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| Israeli Minister of Economy Amir Peretz, left, and Korean Minister of Trade, Industry and Energy Yoo Myung-hee, pose for a photo after signing a free trade agreement between the two countries at Lotte Hotel Seoul, Wednesday. Courtesy of Ministry of Trade, Industry and Energy |
By Kwon Mee-yoo
Israeli Minister of Economy Amir Peretz visited Korea to sign a free trade agreement (FTA), opening a new chapter in the bilateral economic relations between the two countries.
Israel is the first Middle Eastern country to sign an FTA with Korea and Korea is the first Asian country to ink one with Israel, signaling the significance of the agreement.
"Israel and South Korea have a lot in common. We both have ancient history and for many years, we both fought for independence, eventually achieving at a similar time," Peretz said during the signing ceremony at Lotte Hotel Seoul, Wednesday. "The free trade agreement will significantly lower tariffs and eliminate duties in so many areas from cars to mobile phones, plastic, chemical, machinery and many more."
The FTA exempts Israeli products imported to Korea as well as Korean products exported to Israel from tariffs. Over 95 percent of each country's export to the counterpart would become tariff-free, increasing competitiveness and improving trade in other areas such as services and investment.
Major beneficiaries in Korea are cars and car parts as 7 percent and 6-12 percent tariffs, respectively, will be lifted immediately. Cars and car parts are Korea's largest exports to Israel, taking up to 46.9 percent of its exports there in 2020.
Tariffs on semiconductor manufacturing equipment, Korea's top import item from Israel, will be eliminated immediately and those on applied electronics devices, the second-largest import from Israel, will be abolished within three years.
Peretz noted the importance of economic cooperation despite rising Israeli-Palestinian tensions.
Korea's Trade Minister Yoo Myung-hee emphasized how the FTA will build foundations for both countries' economic growth by speeding up cooperation in advanced industries, not just lowering tariffs.
"This activity is designed to serve as a robust platform for bilateral cooperation in innovation, especially in advanced technology. ... Stronger collaboration between our two countries enables us to stand as the global innovation powerhouses. Specifically, it creates very active promotion and cooperation in aerospace, renewable energy, IT, technology in AI, which serve as our future growth engine," Yoo said.
After the two countries struck the FTA deal in 2019, detailed negotiations were done amid the pandemic and Peretz tried to look for the silver lining.
"The pandemic has forced us to think in new ways. The world is divided by politics and nationality, but COVID-19 is not distinguished between religion, gender, countries or nation. I hope COVID-19 will make a global change in which innovation efforts will be channeled into areas such as environment, education and health," he said.
Meanwhile, the two countries amended the Korea-Israel Technological Cooperation Treaty on the same day as well.
The amendment will double the amount invested to the Korea-Israel Industrial R&D Foundation (KORIL-RDF) from $2 million to $4 million from each country. The revision also invites more research institutes and universities to benefit from the R&D programs.
The two governments have raised some $65 million research fund in the past 20 years, supporting 181 joint research projects.
Gabi Ashkenazi, Israel's minister of foreign affairs, visited Korea with Peretz, but returned to his home country early as violence between Israelis and Palestinians escalated quickly.
