A long-awaited free trade agreement between New Zealand and South Korea appears close to being inked following talks in Seoul last week.
Officials concluded the ninth round of talks on Friday.
Comments by both New Zealand and Korean diplomatic sources suggest the deal is imminent, with people close to the talks saying there were no “thorny issues” outstanding, with both sides in “substantial agreement”.
The New Zealand Ministry of Foreign Affairs and Trade said New Zealand remains optimistic about reaching an agreement with Korea, and our negotiators made “considerable progress” last week in Seoul. The Ministry hopes to be in a position to make further announcements soon, a spokesperson said.
South Korean Prime Minister Chung Hong-won last week signalled the country would push to conclude free-trade agreements with China, Vietnam and New Zealand before the end of the year as it seeks to expand its presence overseas. New Zealand Prime Minister John Key said before the general election on Sept. 20 that encouraging free trade for New Zealand’s goods gave the small country access to big international markets, and the conclusion of a Korean FTA was “very close.”
South Korea is New Zealand’s fifth-largest trading partner, with total trade last year worth $3.59 billion, according to MFAT. It is the country’s fourth-largest source of foreign students and seventh-largest source of overseas visitors.
New Zealand exporters pay an estimated $229 million in Korean tariffs each year, and the talks begun in 2009 have previously stalled amid Korean concern about the impact of New Zealand agricultural exports, according to MFAT. Australia and Canada, both of which compete with New Zealand to export agricultural products to Korea, have recently concluded FTA’s with Seoul.
Tariff elimination on agricultural products remains a challenge with New Zealand arguing that it doesn’t compete with sensitive Korean production, given the country provides only about 3 percent of Korea’s total agricultural imports, doesn’t produce rice, is counter-seasonal, doesn’t export fresh milk and produces grass-fed beef, according to MFAT.
An FTA between the two countries would be complementary, adding US$4.5 billion to New Zealand’s GDP and US$5.9 billion to South Korea between 2007 and 2030, according to a report by the New Zealand Institute for Economic Research and the Korean Institute for International Economic Policy.