The Ministry of Trade, Industry & Energy announced on November 16 that negotiations for a free trade agreement have been concluded between South Korea and the six Central American countries of Nicaragua, El Salvador, Honduras, Costa Rica, Panama and Guatemala.
The six countries have a combined GDP of US$209.8 billion along with a population of 43.5 million, which rank fifth and third in Central and Latin America, respectively. Last year, the volume of trade between the six countries and South Korea totaled US$4.053 billion, divided into US$3.269 billion in South Korea’s exports to these countries and US$784 million in South Korea’s imports from these countries. At present, the ratio of South Korea’s exports to these countries to its total exports is 0.5% or so, but the ministry is seeing this region as an important link to North and Latin Americas.
South Korean automakers, steelmakers, auto parts manufacturers and tire manufacturers are likely to benefit from the result in particular. For example, Costa Rica’s 15% tariffs on imported trucks, vans and cosmetics are to be immediately eliminated. In addition, a 2% tariff on coffee beans and 3% on raw sugar are to be abolished soon and 30% on pineapples is to be abolished over seven years. The six countries’ government procurement markets, worth US$12 billion in total, are opened as well. According to the South Korean government, South Korea’s GDP increases by 0.0257 percentage points and its exports increase by approximately US$1 billion once a free trade agreement becomes effective between the two sides.