Israel and the Republic of South Korea on Wednesday, August 21, 2019, in the presence of South Korean Trade Minister Yoo Myung-hee and Economy and Industry Minister Eli Cohen declared the conclusion of the joint negotiations on a free trade agreement.

The Economy and Industry Ministry Foreign Trade Administration concluded the negotiations on the free trade agreement with South Korea, the 11th largest economy in the world. It is anticipated that the agreement will provide a competitive advantage and ease activity for Israeli exporters in the South Korean market, thus strengthening Israeli exports and increasing economic growth. The annual benefit to the economy will facilitate a better jumping-off point for Israeli exports.

The Economy and Industry Ministry Foreign Trade Administration – in cooperation with the ministries of Foreign Affairs, Finance, Agriculture, Communications and Justice, as well as the Population and Migration Authority, the Tax Authority and the Competition Authority – led the negotiations over the past three years. The agreement is of great importance to relations between the countries and will advance bilateral relations as well as encourage trade in new areas.

In 2018, trade between Israel and South Korea amounted to approximately $2.5 billion, an almost 15% increase over 2017. It is anticipated that the free trade agreement will further increase bilateral trade. Upon the agreement’s taking effect, most Israeli exports to South Korea will be exempt from customs duties, including machinery and electrical equipment, mechanical devices, fertilizer, medical equipment, cosmetics, plastics, metals, fruit juices and wine. From the other side, customs duties will be lowered on South Korean goods imported into Israel such as automobiles and automobile parts, refrigerators, medical equipment, electronic components, toys and games, plastics and chemicals.

South Korea is the leading global producer of memory components and the second largest producer of semi-conductors. It is also the world’s largest shipbuilder and holds more than half of the global market. In the automotive sector, thanks mainly to the Hyundai-Kia group and its secondary suppliers, is one of the ten largest producers in the world.

South Korea currently has 15 free trade agreements with various countries and trading blocs, including the US, the EU, India and China. The free trade agreement between Israel and South Korea will assist in equalizing Israel’s trade terms with those of the foregoing countries. Upon completion of the mutual ratification process, Israeli companies will benefit from equal trade terms and competition in the South Korean market.

In 2018, Israeli exports were at a record high and passed the $110 billion threshold. Trade agreements that have been signed recently, including with South Korea, will facilitate the continuation of this trend.

Economy and Industry Minister Eli Cohen: “The free trade agreement with South Korea is an historic agreement, the first to be signed with an East Asian country that is one of the leading economies in the world. It reflects – inter alia – the policy of the ministry to assist in diversifying exports and opening new markets for Israeli industry. South Korea is an important trade partner for the State of Israel. The international trade agreements are, as a rule, of strategic importance for the Israeli economy and assist in increasing exports, lowering the cost of raw materials, which increases the competitiveness of Israeli exporters and constitute welcome news for Israeli consumers in light of the entry of a broad range of products without customs duties.”

(YWN Israel Desk – Jerusalem)