoi on May 5 in the presence of Vietnamese Prime Minister Nguyễn Tấn Dũng. According to the agreement, Korea and Vietnam will eliminate 94.7 percent and 92.4 percent of their tariffs based on the amounts of imports, respectively.
The 10 percent to 15 percent tariffs imposed on auto parts exported from Korea are scheduled to be eliminated in steps, along with a 12 percent tariff on textile goods. In addition, the 25 percent tariff on electric rice cookers and the 20 percent one on mixer and vegetable juice machines will be removed, so small firms in Korea can increase their exports.
In the service sector, segments such as construction, urban planning, landscaping, and machinery lease will be further opened, so that Korean builders can better participate in urbanization projects in Vietnam. The rice market is excluded from the agreement, and no further market opening is scheduled for sensitive primary industry items like onions, squid, green tea, and chili pepper. The tariffs on tropical fruit, ginger, garlic, and pork will be removed within 10 years, and those on natural honey and sweet potato starch within 15 years.
According to the Korea International Trade Association, exports from Korea to Vietnam reached US$6.58 billion in the first quarter of this year, showing an 18.3 percent increase from a year earlier. In that quarter, only China and the United States recorded more exports to Vietnam than Korea did. The increase in the exports is especially eye-catching in that Korea’s overall exports declined 2.9 percent in Q1 this year, when those to the ASEAN region, Japan and China fell 17.6 percent, 22.0 percent and 1.5 percent as well, respectively.
During the same period, Korea’s imports from Vietnam increased 17.3 percent to US$2.03 billion and the bilateral trade volume went up 18.1 percent to US$8.61 billion. The latter broke the US$30 billion mark last year, when the volume added up to US$30.34 billion by showing a 7.4 percent growth. Last year, Korean companies accounted for 14.7 percent of the imported goods market of Vietnam to be second only to Chine, which took up 29.6 percent of it.