South Korea recently finalised a free trade agreement (FTA) with Cambodia to boost ailing exports amid the COVID-19 pandemic.
Trade minister Yoo Myung-hee and her Cambodian counterpart Pan Sorasak held a virtual meeting and declared that Seoul and Phnom Penh have completed FTA negotiations, according to South Korea ministry of trade, industry and energy.
The two countries plan to hold an official signing ceremony in the near future. The pact also needs parliamentary approval.
Both countries launched feasibility studies on the FTA after holding a summit in March 2019. The first round of negotiations began in July last year.
“The FTA will pave the way for the two countries to overcome challenges from the COVID-19 pandemic, and seek sustainable economic growth,” Yoo said. Cambodia is South Korea’s 60th-largest export destination.
Major exports include beverages, textiles and cargo trucks. South Korea mostly imports clothes and shoes from the Southeast Asian nation.
Under the deal and also when combined with the upcoming Regional Comprehensive Economic Partnership (RCEP), Cambodia will lift tariffs on 93.8 per cent of all products, with South Korea eliminating duties on 95.6 per cent, media reports from South Korea said.
South Korea has been rolling out what it calls New Southern and New Northern Policies, which concentrate on expanding trade ties with emerging nations and reducing its reliance on China and the United States, which take up roughly 40 per cent of annual exports.
South Korea already held an FTA with the Association of Southeast Asian Nations (ASEAN), but it has been pushing for separate agreements as well to seek closer ties. Seoul signed FTAs with Singapore in 2006 and Vietnam in 2015.
ASEAN comprises Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Thailand, Singapore and Vietnam. The country’s exports to the bloc fell by 15.2 per cent year on year in January to $8 billion amid the pandemic. Seoul currently awaits the official launch of the RCEP later this year.
Meanwhile, a tax agreement signed between South Korea and Cambodia to prevent double taxation went into force recently, the South Korean foreign ministry said. The pact allows countries to avoid taxing the same income twice and helps ease the tax burden on companies doing business in another country.
South Korea and Cambodia signed the agreement in November 2019, and both countries gained parliamentary approval in December last.
South Korea has now signed the double taxation avoidance pacts with all 10 members of the Association of Southeast Asian Nations (ASEAN). The first pact it signed with Vietnam went into effect in 1994.