KCS: "FTA Plays Key Role in Maintaining Trade Surplus"... Clear Effects of FTA Implementation

A container ship is being unloaded at Busan Port Sinsundae Pier. The photo is unrelated to the article. Source=Yonhap News

[Asia Economy (Daejeon) Reporter Jeong Il-woong] It is analyzed that free trade agreements (FTA) played a positive role in maintaining South Korea's trade surplus amid the COVID-19 pandemic.

According to the Korea Customs Service on the 28th, South Korea recorded a trade surplus of $40.4 billion in trade with FTA partner countries by the end of the third quarter (September) this year. Although this is a 24.4% decrease compared to the trade surplus of $53.4 billion during the same period last year, it is significant that the surplus was maintained despite the spread of the infectious disease.

In particular, the trade balance showed a stark difference between FTA partner countries and non-FTA countries. By the end of the third quarter this year, trade with non-FTA countries recorded a deficit of $12.8 billion, which is a 16.8% decrease from $25.1 billion in the same period last year. This highlights the impact of FTA implementation on the trade balance.

Based on this, the Korea Customs Service analyzes that maintaining a trade surplus with FTA partner countries amid the COVID-19 crisis is meaningful in itself.

As of the end of the third quarter this year, the utilization rate of FTAs by country was recorded at 74.5% for exports and 79.4% for imports. The export utilization rate decreased by 0.3 percentage points compared to the same period last year, while the import utilization rate increased by 4.3 percentage points.

The FTA export utilization rate increased the most in chemical industry products by 3.1 percentage points, and the import utilization rate surged by 9.5 percentage points in machinery, which is also noteworthy.

The increase in FTA utilization rate in imports is largely due to a 9.5 percentage point rise in the FTA utilization rate when importing machinery such as automobiles and automobile parts domestically, according to the Korea Customs Service.

Kim Tae-young, Director of the FTA Implementation Planning Office at the Korea Customs Service, said, “It has been confirmed numerically that FTA trade has a positive impact on the trade balance. Considering this, the Customs Service will continue to support domestic export and import companies to easily and appropriately utilize FTAs.”

This content was produced with the assistance of AI translation services.