Free Trade Benefits
The Ministry of Trade, Industry & Energy of South Korea announced on May 31 that the volume of trade between South Korea and the ASEAN region, exports from the former to the latter and service trade between the two increased at an annual average of 5.7%, 7.5% and 6.6%, respectively, between 2007 and last year, following the implementation of the free trade agreement (FTA) between the two regions. For reference, the total volume of international trade showed an average annual increase of 2.4% during the same period, when the value of trade between South Korea and the ASEAN region jumped from US$71.86 billion to US$118.84 billion.
The rate of increase in exports, 7.5%, exceeded the global export growth during the same period by 4.2 percentage points as well. With the total value of exports rising from US$38.75 billion to US$74.52 billion, the ASEAN region became the second-largest export destination for South Korean products. Last year, the exports from South Korea to the region exceeded exports from South Korea to the United States, US$66.46 billion, by US$8.06 billion. Vietnam accounted for 43.8% of the exports last year, followed by Singapore (16.7%), Malaysia (10.1%), the Philippines (9.8%) and Indonesia (8.9%).
Semiconductor exports from South Korea to the region increased from US$7.381 billion to US$11.705 billion with an average annual growth of 5.3%. The figures were from US$5.1 billion to US$7.179 billion with 3.9% for petroleum products, from US$1.501 billion to US$5.633 billion with 15.8% for wireless communications equipment and devices, from US$3.414 billion to US$4.197 billion with 2.3% for ships and related products, and from US$554 million to US$2.924 billion with 20.3% for flat panel displays.
Between 2007 and 2016, South Korean products’ market share in the ASEAN region rose by two percentage points to 7% whereas those of products in the same market imported from Japan, the European Union and the U.S. fell alike. In addition, South Korea’s trade surplus with the ASEAN region skyrocketed from US$5.64 billion to US$30.2 billion between the two years.
In the meantime, the service trade between the two regions more than doubled from US$20.13 billion to US$42.99 billion between 2006 and last year. South Korea’s service exports to the ASEAN market reached US$21.91 billion in 2015 based on an average annual growth of 7.2% and the country’s service trade surplus has continued since 2012. At present, the market represents 20.4% of South Korea’s global total service trade.
In comparison to 2006, immediately before the implementation of the bilateral FTA, the trade, exports and imports increased 6.8%, 8.8% and 4.1%, respectively. Temporarily in 2015 and 2016, exports from South Korea to the ASEAN region fell 11.5% and 0.4% and the bilateral trade volume fell 13.1% and 0.8% from a year earlier due to the global economic recession at that time. The ASEAN, which is an abbreviation of Association of Southeast Asian Nations, consists of the Philippines, Thailand, Indonesia, Malaysia, Singapore, Brunei, Vietnam, Laos, Myanmar and Cambodia.