In an effort to boost trade between two of Asia's major emerging economies, South Korea and India signed a comprehensive free trade agreement Friday that will slash tariffs, encourage mutual foreign investment, and facilitate the exchange of professional workers between the two countries.
According to South Korean Trade Minister Kim Jong-hoon, the pact is South Korea's first free trade agreement with one of the fast-growing BRIC countries - an informal bloc comprised of Brazil, Russia, India and China. India's minister of commerce and industry Anand Sharma said the agreement is India's first comprehensive trade agreement with any major economy. "This is a historic occasion," Sharma said.
Bilateral trade between India and South Korea amounted to $15.6 billion dollars last year, up dramatically from just $2.6 billion in 2002. "We will be able to have access to one-sixth of the global market," Kim said, adding that the agreement "will open a significant opportunity as well as strengthen our relationship with India into the future."
Sharma said the economic relationship between the two countries could double over the next 10 years. "This is just the beginning," he said. Such major South Korean manufacturers as Samsung Electronics, Hyundai Motor, LG Electronics, and steelmaker Posco already have major investments in India.
The deal will abolish or cut tariffs on 90 percent of Indian goods in terms of value and on 85 percent of South Korean products, South Korea's Ministry of Strategy and Finance said in a statement. It will also pave the way for Indian computer and software experts as well as English teachers to gain access to the South Korean labor market. "India has great competitiveness in terms of its IT professionals and so they will be able to come to Korea to contribute to the growth of the national economy in Korea," Kim said. "English teachers from India will be able to contribute to the development of education in Korea as well."
In 2007, South Korea signed a bilateral free trade agreement with the United States but that pact has yet to be ratified by the legislatures in both countries. However, South Korea already has a free trade agreement with the Association of Southeast Asian Nations (ASEAN), and the South Korean government said last month that it has concluded free-trade negotiations with the European Union.
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