Singapore — South Korea and Indonesia have reached a preliminary consensus that will see the elimination of tariffs on steel products and automobile parts, South Korea's Ministry of Trade, Industry and Energy said Wednesday.
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South Korean trade minister Yoo Myung-Hee and his Indonesian counterpart Enggartiasto Lukita announced the in-principle agreement at Tangerang, Indonesia, it said.
Their agreement deals with the Korea-Indonesia Comprehensive Economic Partnership Agreement, or KI-CEPA, which is equivalent to a free trade agreement but also focuses on a broader scope of economic cooperation.
Under the deal, South Korea and Indonesia will eliminate tariffs on 95.5% and 93% of products, respectively.
But major agricultural products will not be included under KI-CEPA in order to protect South Korean farmers, the Korean ministry said.
The countries plan to officially finalize KI-CEPA by end-2019 before conducting a signing ceremony some time in H1 2020. The trade agreement must be ratified by the respective legislatures of South Korea and Indonesia.
Exports of major steel products will benefit from the elimination of tariffs, including hot-rolled steel sheets (5% tariff), cold-rolled steel sheets (5-15%), plated steel sheets (5-15%), synthetic resins (5%), and automobiles and parts (5%), the ministry said.
In addition, synthetic resins used for automotive steel sheets are expected to be duty-free, it said.
Trade volume between South Korea and Indonesia amounted to $20 billion in 2018, up from $17.9 billion the year before, South Korean data shows.
South Korea is the sixth largest supplier of Indonesian imports and the seventh largest destination for the latter's exports. Indonesia's imports from South Korea include synthetic and natural rubber, steel and integrated electronic circuits while its exports to South Korea consist mostly of coal, copper ore, natural rubber, plywood and unforged tin.
In 2018, steel sheet exports to Indonesia were valued at $629 million, up 11% year on year, the ministry said.
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