A bilateral free trade agreement between Vietnam and South Korea expected next year should save Vietnam from paying more Korean taxes, a Korean official said Tuesday.
The two countries are expected to negotiate an agreement early next year, after an exploratory study, Kim Deok Ku from the Korean Knowledge Economy Ministry told Thoi Bao Kinh Te Saigon Online on the sidelines of a conference on the ASEAN-Korea Free Trade Agreement.
Kim said he could not tell when the negotiation will end or what sectors will be included in the agreement.
But Sim Jin Su from the Korea Ministry of Strategy and Finance said the bilateral agreement will provide a bigger tariff reduction than the tarriff reduction provided by Korea's agreement with ASEAN, in which Vietnam is a member.
The procedures will also be simpler, Su said.
The Korea-ASEAN Free Trade Agreement has covered commodities since June 2007 and services since May 2009, allowing Vietnam to be free from 90.8 percent of all lines of general goods tariffs, and 3 percent to 7 percent free from tariffs on sensitive goods.
Vietnam, in return, has promised to gradually leave out 90.1 percent of tariffs on select Korean goods, and will eliminate all tariffs in 2018.
Figures from Vietnam Customs showed that Vietnam exported nearly $4 billion, mostly of crude oil, seafood, and garment and textile products to South Korea during the first 10 months of 2011. Vietnam imported more than US$10.4 billion, including cloth, iron and steel, machines and accessories, and computers and electronic chips.
South Korea is among Vietnam's major import markets, besides China and other ASEAN members. Besides Vietnam, the country is also planning to form bilateral free trade agreements with Indonesia and China.