• The ASEAN-Korea Summit on 8 October 2003 tasked Ministers to discuss feasibility of a Framework Agreement on Economic Cooperation between ASEAN and Korea with a view towards establishing a Free Trade Area (FTA).

• At the 8th ASEAN-Korea Summit held on 29 November 2004, the Leaders signed the ASEAN-ROK Joint Declaration on Comprehensive Cooperation Partnership Agreement. Through the Joint Declaration, the Leaders among others agreed to: 

  • the recommendations of the ASEAN-ROK Experts Group (AKEG) on the measures to expand two-way trade and investment by liberalising and integrating the markets;
  • the establishment of an ASEAN-ROK Free Trade Area (AKFTA); and  
  • launching the AKFTA negotiations in early 2005 with a goal of having at least 80% of products at zero tariff by 2009, and consideration of special and differential treatment and additional flexibility for new ASEAN Member Countries. 
     
• The Framework Agreement on Comprehensive Economic Cooperation between ASEAN and Korea was signed by the Leaders at the ASEAN-Korea Summit on 13 December 2005 in Kuala Lumpur, Malaysia and came into force on 1 July 2006.  
  
  (Click here to view full text of the agreement)
• During the ASEAN-Korea Summit on 13 December 2005, the Economic Ministers of Korea and ASEAN signed: 
  • the Agreement on Dispute Settlement Mechanism between ASEAN and Korea.

  (Click here to view full text of the agreement)  

• On 26 August 2006 in Kuala Lumpur, the Economic Ministers of ASEAN and Korea, with the exception of Thailand, signed: 

• the Agreement on Trade in Goods of the Framework Agreement on Comprehensive Economic Cooperation between ASEAN and Korea. 

(Click here to view full text of the agreement) 

• The main elements of the Framework Agreement include:  
  • establishment of ASEAN-Korea Free Trade Area (AKFTA):  
  
  
• FTA for Trade in Goods to be realised by 2012 for ASEAN-6, 2018 for Vietnam and 2020 for Cambodia, Lao PDR and Myanmar; and  
• FTA for Trade in Services and Investment to be implemented within the timeframes to be mutually agreed between ASEAN and Korea; and  
  • cooperation in the areas of:  
    • Customs Procedures;  
    • Trade and Investment Promotion;  
    • Small and Medium Enterprises;  
    • Human Resource Management and Development;  
    • Tourism;  
    • Science and Technology;  
    • Financial Services;  
    • Information and Communication Technology;  
    • Agriculture, Fisheries, Livestock, Plantation Commodities and Forestry;  
    • Intellectual Property;  
    • Environmental Industry;  
    • Broadcasting;  
    • Construction Technology;  
    • Standards and Conformity Assessment and Sanitary and Phytosanitary Measures;  
    • Mining;  
    • Energy;  
    • Natural Resources;  
    • Shipbuilding and Maritime Transport; and  
    • Film.  

• Main provisions in the Agreement include:  
  • modalities for tariff reduction;  
  • rules of origin;  
  • modification of concessions;  
  • removal of non-tariff barriers; and  
  • safeguard measures, including Balance of Payment.  
  • The first tranche of tariff reduction/elimination began on 1 June 2007.  
  • The modalities for tariff reduction for products agreed by ASEAN and Korea are:

• Korea will eliminate tariffs on at least 70% of its products listed in Normal Track upon the entry into force of the Agreement, i.e., 1 June 2007. All tariffs for products listed in Normal Track will be eliminated by 1 January 2010;

• For ASEAN-6, tariffs will be eliminated in 4 phases beginning July 2006 and concluded by 2012:

• tariffs for at least 50% of products listed in Normal Track will be reduced to 0- 5% by 1 January 2007;

• tariffs for at least 90% of products listed in Normal Track to be eliminated by 1 January 2009;

• all tariffs for products listed in Normal Track to be eliminated by 1 January 2010, with flexibility to eliminate maximum 5% of products listed in Normal Track by 1 January 2012; and

• all tariffs for products listed in Normal Track will be eliminated by 1 January 2012.

• Vietnam is given an additional 6 years while Cambodia, Lao PDR and Myanmar are given an additional 8 years.

• Maximum ceiling for Sensitive Track is 10 per cent of all the tariff lines and 10 per cent of the total value of imports based on 2004 trade statistics;

• Products in the Sensitive Track are divided into Sensitive List (SL) and Highly Sensitive List (HSL);

• HSL is limited to 200 tariff lines at the HS 6-digit level or 3 per cent of all the tariff lines and 3 per cent of the total value of imports.

• Duties for products under the SL will be reduced to 20 per cent by 1 January 2012 and subsequently to 0-5 per cent by 1 January 2016 .

• Products under HSL is subjected to five methods of tariff reduction:
  • tariffs to be reduced to 50% by 1 January 2016;
  • tariffs to be reduced by 20% by 1 January 2016;
  • tariffs to be reduced by 50% by 1 January 2016;
  • products subjected to Tariff Rate Quotas (TRQs); and
  • products exempted from tariff reduction. A maximum of 40 tariff lines at six digit level can be placed under this category.

• Negotiations for Trade in Services Agreement was concluded in October 2007. The ASEAN-Korea Trade in Services Agreement was signed by the Economic Ministers and Korea at the ASEAN-Korea Summit on 21 November 2007.  

• The scope of offers is based on commitments under:

  1. WTO Doha Round; and
  2. selected sectors under the Fourth Package of ASEAN Framework Agreement on Services (AFAS) such as:
     • business services;
     • computer related services;
     • telecommunication services;
     • construction;
     • distribution services;
     • educational services;
     • environmental services;
     • financial services;
     • tourism and related services; and
     • transport services.
• Malaysia is expected to gain leverage in penetrating Korea's services market. These are in competitive sectors such as construction, engineering, financial services and Information Communication and Technology (ICT).

(Click here to view the schedule of specific commitments of each ASEAN Member Countries and Korea)

• Six projects were endorsed for implementation at the AEM-Korea Consultations :
  • Executive Training Programme for ASEAN SMEs;
  • ASEAN - Korea Women SMEs Cooperation Network;
  • study visit to ROK on four environmental areas:
    • Solid Waste Management;
    • Environmentally Sound Technology and Clean Production;
    • Biodiversity; and
    • Environmental Awareness and Education;
    
    
  • project on Natural Gas Vehicles;
  • FTA Negotiations Capacity Building for CLMV; and
  • ASEAN-ROK Cooperation Workshop for the Facilitation of Trade of Broadcasting Services in the Digital Economy.
  
  
• Korea is in the process of securing funding for implementation of these projects. Options are also being considered to use the ASEAN-Korea Cooperation Fund.  
• Malaysia (SMIDEC) chairs the Working Group on Economic Cooperation. The Working Group will meet twice a year.

• ASEAN's trade with the Republic of Korea (ROK) has increased from RM60.80 billion in 1994 to RM153.5 billion in 2004. For 2006, ASEAN and ROK recorded total trade of RM168.1 billion. The ROK, with a GDP per capita of RM60,657 represents an important market for ASEAN's exports.  

• Malaysia 's trade with the ROK also showed a significant growth in the last ten years. Malaysia‘s trade with Korea expanded from RM16.3 billion in 1996 to RM47.2 billion in 2006.  

• An FTA between ASEAN and ROK will also strengthen and deepen economic integration and help to build capacity through sharing of available resources and expertise.  

• An ASEAN-ROK FTA is also expected to facilitate greater flow of ROK investments into ASEAN.