No IT FTA
Korea and China agreed not to differentiate competition in communications services and equipment. Industry analysts are saying that the agreement will not directly affect telecommunications service providers or telecoms equipment makers in the two countries.
The two sides reached a deal on a bilateral free trade agreement (FTA) on Feb. 25, and China included the communications area as a separate chapter for the first time. It guarantees that Korean and Chinese companies engaged in communications businesses can compete fairly in the other country. An official at the Ministry of Trade, Industry and Energy said, “The Korea-China FTA ensures that communications service provides can access and use public communications networks in the other country in fair, reasonable, and non-discriminatory manners.”
A source in the telecommunications industry noted, “The telecommunications service is a representative infrastructure industry. So, it will be unlikely that Korean telecommunications service providers will be willing to construct infrastructure and provide services in China, even without regulations by the government.” The source added, “The same is true for Chinese counterparts.”
It is not easy for telecommunications service providers to enter overseas markets, and it is not because of government regulations. Rather, it is due to the fact that a massive amount of investment in infrastructure for more than 10 years are necessary. Therefore, experts are saying that fair competition guaranteed by the Korea-China FTA has no special meaning.
Many in the equipment industry predict that the deal will not bring about a big change in the market. Sixty-three countries including Korea, the U.S., and Japan already finalized the Information Technology Agreement in 1996 that requires participants to eliminate their tariffs on a specific list of IT and telecommunications products, which include mobile phones and wireless communications equipment. China became a signatory in 1999. That is, there are already no tariffs on those products.