On December 1, 2022, the Korea-Israel FTA and the Korea-Cambodia FTA entered into force. An overview of each FTA is provided below.
I. Overview
A. Korea-Israel FTA
Israel has sought FTAs with Asian countries to diversify its current trade structure, which is concentrated in the Americas and Europe. Her FTA this time is meaningful in that Korea is the first Asian country to conclude her FTA with Israel.
Tariffs on major export items to Israel such as automobiles, auto parts and synthetic resins will be eliminated immediately, and tariffs on most traded items will be eliminated within 10 years. Based on import volume, Israel’s tariff elimination level is 100%, while South Korea agrees with her high elimination rate of 99.9%.
In particular, as Korea’s first FTA to introduce a ‘technical cooperation’ chapter in the agreement, cooperation between the two countries is expected to expand to industries such as big data, information technology (IT), and biotechnology (BT) in the future. will be ), renewable energy, aerospace.
B. Korea-Cambodia FTA
Korea and Cambodia are parties to two existing trade agreements, the Korea-ASEAN FTA and RCEP. The South Korea-Cambodia FTA will also open up free trade at 0.8% of all items and 19.8% of total imports.
The Korea-Cambodia FTA eliminates tariffs on export items excluded from the Korea-ASEAN FTA and RCEP. In particular, tariffs on knitted goods (Cambodia 7%) and garments (Korea 5%) will be eliminated, strengthening the value chain of trade related to textile and apparel manufacturing.
C. Rules of Origin
The procedures for certification of origin in the Korea-Israel FTA and the Korea-Cambodia FTA are as follows.
certificate of origin
Verification procedure
II. BKL Insight A. Korea-Israel FTA Korea’s main export items to Israel include automobiles, synthetic resins, and imaging equipment. In terms of imports, South Korea imports industrial electronic products from Israel, such as semiconductor manufacturing equipment, electronic application equipment, measurement control analysis equipment, and wireless communication equipment. The effect of the FTA with Israel is expected to further promote trade in these industries.
Main import/export items with Israel in 2021 (USD million)
Source: Korea International Trade Association, Trade Issues Brief, December 1, 2022
In addition, the fusion of Israel’s cutting-edge technology and South Korea’s manufacturing technology will increase exports of automobile parts, home appliances, textiles, secondary batteries, etc., and new investment is expected.
B. Korea-Cambodia FTA
As of 2020, South Korea’s main exports to Cambodia are beverages, knitted goods, and trucks, while its main imports are clothing and shoes. is expected, and direct investment in Cambodia in the apparel industry is expected to be further strengthened.
Main import/export items with Cambodia in 2020 (USD million)
Source: Ministry of Trade, Industry and Energy press release February 2, 2021
C. Rules of Origin
To take advantage of FTAs signed by South Korea, preferential tariffs for South Korea (for imports) and the exporting country (for exports) and the exact HS code for each item under review.
In addition, even when preferential tariff rates are applied under an FTA, the importing country or exporting country may request the submission of relevant documents, so it is important for importers and exporters to keep relevant documents for five years.
Rules of origin and their verification processes and methods are highly complex and require expertise in FTAs and local legislation. Therefore, we recommend that you seek professional advice before proceeding with any import or export transaction under an FTA.
