With just hours to go, the US and South Korea reached a FTA yesterday which scraps tariffs on a huge range of items but excludes rice, as Seoul had demanded.
The pact, secured after 10 months of tough negotiations, is "an agreement for the 21st century," Deputy US Trade Representative Karan Bhatia told a press conference.
"The agreement we have reached is a strong deal for both Korea and the United States," he said, adding it would break down both tariff and non-tariff barriers.
The US is counting on the agreement, which needs approval from the legislatures of both countries, to shrink its trade deficit with South Korea which amounted to US$16 billion in 2005.
More than 80 percent of that came from the auto trade. South Korea sold some 800,000 vehicles in the US last year, while US firms exported only some 4,000 vehicles the other way.
Seoul has agreed to change its tax system on autos based on engine size which makes US models more expensive.
The two sides agreed immediately to lift tariffs -- 8 percent in Korea, 2.5 percent in the US -- on all cars of less than 3,000cc and auto parts. Tariffs on larger models will be phased out later.
Sandwiched between low-cost China and high-tech Japan, can develop a new model for economic growth following the FTA pact.
The world's largest and 11th biggest economies will both enjoy a big boost and their sometimes shaky political alliance will also be strengthened, they said.
Song Wongun, of the Korea Economic Research Institute, said the agreement was inevitable and necessary for South Korea's economic survival.
"South Korea, stuck in between rapidly growing China and already industrialized Japan, needs a new engine for growth -- like service industries that can be strengthened by competing with advanced US peers," Song said.
"South Korea will also be able to enjoy a more favorable trade status in the United States, the world's biggest market, than other Asian rivals," Song said.
South Korea's economy depends 70 percent on foreign trade but after several years of modest growth, analysts and industrialists have been warning it seems to be losing its way and must find a new course if it is to keep up.
"China is catching up fast. Japan is racing ahead but we are running in one place," Samsung Group chairman Lee Kun-hee said.
"We need fresh growth engines to swiftly and effectively cope with an uncertain business climate," Hyundai Motor chief Chung Mong-koo remarked earlier this month.
"Unlimited competition is continuing in the global auto industry. Japanese firms are stepping up their push to hold us in check while latecomers in China and other countries are catching up at a faster pace," he added.
South Korea is expected to grow 4.4 percent this year following 5 percent last year -- far below an average growth of nine percent in the 1990s when it was one of the "Asian Tigers."
Trade between South Korea and the US totaled US$74 billion last year and studies showed this could rise by about 20 percent if commerce is liberalized.
Song also saw big opportunities for the US.
The pact can create better opportunities for US farmers and businesses to expand their Asian presence, he said.
In turn, major US industries such as financial and banking services, automobiles and pharmaceuticals will have more access to Asia's third largest economy.
"The US can use South Korea as a bridgehead for continuing to lead the global economy in Northeast Asia, a huge economic bloc being shaped by a rapidly growing China," Song said.
ROLLER-COASTER RIDE: More than five earthquakes ranging from magnitude 4.4 to 5.5 on the Richter scale shook eastern Taiwan in rapid succession yesterday afternoon Back-to-back weather fronts are forecast to hit Taiwan this week, resulting in rain across the nation in the coming days, the Central Weather Administration said yesterday, as it also warned residents in mountainous regions to be wary of landslides and rockfalls. As the first front approached, sporadic rainfall began in central and northern parts of Taiwan yesterday, the agency said, adding that rain is forecast to intensify in those regions today, while brief showers would also affect other parts of the nation. A second weather system is forecast to arrive on Thursday, bringing additional rain to the whole nation until Sunday, it
CONDITIONAL: The PRC imposes secret requirements that the funding it provides cannot be spent in states with diplomatic relations with Taiwan, Emma Reilly said China has been bribing UN officials to obtain “special benefits” and to block funding from countries that have diplomatic ties with Taiwan, a former UN employee told the British House of Commons on Tuesday. At a House of Commons Foreign Affairs Committee hearing into “international relations within the multilateral system,” former Office of the UN High Commissioner for Human Rights (OHCHR) employee Emma Reilly said in a written statement that “Beijing paid bribes to the two successive Presidents of the [UN] General Assembly” during the two-year negotiation of the Sustainable Development Goals. Another way China exercises influence within the UN Secretariat is
CHINA REACTS: The patrol and reconnaissance plane ‘transited the Taiwan Strait in international airspace,’ the 7th Fleet said, while Taipei said it saw nothing unusual The US 7th Fleet yesterday said that a US Navy P-8A Poseidon flew through the Taiwan Strait, a day after US and Chinese defense heads held their first talks since November 2022 in an effort to reduce regional tensions. The patrol and reconnaissance plane “transited the Taiwan Strait in international airspace,” the 7th Fleet said in a news release. “By operating within the Taiwan Strait in accordance with international law, the United States upholds the navigational rights and freedoms of all nations.” In a separate statement, the Ministry of National Defense said that it monitored nearby waters and airspace as the aircraft
Taiwan’s first drag queen to compete on the internationally acclaimed RuPaul’s Drag Race, Nymphia Wind (妮妃雅), was on Friday crowned the “Next Drag Superstar.” Dressed in a sparkling banana dress, Nymphia Wind swept onto the stage for the final, and stole the show. “Taiwan this is for you,” she said right after show host RuPaul announced her as the winner. “To those who feel like they don’t belong, just remember to live fearlessly and to live their truth,” she said on stage. One of the frontrunners for the past 15 episodes, the 28-year-old breezed through to the final after weeks of showcasing her unique