China and Korea Free Trade Agreement: What You Need to Know
The China-Korea Free Trade Agreement (CKFTA) was signed on June 1, 2015, and came into effect on December 20, 2015. This agreement aims to expand the trade relationship between the two countries by eliminating tariffs on goods and services, promoting investment, and enhancing cooperation in various sectors.
Here are some of the key points you need to know about CKFTA:
Tariff Elimination
Under the agreement, China and Korea agreed to eliminate tariffs on 90% of their traded products within 20 years. This means that products such as electronics, machinery, and chemicals, which are the main items traded between the two countries, will become cheaper.
Agriculture
The CKFTA includes tariff reductions on agricultural products such as beef, pork, and fruit. For example, Korea will gradually reduce tariffs on Chinese pears, while China will eliminate tariffs on Korean rice.
Services
The CKFTA also covers trade in services, including financial services, telecommunications, and transportation. The agreement provides an opportunity for Chinese and Korean companies to expand their businesses in these sectors.
Investment
The CKFTA includes provisions to protect investments made by Chinese and Korean companies in each other`s countries. This includes protection against expropriation, fair and equitable treatment, and free transfer of returns.
Intellectual Property
The agreement also includes provisions for the protection of intellectual property rights, including patents, trademarks, and copyrights.
Impact on Trade
The CKFTA is expected to have a significant impact on trade between China and Korea. According to the Korea International Trade Association, the agreement is expected to increase Korea`s exports to China by $12.6 billion, while China`s exports to Korea are expected to increase by $9.6 billion.
Conclusion
The China-Korea Free Trade Agreement is a significant step towards closer economic ties between the two countries. By eliminating tariffs, promoting investment, and enhancing cooperation, the agreement is expected to boost trade and create new opportunities for businesses in China and Korea. As such, it is important for companies doing business in either country to understand the CKFTA and its potential impact on their operations.
