South Korea and China have made a meaningful breakthrough in their latest round of negotiations for a bilateral free trade agreement after agreeing on how to open their respective service and investment markets, the government said Friday.

“Regarding the service and investment sectors, we reached an agreement on the principles of market liberalization,” the Ministry of Trade, Industry and Energy said in a press release.

The 12th round of FTA talks between Seoul and Beijing was held in Daegu from Monday through Friday.

Under a previous agreement, the countries were to introduce a positive list approach for opening up their bilateral trade in investment and service areas, meaning they would be first listing the items and areas that would be liberalized.

But the two sides have now agreed to switch to a “negative list approach” within a certain period following the implementation of the proposed FTA. In a negative list agreement, all items and services can be liberalized except those named in the list.

The ministry said the two sides have also made significant progress in areas of regulation and cooperation.

“The sides have come to a complete agreement on the text of a chapter that deals with competition and electronic commerce while also making significant progress on the text for the environment chapter,” it said.

“They have also made meaningful progress in the areas of customs procedures, economic cooperation and government procurement.”

South Korea and China began their FTA negotiations in May 2012.

China is already South Korea’s largest trading partner, accounting for nearly one-quarter of South Korea’s overall exports in 2013.

The latest FTA talks were the first of their kind since President Park Geun-hye met her Chinese counterpart Xi Jinping in a summit meeting earlier this month in Seoul. At the meeting, the two leaders called for a conclusion of the FTA talks before the year is out.

By Bae Hyun-jung and news reports
(tellme@heraldcorp.com)