China, S. Korea can both benefit from service sector pact: experts

China, S. Korea can both benefit from service sector pact: experts

Lee Kyung-sik, left, director general at South Korea’s Ministry of Trade, Industry and Energy, talks with Yu Benlin, director general at China’s Ministry of Commerce, during the meeting via video link, July 13, to discuss negotiations for the second phase of the Korea-China FTA. Courtesy of Ministry of Trade, Industry and Energy

 

But Yoon administration’s policy shift away from China adds uncertainty

By Kim Bo-eun

HONG KONG — The resumption of talks between South Korea and China on further opening up the service sector could be a “win-win situation for both economies,” analysts said.

The outlook for the South Korea-China free trade agreement (FTA) on July 13 was bright after the two countries’ chief negotiators agreed to resume talks on strengthening cooperation in opening services and investment markets.

Discussions on the second phase of the free trade agreement, which entered into force in December 2015, began in 2018 with nine working-level discussions, but negotiations have stalled.

After the July 13 meeting, the Chinese Ministry of Commerce said that the two sides had “in-depth consultations on cross-border trade in services, investment and financial services, other regulatory issues and market access, with positive progress.” ‘ said.

South Korea’s commerce ministry said negotiations had been delayed because of the coronavirus, and it was also prioritizing preparations for the Regional Comprehensive Economic Partnership (RCEP), which took effect earlier this year. RCEP is a free trade agreement between the 15 Association of Southeast Asian Nations (ASEAN) and the non-ASEAN economies of the Asia-Pacific region, including China and South Korea.

However, even though it has resumed, negotiations are still a long way to go to the stage of outlining the sector and discussing the details. South Korea’s new government under President Yoon Seok-yul reduces its reliance on China for trade by strengthening cooperation with Europe and Australia while maintaining its alliance with US-led Western nations.

As it does so, negotiations are also uncertain. Anonymous officials from the Korean Ministry of Commerce said anonymously, “Opening the market regardless of future developments,” because the issue is a delicate issue. We are aiming to expand. ”

However, despite obvious changes in the government’s foreign trade policy, analysts said South Korea could still benefit from the opening of the service sector.

There was initial concern because the influx of Chinese doctors and labor lawyers into the market could undermine the competitiveness of Korean doctors.

“However, the declining competitiveness of South Korean products in the manufacturing sector has made South Korea more active on the idea of ​​opening up its market in the service sector,” said Sun-Shin Yi, a researcher at China Economics and Trade. A team from the Korea Institute for International Economic Policy (KIEP).

South Korea has already posted a trade deficit of $ 18 billion from the beginning of the year to July 20, and is facing the prospect of recording a total deficit for the first time in 14 years for a total of four months.

Due to factors such as the blockade of China in the first half of this year, production at manufacturing bases decreased, and South Korea’s exports to China decreased during the US-China conflict, and Lee was replaced by China.

In addition to the overall decline in the competitiveness of South Korean intermediaries that have begun to According to the document, under the China-Korea Free Trade Agreement, China plans to expand the entertainment market to some extent, including financial, legal, and movie and entertainment TV show products, Open Aeon.

KIEP Services “China can benefit from South Korea opening its market to financial and gaming services,” said Kim Jong-duk, head of the Trade and Industry Organization.

“South Korea, like the entertainment industry, can benefit from China opening up the same sector.”
China is South Korea’s largest trading partner, and South Korea is China’s fifth largest.

U.S. President Joe Biden looks around Samsung Electronics’ chip plant in Pyeongtaek, Gyeonggi Province, with President Yoon Suk-yeol, center, and Samsung Electronics Vice Chairman Lee Jae-yong on May 20. Yonhap

However, according to Lee Dong-gyu, a Chinese researcher at Eshan Yi Autonomous Policy Research Institute (Seoul), the geopolitical situation surrounding China could hinder the progress of the agreement.

“China has been actively seeking trade agreements that can promote cooperation with the Asian economy as it seeks to curb US influence and expand its influence,” Lee said. Stated.

“However, recent moves to restore the world’s supply chain to reduce reliance on China and the decoupling of the technology sector are in the second phase of a [free trade agreement] between South Korea and China. The range of profits that can be obtained is unclear.

South Korea, China, and Japan have also started talks for a trilateral free trade agreement, but the conflict between China and the United States has intensified, and the United States has become a major economic nation in Asia.

Talks have stagnated as the relationship strengthens. Under the agreement, which came into effect in December 2015, the two countries will eliminate tariffs on 7,428 Chinese and 11,272 Korean products over the next 20 years.

South Korea Challenges 91 Pros Cents of Customs on Imports to China.

Ratification of the Free Trade Agreement immediately eliminated tariffs on exports of aviation kerosene, high-frequency medical equipment, transformers, etc. from China to South Korea. South Korea’s
tariffs on exports of cast iron products, chemical machinery, lithium batteries, etc. to China have also been eliminated.

 

Credit/Source : KoreaTimes

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