South Korea signing the Regional Comprehensive Economic Partnership is expected to benefit Korean companies, especially in steel, automobiles and electronics, through the elimination of tariffs across Asian countries. The pact will also help better protect Korean firms’ intellectual property rights in the region, experts said Monday.
RCEP is made up of 10 Southeast Asian countries, South Korea, China, Japan, Australia and New Zealand. The region covers nearly a third of the global economy with a combined nominal gross domestic product of $26.3 trillion and combined trade volume of $5.4 trillion.
The Korea Institute for International Economic Policy, a state-run think tank, said in a recent report, “When RCEP comes into effect, the Korean economy will have a growth effect of 0.41 to 0.62 percent by reducing tariffs on goods.”
Korea’s exports to RCEP nations were $269 billion last year, accounting for half of the nation’s total exports.
With Korea joining the mega deal on Sunday, Korean companies, especially in automobile parts, steel and electronics, are expected to benefit through tariff elimination in the world’s largest trading bloc.
Under the pact, Indonesia, the Philippines and Thailand will remove tariffs on automobile parts such as seat belts, air bags and wheels.
Indonesia, in particular, will eliminate tariffs that are imposed on auto parts by up to 40 percent. Hyundai Motor is building an automobile plant in Indonesia, and parts exports are expected to increase once tariffs are lifted.
As for finished cars, tariffs will be removed on cargo trucks or small cars in some countries.
In the steel industry, tariffs on steel products (now 5 percent), steel pipes (20 percent) and steel plates (10 percent) will be removed. In electronics, tariffs on refrigerators and washing machines (up to 30 percent) as well as air conditioners (up to 25 percent) in some countries will be removed.
The mega deal will also improve the protection of Korean companies’ intellectual property rights in the region.
The Free Trade Agreement between Korea and the Association of Southeast Asian Nations went into effect in 2007. However, this still has limitations in effectively protecting Korean corporate intellectual property rights as it only declaratively stipulated sharing information and experience in the field of intellectual property rights and raising awareness of the protection of the rights.
Under the RCEP trade deal, however, a total of 83 provisions are specifically stipulated in areas such as trademarks, patents and designs, which are expected to further strengthen the protection of intellectual property rights in the ASEAN region.
Through the rights protections, companies riding the Korean wave are expected to be greatly restricted. Currently, sellers in the region often take advantage of selling products by misusing the country name of Korea even for products not made in Korea.
The formation of the mega deal was welcomed by Korean business associations.
On Sunday, the Korea Chamber of Commerce and Industry released a statement saying, “We welcome this conclusion, expecting that RCEP will expand a new free trade bloc and serve as the basis for revitalizing the Asia-Pacific regional economic markets.
The Korea International Trade Association said it hopes to expand economic cooperation in East Asia in the future and secure a stable foundation for trade and investment.
By Shin Ji-hye (email@example.com