How would you like it if some of your favorite brands — Hyundai, Kia, Samsung, LG — would suddenly cost less? You probably wouldn’t object, right? Well, there’s a good chance that the prices of high quality products made in South Korea will be coming down soon.
South Korean Minister of Trade Yoo Myung Hee will be arriving in Israel on August 21, to meet with Finance Minister Eli Cohen. The two ministers are expected to sign on the conclusion of negotiations to establish a Free Trade Zone between Israel and South Korea, negotiations that began in June 2016. This is the first FTZ agreement between Israel and any Asian country and has enormous economic and diplomatic importance. It is likely that this agreement will pave the way for treaties with other Asian states, such as China, Vietnam and, down the line, Japan and Thailand.
Israel views the signing of FTZ agreements with Asian countries with emerging economies as a key objective in our relations with these countries. Accordingly, this subject was given high priority in President Rivlin’s visit to South Korea, in the meeting of Prime Minister Netanyahu and Foreign Minister Katz with Vietnamese senior officials, and in PM Netanyahu’s meeting with the Chinese vice-president at the October 2018 innovation conference in Israel.
In addition to the diplomatic significance of the agreement, which marks Israel’s entry into the Asian market, the mutual lowering of customs taxes means an immediate benefit of 100 million USD to the Israeli market, and several times that in the future. Mutual trade today is 2.5 billion USD. The FTZ agreement will allow Israeli exporters to compete with states that already have FTZ agreements with South Korea, such as the US, the EU and China. Concurrently, customs taxes in Israel will be lowered on South Korean imports such as cars, TV screens, cell phones, electrical appliances and others. These popular products can be found in almost every Israeli home, and the cheaper prices will likely contribute to lowering the cost of living in Israel.
The Economic Ministry and the Ministry of Foreign Affairs worked hard to achieve this agreement, which will have an important impact on the Israeli marketplace. It is expected to lead to an increase in trade with the 11th largest economy in the world, to increase Israeli exports, to encourage investments on both sides, and to boost Israel’s diplomatic presence in Asia.