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ECONOMY > Trade

South Korea, Japan to be united by 1st free trade pact in February

  • December 7, 2021
  • , Nikkei Asia , 11:48 a.m.
  • English Press
  • ,

SATSUKI KANEKO, Nikkei staff writer

 

TOKYO — South Korea is now set to put the Regional Comprehensive Economic Partnership into force on Feb. 1, an arrangement that will give it its first free trade deal with neighboring Japan.

 

RCEP will take effect Jan. 1 for 10 parties that completed the ratification process by Nov. 2, when the necessary conditions were met: China, Japan, Australia, New Zealand, Singapore, Thailand, Vietnam, Brunei, Cambodia and Laos.

 

South Korea’s National Assembly ratified it last week. Indonesia, the Philippines, Myanmar and Malaysia have yet to complete domestic approval of the 15-country deal.

 

The pact will immediately eliminate tariffs on many products and start phasing out others. Tariffs will eventually be eliminated on roughly 90% of goods across a free trade sphere covering about 30% of the world’s total gross domestic product and population.

 

It is the first free trade agreement to involve both Japan and South Korea, its third-largest trade partner. The share of goods traded tariff-free between the two countries is set to swell to 92% from 19%.

 

Japan anticipates a boost to its exports of autos and chemical products to South Korea. The deal will eliminate duties on about 78% of auto parts, of which Japan sells about 190 billion yen ($1.7 billion) a year to its neighbor, and on such items as cellulose acetate — used in protective films for liquid crystal displays — and some cotton and synthetic textiles.

 

It could also bring more-affordable South Korean alcoholic beverages to Japan with the phaseout of duties on soju and makgeolli. Tokyo will remove tariffs on such treats as candy and chocolate bars.

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