The free trade agreement (FTA) between Korea and Colombia is now officially in effect starting July 15.

This is Korea's third FTA with Central and South American countries, after signing one with Chile in 2004 and Peru in 2011. It is also Colombia's first FTA with an East Asian country. With the FTA now in effect, tariffs in Colombia on 4,390 items will be immediately lifted, and tariffs on 2,797 other items will be lowered. Seoul and Bogota agreed to lift tariffs on most of items within 10 years. Trade last year between the two countries hit USD 1.45 billion, with Korea exporting mostly cars, car compartments, synthetic resins and petrochemicals, and Colombia exporting crude oil, coffee and ferroalloys.

Korea will eliminate tariffs on 96.1 percent of the items it imports from Colombia, which covers 99.9 percent of the value of its imports from the South American nation. Colombia, in turn, will eliminate tariffs on 96.7 percent of the items it imports from Korea, which covers 97.8 percent of the value of its imports from South Korea. Tariffs on Korea's main export items to Colombia will also be gradually eliminated. Tariffs on automobiles, currently at 35 percent, will be entirely eliminated within 10 years. Automobile components and tires, which currently face a five to 15 percent tariff, will be tariff-free within five years. Tariffs on potential export items, such as makeup and cosmetics, which currently face a 15 percent tariff, will be fully lifted within seven to 10 years, while tariffs on medical devices, currently facing a five percent tariff, and on non-alcoholic drinks, such as aloe and red ginseng drinks, which currently face a 15 percent tariff, have been lifted immediately.

Colombia will open its market as it did after its FTA with the U.S., which, as a result, will allow Korean businesses to enter the market there. A secure environment for investment will also be created by, for example, allowing remittances with no constraints, banning nationality charges when appointing board members or CEOs, and developing an investor-state dispute settlement system, just as it has done with the U.S. The South Korean government will continue to discuss with the Colombian government ways to maximize the positive effects of the FTA, including the development of a ministerial joint commission and other committees covering each industry or category.

The FTA will encourage and expand industrial partnerships between the two countries. The Korea Trade-Investment Promotion Agency said that, "Mutually beneficial partnerships are expected, by combining Colombia's abundant natural resources, food resources, coffee, and beauty and cosmetics industry, with Korea's technologies. Korea's strengths in manufacturing and marketing can put the two countries in an advantageous position to together enter third country markets, such as other East Asian markets."

By Wi Tack-whan, Chang Iou-chung
Korea.net Staff Writers
Photo: Ministry of Trade, Industry and Energy
whan23@korea.kr