South Korean Trade Minister Yoo Myung-hee and Israeli Economy and Industry Minister Eli Cohen declared the conclusion of the South Korea-Israel FTA in Jerusalem on Aug. 21 (local time).
South Korea has become the first Asian country that concluded a free trade agreement with Israel. The two governments entered FTA negotiations in May 2016 and have had six rounds of official negotiations for about three years.
According to the agreement, South Korea is going to abolish its tariffs on Israeli goods equivalent to 99.9 percent of its total value of imports from Israel and Israel will take the same measure for South Korean goods equivalent to 100 percent of its total value of imports from South Korea.
Immediate tariff elimination is applied to goods accounting for approximately 97.4 percent of South Korea’s exports to Israel. Those include automobiles, auto parts, textiles and cosmetics. The current tariff rates are 7 percent, 6 percent to 12 percent, 6 percent, and 12 percent, respectively.
The tariffs on Israeli semiconductor manufacturing equipment and applied electronic equipment will be eliminated within three years. The two items account for 25.4 percent and 13 percent of South Korea’s total imports from Israel, respectively. South Korean companies are anticipating import source diversification in the industries including semiconductor, electronics and telecom.
Meanwhile, the current tariffs will be maintained regarding rice, some vegetables such as garlic, onions, mushrooms and carrots, and sensitive items such as processed meat and dairy products. Those on grapefruits (30 percent), medical devices (8 percent), and composite fertilizers (6.5 percent) are scheduled to be eliminated in seven, up to 10, and five years, respectively.
In the service and investment sector, negative listing is applied for opening comparable to the WTO’s General Agreement on Trade in Services (GATS). In addition, a new investor protection scheme has been prepared to replace the two countries’ bilateral investment treaty that took effect in 2003, their rules of origin have been simplified for the convenience of enterprises, and provisions have been prepared to allow outward processing in the Gaeseong Industrial Complex.
Also, digital entertainment content protection will be strengthened along with industrial and intellectual property right protection so that the pop culture of South Korea can gain more popularity in Israel. With the declaration of the conclusion, the Korea Institute of Industrial Technology and the Weizmann Institute of Science of Israel signed a memorandum of understanding for cooperation in the fields of materials, components and equipment.