SEOUL, June 19 (Korea Bizwire) — The automobile, mobile phone and medical sectors are among the areas that could benefit a lot from a free trade deal with Central American countries as lower tariffs are expected to help them better compete with cheaper products imported from China and other countries, a report said Friday.
Earlier, South Korea and a group of six Central American countries — Guatemala, Panama, El Salvador, Honduras, Nicaragua and Costa Rica — declared the official launch of their negotiations for a free trade agreement (FTA).
According to the report by the Korea Trade and Investment Promotion Agency, the automobile and auto parts sectors are expected to get a big boost from free trade with those countries given that they are currently subject to relatively high tariff rates of over 20 percent.
A free trade deal could also help mobile phones by lowering tariffs ranging from 3 percent to 20 percent in the areas where they have to compete with cheaper Chinese products, the report said.
As the countries are pushing to modernize their public health infrastructure and medical facilities, demand for related equipment and products could lead to more exports for South Korea, according to the report.
An FTA with those countries could provide a major chance for small and medium-sized enterprises as well to make inroads into the fast-growing market in the region, according to the report.
The six countries make up the fifth-largest market in Central and South America in terms of their combined gross domestic product. In 2014, trade between South Korea and the six countries reached US$5 billion.