South Korea’s National Assembly ratified on Tuesday a Free Trade Agreement (FTA) with Israel, the final domestic procedure needed for its implementation, and the first-ever FTA between Israel and a country in Asia.
The ratification came after South Korea signed the FTA with Israel in May 2021 and after the countries finalized the deal in 2019 following three-year negotiations.
Prime Minister Yair Lapid thanked “our Korean partners” for their friendship and cooperation.
“This agreement will create new opportunities and help lower the cost of living in both our nations,” he said.
The agreement will see over 95% of Israeli exports to Korea duty-free, a move that is expected to lead to increased competitiveness of Israeli companies exporting to Korea. The list includes machines and electrical equipment, fertilizers, medical equipment, cosmetics, metals as well as fruit juices and wine.
On the other hand, tariffs have been lowered on products imported from South Korea to Israel, including cars and their parts, industrial refrigerators, medical equipment, electronic components, toys and games, plastics and its products, and chemicals.
The benefits for exporters and the savings for importers and consumers under the agreement are estimated at approximately NIS 500 million per year.
The volume of trade in goods and services between the countries in 2021 was approximately three and a half billion dollars, an increase of approximately 35% compared to 2020. The export of goods and services from Israel to South Korea in 2021 reached over one and a half billion dollars, an increase of approximately 42% compared to the year 2020.
South Korea is the world’s leading manufacturer in the field of memory components and the second largest semiconductor manufacturer in the world. It is also the largest ship manufacturer in the world, with over half of the global market share. In the automotive sector, South Korea, mainly through the Hyundai-Kia group and its sub-suppliers, is one of the 10 largest manufacturers in the world.
South Korea currently has 18 trade agreements in force with various countries and trade blocs, led by the US, the European Union, India and China. The agreement between Israel and Korea will help to compare Israel’s trade conditions with these countries.
About 70% of Israel’s international trade takes place within the framework of FTAs.
In the past decade, Israel signed or upgraded an FTA with South Korea, Colombia, Canada, Ukraine, and the United Arab Emirates. This doubles the seven agreements that were in force in 2009.
In addition, Israel is currently negotiating with a variety of other significant markets such as China, Vietnam, Russia, Belarus, Kazakhstan, Kyrgyzstan, and Armenia.