Tariffs on Cars, Auto Parts, Cosmetics to Be Eliminated
South Korea and Israel signed their FTA in Seoul on May 12. It is Israel’s first FTA in Asia. The two countries are going to take necessary steps so that the agreement can become effective this year.
According to the FTA, South Korea will apply a zero tariff to 95.2 percent of the items it imports from Israel and Israel will apply the same tariff to 95.1 percent of those it imports from South Korea. In terms of import value, the percentages are 99.9 percent and 100 percent, respectively.
The tariffs on South Korean cars (7 percent), auto parts (6 to 12 percent), textile products (6 percent) and cosmetics (12 percent) will be eliminated immediately. Cars and auto parts accounted for as much as 46.9 percent of South Korea’s exports to Israel last year. As of 2019, South Korean automobiles were the most popular ones in the imported car market of Israel with a market share of 17.6 percent.
The tariffs on grapefruits (30 percent), medical appliances (8 percent) and composite fertilizers (6.5 percent) will be eliminated over seven, up to 10 and five years so that the South Korean markets can be protected as much as possible. Those on semiconductor manufacturing equipment, South Korea’s largest import item in relation to Israel, will be eliminated immediately and those on applied electronics devices will be eliminated within three years. Last year, the equipment and the devices accounted for 17.6 percent and 16 percent of South Korea’s imports from Israel, respectively.
The South Korean and Israeli governments revised their industrial technology cooperation agreement as well. Concluded in 1999, the agreement is the only treaty of South Korea for the purpose of industrial technology cooperation. The two countries established a joint R&D fund based on the treaty in 2001 and have conducted R&D projects together since then. According to the latest version of the agreement, the investment of each in a new project has been adjusted from US$2 million to US$4 million and the maximum government support for each project has been adjusted from 50 percent to 70 percent.