Good News for Services Industry
It has been found that South Korean President Moon Jae-in and Chinese Premier Li Keqiang agreed in Manila, Philippines on November 13 to initiate additional FTA negotiations on the service and investment sectors next month.
The negotiations were planned to be completed within two years from the implementation of the South Korea-China FTA in December 2015 but could not be initiated due to China’s economic retaliation following THAAD deployment in South Korea. However, South Korean President Moon Jae-in and Chinese President Xi Jinping agreed to mend fences on November 11 and the South Korean President and the Chinese Premier reached the agreement two days later.
According to the South Korean government, South Korea and China focused on the manufacturing sector two years ago with regard to the application of the FTA, agreed at that time to expand the FTA after it begins to run smoothly, and the next phase is investment and service.
The South Korea-China FTA took effect on December 20, 2015. At that time, the two countries focused on tariff barrier elimination in the field of commodities. The following negotiations, meanwhile, are likely to concentrate on the restrictions applied to South Korean companies doing business or providing services in China and vice versa. South Korea is likely to be more aggressive during the negotiations in that China currently has more constraints for the protection of local enterprises.
South Korean industries are welcoming the news. Entertainment, freight logistics, information & communications, finance, legal service, tourism, medical service, and healthcare are expected to benefit most from the initiation of the talks. Experts point out that the South Korean government needs to urge the Chinese government to switch from positive to negative when it comes to its way of service market opening so that the market is fundamentally open with some stipulated exceptions.