[Deal Street Asia, 11 May 2015] An edited extract of an article by Nguyen Thi Bich Ngoc, titled Vietnam, Korea sign VKFTA, plan to triple trade turnover, which was published on 11 May 2015 appears below.

To view the original article, click onto Vietnam, Korea sign VKFTA, plan to triple trade turnover.

The Vietnam – Korea Free Trade Agreement (VKFTA) was signed on May 5, after two years of negotiation. It has widened the door for both countries to become each other’s major trade partner.

VKFTA is the first completed bilateral free trade agreement between Vietnam and its trade partners, that was put on the round table in 2014…

More transparent, comfortable investment conditions will lure more Korean investment into Vietnam, accompanied by Korea’s advanced technology and management expertise, and create opportunities of accessing a third markets.

The provisions of the bilateral trade agreement cover the trade of commodities, services (including appendixes for telecommunications, finance and the movement of natural persons – a way through which services can be supplied trans-nationally), investment, intellectual property, measures for food safety and animal and plant quarantine, rule of origin, customs facilitation, trade remedies, technical barriers, e-commerce, competition, economic cooperation and legal system.

In addition, Korea pledges to help Vietnam with enhancing the ability in making policies and increasing its competitiveness in mutually interested areas like agriculture, aquaculture, electronic industry, refinery and auxiliary industry.

Korea is one of Vietnam’s biggest export markets for products in the seafood, garment, footwear, agriculture and wooden furniture sectors. In turn, Vietnam imports mainly chemicals, garment input and equipments from Korea.

The two countries have been actively expanding economic operation since the 2000s. Vietnam is Korea’s fourth largest investment destination and the eighth largest trading partner. Korea’s volume of exports to Vietnam increased from $7.2 billion in 2009 to $22.3 billion last year [Australia exported $2billion in 2014*].  Meanwhile, Korea is Vietnam’s largest foreign investor [Australia was ranked 19 in 2014*], the third largest trading partner and second largest source of tourists.

Against the backdrop, the two governments concluded negotiations last December that will bring them even closer. “Economic relations are expected to be further intensified through an import tariff removal of more than 90 per cent of the products in exchange, which will potentially see the bilateral trade value triple to $70 billion by 2020,” said Do Hoon Kim, president of the Korea Institute for Industrial Economics and Trade.

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