Nov. 6, 2009 (The Korea Times) -- By Kang Hyun-kyung
Staff Reporter
Koreans will be able to get Indian mangos at nearby grocery stores at cheaper prices, while automakers and home appliance producers will post higher earnings.
Industry experts say these are snapshots displaying the outcome of the Comprehensive Economic Partnership Agreement (CEPA), which was ratified by the National Assembly, Friday. The bilateral deal is set to take effect Jan. 1 next year.
The motion was passed 192-0 with five abstentions.
"The CEPA signed with India is a deal where both sides can truly win. Few sectors on both sides will suffer as the consequence of the trade accord," said Cho Choong-jae, head of the Southeast and South Asia Team at the Korea Institute for International Economic Policy (KIEP).
In a phone interview with The Korea Times, Cho said farmers are not going to lose out, pointing to the fact that Korea and India excluded agriculture , except for a few items such as mangos.
Farmers launched fierce protest against the free trade deal with United States when the negotiations were under way, saying they would be victimized if the agreement is effective.
The KORUS trade deal, which was clinched in 2007, has yet to be ratified by the National Assembly or U.S. Congress.
In contrast, the win-win Korea-India trade accord easily got the nod from lawmakers.
India, which has the second-largest population in the world at 1.2 billion, already ratified the bilateral trade deal in July.
Industry experts say global brands, such as Hyundai cars, and LG and Samsung television sets, will benefit most from the trade deal because of tariff cuts.
Korea, Asia's fourth-largest economy, and India, the third-largest, agreed to lower tariffs on auto parts by as much as 5 percent, and on refrigerators and television sets by 50 percent, over the next eight years.
The market share of Hyundai cars in the Indian market is approximately 20 percent, making it the second best-selling auto brand there. Experts say the brand will see sales growth next year.
Indian consumers prefer Korean home appliance brands such as LG and Samsung television sets, laundry machines and refrigerators.
"These global giants will post higher earnings next year as a result of the CEPA.
Cell phone producers and other information technology-related businesses, however, will feel almost no difference when it comes to earnings as tariffs in these areas are virtually zero now or, if any, they are very low," Cho said.
On the other hand, Korean consumers will be able to purchase cheaper Indian mangos and the Indian textile industry will see growth in exports to Korea.
According to a KIEP report released in September, the overall impact of the CEPA on the Korean market is relatively minor, compared with that of the Korea-U.S. free trade agreement and the Korea-EU deal.
The think tank projected that the average growth in gross domestic product (GDP) here will be 1.18 percent and that the manufacturing sector will also see growth in exports to India.
Korea will see a trade surplus of $140 million as a result of the trade deal with India, the report said.
