S. Korea, Central America Reach Agreement on Free Trade Deal

South Korea reached an agreement with six Central American countries on a free trade deal Thursday, which is expected to pave wider ways for Asia's fourth-largest economy to tap deeply into the continent, South Korea's trade ministry here said.

    Under the deal, South Korea and six countries including Nicaragua, El Salvador, Honduras, Costa Rica, Panama and Guatemala agreed to eliminate tariffs on about 95% of goods made from each country within 10 years after the pact takes effect, according to the Ministry of Trade, Industry and Energy.

    It came to an agreement 1 1/2 years after the two parties launched official negotiations in June 2015, according to South Korea's (Yonhap) News Agency.

    The countries will have an official signing in the first half of next year after working on further discussions on words and phrases. After signing, the free trade agreement will be submitted to the countries' respective legislatures for approval before it can be implemented.    

    The ministry said the Korea-Central America free trade agreement (FTA) is the first trade accord that the region, which has seven FTAs, including one with the United States, has concluded with an Asian country. "The FTA will help South Korean companies have a competitive edge in the Central American region," Deputy Trade Minister Kim Hak-do. "And we can establish a bridgehead to go over to the North and South American countries through their FTA networks." The trade ministry said each Central American country has its own lists of goods subject to the FTA tariff concession, as Costa Rica will immediately eliminate its 1% import duties imposed on South Korean passenger cars, while Honduras will remove a 5% tariff on vehicles in the coming eight years. 

    They will also open their markets of cosmetics, pharmaceuticals and home appliances step by step to South Korean companies. South Korea, on the other hand, will phase out tariffs on Central America-produced coffee, sugar, bananas, pineapples and mangoes immediately or within seven years. 

    Trade volume between South Korea and the six nations totaled $4 billion last year, accounting for about 0.4% of the country's total trade. South Korea has a number of FTAs with major economic blocs, including the US and the European Union, and three FTAs with the South American countries of Chile, Peru and Colombia.