The free trade accord between South Korea and Peru will take effect on Aug. 1, paving the way for the two countries’ trade and investment to increase sharply, the trade Ministry in Seoul said Wednesday.
“The free trade deal with Peru will contribute to bolstering trade and investment and promoting cooperation in resources development. We expect that the trade pact will help South Korea expand into the South American markets,” the ministry said in a statement.
South Korea and Peru signed the deal in March this year. South Korea’s parliament approved the pact last month.
Peru is the second South American country with which South Korea has sealed such a trade pact. In April 2003, South Korea signed a similar trade deal with Chile.
The accord calls for both countries to eliminate all tariffs within 10 years after the pact takes effect.
Under the agreement with Peru, tariffs on South Korean automobiles with engine displacements of less than 3,000 cubic centimeters will be scrapped in five years, while the tax on Peruvian coffee will be abolished right after the deal comes into effect, according to the foreign ministry.
Bilateral trade reached $1.98 billion in 2010 with South Korea’s exports to the South American country reaching $944 million.
The Peruvian economy has expanded at an annual rate of more than 6 percent over the past five years. Resource-rich Peru will provide good business opportunities to South Korean firms, the ministry said.
South Korea mainly imports resources such as zinc and iron and exports such goods as cars and petrochemicals.
The free trade accord with Peru is widely expected to help South Korean companies accelerate their inroads into the South American country and gain greater access to resource development projects there.
Peru holds roughly a third of the world’s key resources, such as zinc. Nine South Korean companies, led by SK Energy Co., are already involved in resource development projects in Peru.
Also, exports of autos, heavy machinery, TVs, computers and other products with tariff rates of up to 17 percent are expected to increase sharply after the deal takes effect, experts said.
