Korea has started official talks with six Central American countries for a potential free trade agreement (FTA).
Korea’s Trade Minister Yoon Sang-jick and six of his counterparts from Guatemala, El Salvador, Honduras, Nicaragua, Costa Rica, and Panama held a meeting in Houston, the United States, on June 18 (local time), where they declared the official launch of the FTA talks.
The trade ministers said in a joint statement, “The ministers shared the view that the FTA should be consistent with the rules of the World Trade Organization and agreed to pursue a high-level and comprehensive FTA including trade in goods and services, investment, economic cooperation, and other areas of mutual interest.”
If the two parties sign the deal, Korea will become the first Asian country to sign such an agreement with the six countries, which formed a regional economic bloc known as the Secretariat for Economic Integration (SIECA) in 1960. Currently, China has signed an FTA with Costa Rica, and Taiwan has made the deal with Panama, El Salvador, and Honduras.
Central America is a market with huge growth potential. According to the Ministry of Industry, Trade and Energy, the six countries make up the fifth-largest market in Latin America in terms of their combined gross domestic product (GDP), while their combined population reaches 43.5 million, the third largest in the region. Their GDP totals US$209.8 billion, and the population stands at 43.5 million.
The trade volume between Korea and the six Central American nations isn't so much yet, totaling US$5 billion in 2014. The volume has doubled over the past 10 years. Currently, some 200 Korean firms are investing or operating in those countries.
If the deal is inked, Korea’s automobiles, auto parts, smartphones, medical, construction material, and food sectors are expected to benefit, while Korea imports coffee, tropical fruit and metals.
The ministry expects the deal to increase Korea's GDP by 0.0257 percent. Korea's exports to the region are expected to increase by between 10 and 51 percent, and imports by 34 to 69 percent.
The first round of FTA negotiations will be held as early as next month in El Salvador, where SIECA is headquartered, a ministry official said.