"Benefits of Tariff Reductions on Plastics, Steel, and Car Parts upon Korea-Indonesia CEPA Enforcement"

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[Asia Economy Reporter Jeong Hyunjin] An analysis suggests that once the Comprehensive Economic Partnership Agreement (CEPA) signed between Korea and Indonesia last December is ratified by the National Assembly and comes into effect, Korean companies, particularly in the plastics, automotive parts, and steel industries, will benefit from tariff reductions.

On the 3rd, the Korea International Trade Association's International Trade and Commerce Research Institute stated in a report titled "Effects of the Korea-Indonesia CEPA" that "It is an encouraging achievement that Korean companies have secured tariff competitiveness compared to major competitors in the promising Indonesian market."

Korea and Indonesia finalized the CEPA on December 18 last year, marking eight years since negotiations began in 2012. As a result, Indonesia agreed to abolish tariffs on 92.1% of imported items, which accounts for 93.5% of import value as of 2019. This represents an increase in market openness by 4.7 percentage points in terms of import value and 11.9 percentage points in terms of the number of items compared to the tariff elimination levels under the existing bilateral Free Trade Agreement (FTA).

By item, plastics and rubber products and automotive parts, which have significant exports to Indonesia, will immediately benefit from tariff elimination once the Korea-Indonesia CEPA takes effect. The Korea International Trade Association noted, "With Indonesia's population and income continuing to grow, both the plastics and automotive markets are expected to experience stable growth."

Additionally, the association forecasts increased exports of steel products, cotton yarn, and centrifugal pumps due to further tariff reductions. In particular, for steel products, the existing Korea-ASEAN FTA had relatively low concession levels and applied a standard tariff rate of up to 15%. However, once CEPA is implemented, tariffs will be gradually abolished starting seven years after enforcement, allowing for tariff reduction benefits.

Kim Kyunghwa, a senior researcher at the Korea International Trade Association, said, "Once the Korea-Indonesia CEPA is enforced, immediate benefits for Korean companies are expected, and as the industry anticipates enforcement in the second half of this year, efforts by the government and the National Assembly are necessary to ensure the agreement is implemented as soon as possible."

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