Turkey-South Korea FTA includes many firsts

A free trade agreement (FTA) between Turkey and South Korea that came into effect at the beginning of this month has registered a number of firsts for Turkey, which had exempted its agricultural goods from deals until the Seoul deal but is now aiming to use the new agreement as a template for future FTAs. New-generation agreements no longer merely encompass the exchange of goods, and the Turkish-Korean deal also includes several extras, such as a framework deal, a deal on the exchange of goods and two others on the exchange of services and bilateral investments. While the deal that came into force on May 1 only regulates the exchange of goods, negotiations on the other two are set to start within a year, according to the framework deal. Even before the investment deal was signed, South Korean companies had begun to show an increasing interest in the Turkish market. The Korea Exchange Bank opened a representative branch in Istanbul on May 16, becoming the first South Korean bank to establish a presence in Turkey, while South Korean carmaker Hyundai Assan has said it will double the manufacturing capacity of its Turkey plant with a $1 billion investment. The current trade volume between the two countries reached $6 billion last year, but exports from South Korea to Turkey accounted for $5.6 billion of the figure, as Turkey's exports to the Far Eastern country remained at a comparatively tiny $485 million. Benefiting from the competitive advantages its exporters will gain in the South Korean market, Turkey hopes to raise its export rate to the country. The goods trade deal, which enables both parties to gradually reduce tariffs on industrial goods to zero over the next decade, is also expected to liberalize around 90 percent of Turkish agricultural trade with South Korea. Turkey is now looking to boost agricultural and food exports to South Korea in order to reverse the asymmetrical trade relations between the two countries. "The rising food necessity of South Korea due to the increasing popularity of Western nutritional habits among younger generations and South Koreans' soaring interest in organic foods suggest that a key sector for Turkish exporters will be these products," Pinar Aslan, an Economy Ministry official said.