by Na, Haejung
SEOUL, Aug. 31 (Xinhua) -- South Korea on Tuesday wrapped up its one-and-a-half-year-long free trade negotiations with Peru and agreed to sign a deal.
Holding a ministerial-level meeting in Lima, South Korean Trade Minister Kim Jong-hoon and his Peruvian counterpart Martin Perez reached an agreement on a bilateral free trade pact and announced a joint statement.
"The (South) Korea-Peru FTA is mutually beneficial to both sides," the countries said in the statement, calling the agreement "a comprehensive and high-quality FTA."
"The deal will further contribute to promoting the prosperity and development of both countries," the statement said.
S. KOREA-PERU FTA
The free trade pact incorporates bilateral agreement on goods, trade safeguards, intellectual property rights, government procurement, and economic cooperation.
Under the deal, the two countries are obliged to eliminate or cut tariffs on goods within 10 years after the deal takes effect.
Accordingly, tariffs on South Korean autos with engine displacements of 3,000 cc or more and color TVs will be removed right away, while those with engine displacement of less than 3, 000 cc will be erased off in five years.
The pact also states elimination of tariffs on home appliances, such as refrigerators and washing machines, in four and 10 years, respectively.
With respect to agricultural products, 107 items that South Korea found sensitive have been excluded from the deal, while other 202 items were subject to be traded off tariffs in 10 years.
In addition, tariffs on Peruvian coffee will be abolished right after the deal comes into effect.
The statement also deals with an agreement on protection measures such as import safeguards and a clause to extend intellectual property rights from 50 to 70 years.
Products from the Kaesong Joint Industrial Park located in the Democratic People's Republic of Korea (DPRK) will also be recognized as originating from South Korea, the joint statement said.
The two countries will have a legal review on the pact until Sept. 3, after which they will push for initialing the deal in November.
South Korea and Peru have been going through three ministerial- level meetings and four official rounds of negotiation talks since March 2009.
Bilateral trade reached 1.56 billion U.S. dollars in 2009, with South Korea's exports to the South American country reaching 641 million U.S. dollars.
EXPECTED ECONOMIC EFFECTS
Upon the free trade pact, local experts are expecting that it will bring about an overall growth in competitiveness of South Korean goods in the South American market.
As the deal marks the second of a kind South Korea reached with a Latin American country, following the FTA with Chile signed in April 2003, it will upgrade South Korea's status in the market, experts said.
According to the Korea Trade-Investment Promotion Agency (KOTRA) , the country's trade promotion agency, South Korea's automobile, heavy machinery, TV and computer exporters are to reap gains from the deal as the tariffs on such products which amount to as high as 17 percent will be eliminated.
In particular, local automobile companies, whose total market share amount to 23 percent in the Peruvian market, will see a sales gain of 10 percent of above thanks to price competitiveness against their Japanese rivals.
The deal, above all, will contribute to South Korea's energy sector the most, local experts are saying in one voice, providing the country with a stable supply of energy resources.
According to local daily Hankyung, Peru is the second largest holder of copper and ranks third in terms of zinc and tin reserves.
As South Korea's imports from Peru are mostly allocated to the three natural resources, with the total imports of the three items taking up 86.3 percent of the total amount in 2007 and 2008, the country is expected to see the greatest benefit in the natural resources.
Also, South Korea will be able to increase its investment in resources development projects, with nine local companies, led by SK Energy Co., are already involved in resource development projects in Peru, South Korea's Yonhap News Agency said.
The South Korea-Peru FTA will also pave way for the country to strike a deal with another Latin American country, Mexico, with which South Korea has been holding negotiations.
Along with deals with South American countries, South Korea has so far inked free trade pacts with India, the Association of Southeast Asian Nations (ASEAN), Singapore and the European Free Trade Association (EFTA).
While the country plans to sign a trade pact with the European Union in September, South Korea is also expecting ratification of the South Korea-United States FTA from both countries.