New Trade Pact Reshapes Economy of South Korea
The Gulf Cooperation Council (GCC) has once again taken a significant stride in strengthening its economic ties, this time with a groundbreaking free trade agreement signed with South Korea. This move has the potential to reshape the economic landscape and foster a new era of collaboration between the Gulf and Asia. It will particularly impact the economy of South Korea.
Boosting Investment Ties: GCC’s Second Trade Deal in 2023
In a monumental move, the GCC inked its second trade deal of the year, reinforcing efforts to forge stronger investment links with major Asian partners. This strategic partnership with South Korea comes on the heels of a free trade agreement with Pakistan. It also illustrates the GCC’s commitment to diversifying its economic portfolio.
Tariff Elimination: A Win-Win Scenario
South Korea seems set to eliminate tariffs on nearly 90% of all items. That includes crucial commodities such as liquefied natural gas (LNG) and petroleum products. Simultaneously, the Gulf states will reciprocate by scrapping tariffs on 76.4% of traded products and 4% of traded goods. This reciprocal tariff elimination is a clear indication of the commitment to fostering mutually beneficial trade relationships.
Comprehensive Coverage: Beyond Goods to Services and SMEs
The Free Trade Agreement (FTA) goes beyond mere goods trading. It encompasses services, government procurement, as well as collaboration among small and medium-sized enterprises (SMEs), customs procedures, and intellectual property. The GCC, historically known for navigating complex priorities, has taken a monumental step forward in addressing diverse aspects of trade collaboration with South Korea.
From Stalemate to Success: A Long-Awaited Resurgence
The journey to this agreement has been a long and winding one. Talks between the GCC and South Korea initiated in 2007, faced a 13-year hiatus. However, the parties revived negotiations last year. Such resiliency showcases the commitment of both parties to overcoming obstacles and creating opportunities for economic growth.
Economic Diversification Drive: A Catalyst for Trade Momentum
As Gulf states seek to diversify their economies and reduce dependence on oil and gas revenue, trade talks have gained considerable momentum. The data showed that trade between the Gulf and South Korea soared from $50 billion to $78 billion between 2021 and 2022. This surge undoubtedly contributes to the overall development of the economy of South Korea.
Global Engagement: GCC’s Ongoing Trade Endeavors
The GCC’s proactive approach to international trade is evident in its recent endeavours. Apart from the South Korea pact and the Pakistan agreement earlier this year, the GCC has advanced negotiations with China. It also rekindled talks with Japan and is currently in discussions with Britain. This global engagement underscores the council’s commitment to fostering economic prosperity on a global scale.
Moreover, the GCC-South Korea free trade agreement stands as a historic milestone, promising economic integration and strengthened trade relations between the two sides. As Secretary-General Jasem al-Budaiwi rightly notes, it’s a significant step towards a more interconnected and prosperous future for the Gulf and Asia, ultimately impacting the broader economy of South Korea.
