South Korea signed another free-trade deal on Aug. 1, as Minister for Trade Bark Tae-ho and his Turkish counterpart, Zafer Caglayan, inked a free- trade agreement (FTA) bill and a commercial trade agreement in Ankara, Turkey.
During his speech at the signing ceremony, Bark said: “The Korea-Turkey FTA is expected to serve as a good stepping stone, which will institutionally link the two countries’ economies and trade ... Trade volume between both countries will potentially grow to US$10 billion in two to three years and hopefully up to US$20 billion [in the future].”
He said that he will push to pass the FTA bill through the National Assembly in order to implement the deal at the beginning of next year.
With the deal, Turkey will become South Korea’s ninth FTA partner country while South Korea will become Turkey’s 46th. An instant benefit of the FTA is that South Korean workers residing in Turkey are exempted from Turkish social insurance for up to five years.
Taking the FTA as a turning point, the two countries are likely to deepen relations and perhaps call each other “strategic partners.” They are also likely to obtain greater results through coordination and cooperation in the international community, including taking a similar stance against North Korea.
In addition, the FTA will significantly help South Korea enter the European, Middle Eastern and African markets, as Seoul seeks to kill many birds with one stone.
South Korea suffered badly during the 1997 Asian financial crisis. The IMF took control over the nation’s finances in return for its bailout. The concept of FTA- signing emerged in December 1998 when the country started to look for partners.
The idea was that trade liberalization was simply not enough. It was necessary to accelerate the economic upgrading using FTAs, which could then stimulate the domestic economy and boost economic development.
Its first choice was Chile, which was its 57th-largest trade partner at that time. Even though Chile was not a major trading partner and had already signed FTAs with the EU and some other countries, South Korea took the Chilean experience as a trial run. The FTA between the two countries officially came into effect on April 1, 2004.
Since 2004, South Korea has attempted to sign FTAs with a number of economically-advanced countries, including Japan. However, the two countries put aside FTA talks due to a disagreement on tariff reductions.
In the same year, it broached talks with the EU and US, and the latter’s enthusiastic response boosted Seoul’s confidence. The two countries started to discuss the deal in 2005 and launched FTA talks officially in February 2006.
At the same time, the EU also approached South Korea, believing that an FTA between the two parties was necessary. Things were going from strength to strength.
After South Korea and the US signed an FTA in April 2007, the former came back into contact with the EU.
Their deal was finalized in July 2009 after eight rounds of talks. The South Korea-EU FTA came into effect on July 1 last year, and the South Korea-US FTA on March 15 this year.
Since 2010, South Korea has been paying greater attention to its own backyard, looking to countries such as China, Japan and the ASEAN-member nations. At one point, there was a debate over which countries were to be prioritized, but eventually it was decided to sign FTAs with the most advanced countries first. This was done with an eye on transforming domestic industry.