South Korea Intends To Sign A FTA Agreement With Vietnam At The End Of This Year.

According to Vietnam,

It is proposed to sign a FTA agreement with Vietnam at the end of this year.

South Korea hopes to further strengthen investment cooperation with Vietnam in agriculture, forestry and aquaculture, and increase its technology and investment in Vietnam, including helping Vietnam to build an industrial technology nurturing Park in the North Vietnam region and promote South Korea's textile industry.

To invest more, strengthen cooperation with supporting industries, and provide assistance to Vietnam's human resources development.

Fit in easily with

The South Korea - Vietnam free trade agreement negotiations were officially launched in 2012.

Since then, the heads of state of the two countries issued a joint statement and decided to speed up the negotiation process.

Li Tianguo, assistant researcher of the Asia Pacific and Global Strategy Research Institute of the Chinese Academy of Social Sciences, told an interview with the International Business Daily reporter that since the first round of free trade agreement negotiations between South Korea and Vietnam in 2012, negotiations have been held for the sixth time.

There are reasons for the rapid pace of negotiations and smooth progress.

South Korea Vietnam bilateral FTA negotiations were carried out on the basis of ASEAN - Korea FTA agreements, and the FTA between South Korea and ASEAN came into force as early as 2007.

Due to the large number of ASEAN members, the FTA is far less effective than expected.

According to South Korean media, South Korean Enterprises

The utilization rate is only about 30%.

This is why South Korea has accelerated the signing of a bilateral free trade agreement with ASEAN countries.

Zheng Huanyu, a researcher at the Korea Trade Association International Trade Research Institute, has made clear that South Korea needs to carry out negotiations on the FTA with other important trade partners in Vietnam and Indonesia, while further developing the economic and trade relations with these countries, further expanding the market of the east alliance and expanding the trade scale of South Korea in Asia.

Li Tianguo pointed out that Vietnam is now the ninth largest trading partner of Korea.

In the trade between South Korea and ASEAN countries, the size of trade between Korea and Vietnam ranks second, second only to Singapore.

Last year, the two sides reached an agreement on a high level free trade agreement (FTA) at the end of 2014. The two sides expect to increase bilateral trade volume from US $28 billion 200 million in 2013 to US $70 billion in 2020.

Of course, in the ROK Vietnam FTA, South Korea's share of the speech is obviously more weighted.

Li Tianguo pointed out that over the years, South Korea's trade with Vietnam has always been favorable. With the continuous growth of Vietnam's economy, there has been a marked expansion of the balance.

South Korea and Vietnam have strong trade complementarity. Vietnam mainly imports semiconductor, non-ferrous metals, petroleum products, synthetic resins, automobiles and auto parts and other intermediate inputs from Korea to export products such as fiber products, aquatic products and forest products to Korea.

Li Tianguo believes that the reason why the Korean government actively promoted FTA in Vietnam is mainly due to the economic partnership agreement (EPA) between Japan and Vietnam, which has entered into force since 2009. South Korea is worried that this agreement will have an adverse effect on the trade between Vietnam and Vietnam.

Secondly, "South Korea believes that as ASEAN countries are in different stages of economic development, the FTA negotiations between South Korea and ASEAN have failed to achieve a high level of trade liberalization. Therefore, South Korea hopes to sign a higher level bilateral trade agreement with Vietnam, so as to improve the investment environment of Vietnamese enterprises and seize the Vietnamese market."

Li Tianguo said.

Weak impact on China

Of course, Vietnam has also benefited from the signing of the ROK Vietnam FTA.

Li Tianguo believes that after the two sides signed a free trade agreement, Vietnam's exports of fiber products, aquatic products, forest products and agricultural products will increase substantially, helping Vietnam to reduce its trade deficit with South Korea and help expand the investment of South Korean investors in Vietnam.

Vietnam is currently the fourth largest investment destination in South Korea. Vietnam is the largest investment destination in South Korea.

At present, many products imported from Vietnam belong to intermediate inputs, which are sold to Vietnam after processing in third countries, which not only expanded Vietnam's exports, increased foreign exchange earnings, but also promoted local employment.

Li Tianguo pointed out that Vietnam hopes to import Korean capital more freely through trade and investment liberalization, so as to maintain high economic growth rate and promote domestic market demand.

Of course, in this process, the fragile production chain of Vietnam will also be impacted.

Li Tianguo believes that for Vietnamese enterprises, such concerns are inevitable: for example, the reduction of tariffs will cause the original high tariff intermediate products such as spare parts to be out of protection, resulting in the dependence of Vietnam on related industries to Korea and the impact on domestic related industries.

"However, taking into account the impact of trade liberalization on both countries, South Korea and Vietnam will gradually reduce tariffs in terms of goods and services, investment and other fields, and preserve the most sensitive products of both sides liberalization."

Li Tianguo said.

In fact, in recent years, with the increase of labor force prices in China, many countries have begun to shift their investment and trade targets to Vietnam, India and Philippines.

In the process of industrial pfer, Vietnam has become the second largest exporter of textiles in the world, second only to China.

Li Tianguo pointed out that one of the reasons why Vietnam actively promotes trade liberalization is to seize more national markets and gain greater market share through reciprocal agreements.

Therefore, the conclusion of the South Korea Vietnam free trade agreement will affect South Korea's investment and trade activities in China to a certain extent.

"But as China's largest trading partner and the most important direct investment target of Korea, compared with Vietnam, the importance of Vietnam is still very large, so its impact will not be very significant in the short term."

Li Tianguo analyzed.

Of course, in the long run, this trade diversion effect is inevitable.

Relatively speaking, China and Vietnam have strong similarities both in the economic development stage and in the economic system.

The two countries have similar positions in the international industrial division of labor, and they are exporting a large number of labor-intensive products with low added value.

But Li Tianguo pointed out that even if there is no South Korea Vietnam free trade agreement, there will be trade liberalization among other countries and weaken the status of China's manufacturing and manufacturing power.

Therefore, China also needs to improve the added value of products from the long-term and strategic perspective, promote the pformation and upgrading of industrial structure, and shift the dominant industries from labor-intensive industries and traditional industries to capital and technology intensive industries and emerging industries.