SEOUL, Dec. 4 (Korea Bizwire) - The ratification of a free trade pact with China will give hope to South Korean exporters struggling to expand market presence abroad, the country’s top economic policymaker said Friday.
Chairing a fiscal policy meeting in Seoul, Finance Minister Choi Kyung-hwan said that the free trade agreement (FTA) approved by the National Assembly on Monday will breathe new life into local companies.
In the January-November period, Asia’s fourth-largest economy reported outbound shipments falling 7.4 percent on-year to US$484.6 billion. Last month, exports backtracked 4.7 percent from the year before to $44.4 billion.
“China accounts for a quarter of South Korean exports, with the FTA to give local companies firmer ground in the world’s No. 2 economy,” he said. “Both companies and the government need to formulate strategies that can take full advantage of the open trade agreement.”
China is by far South Korea’s largest overseas market, with locally made goods making up roughly 10 percent of all products imported by the country.’
Seoul expects the bilateral FTA to go into effect within the year, with companies to benefit from more tariff cuts starting in 2016.
Under the pact inked in early June, Beijing will eliminate import tariffs on 71 percent of all goods within 10 years, with the percentage rising to 91 percent over 20 years. Seoul will take similar measures with Chinese goods.
Besides the FTA, Choi, who doubles as deputy prime minister in charge of economic affairs, said that every effort is being made to execute the 2016 budget without delays.
“Timely execution of the budget can bolster the national economy and stabilize the livelihood of ordinary people,” he said.
The official then stressed that parliament needs to pass various economic and labor reform bills within the year.
“In particular, failure to pass labor reform measures could lead to problems for young people who are struggling to find work,” he claimed.
A tripartite committee made up of representatives from labor, management and the government agreed in September to change local labor rules. The changes include making it easier for businesses to fire under-performing workers.