China and South Korea’s vow to wrap up talks on a trade deal by year-end may prove optimistic, as differences over opening markets for petrochemicals, steel and agriculture could delay a deal, a senior South Korean trade ministry source said.
Trade between the two countries totalled $230 billion last year and Chinese President Xi Jinping and Korean President Park Geun-hye pledged at Thursday’s summit in Seoul to work towards concluding free trade talks by the end of the year.
However, the senior ministry source familiar with the matter told Reuters that substantial differences remained.
“If the wide opinion gaps don’t narrow down, it is possible to be pushed to next year,” the source said on condition of anonymity, given the sensitivity of the matter.
China’s Ministry of Commerce could not be reached immediately for comment.
China is the world’s largest exporter and South Korea the seventh. A trade deal would remove or significantly lower tariffs on exports between the two.
Beijing wants to boost exports of labour-intensive produce such as fruits and vegetable to South Korea, where farmers say they have already been battered by a U.S. trade deal that took effect in March 2013. Producers say they now face pressure to open up the country’s rice market under the World Trade Organization agreement.
China also wants more South Korean market access for cars, electronics and steel.
“We are well aware of big concerns in agricultural sectors, along with rice issues,” the source said.
South Korea is one of the few developed countries that has a trade surplus with China, its biggest export market. China accounts for more than 60 percent of South Korea’s petrochemical exports.
Some Chinese sectors that South Korea’s industrial giants covet, such as autos, steel and petrochemicals, are reluctant to open further.
“Chinese across manufacturing sectors are also very concerned about a deal although the degree of the concern varies depending on sectors,” the source added.
China and South Korea launched free trade talks in 2012.
“Some Chinese industries are not willing to open further, such as chemicals, shipbuilding, steel, and auto. Some are complaining about Korea’s protection, like agriculture,” said Tu Xinquan of the University of International Business and Economics in Beijing.
“But the two governments need something meaningful to show friendship, so I believe the negotiation will finish as announced.”
Beijing and Seoul have been strengthening trade and diplomatic ties - this week’s summit meeting between Xi and Park was their fifth since both took office last year. (Reuters)