Agence France Press | 11 April 2007

Chinese leader proposes free trade deal with SKorea

SEOUL (AFP) — China and South Korea should push to increase annual two-way trade to 200 billion dollars soon, Prime Minister Wen Jiabao said Wednesday before wrapping up a two-day visit.

Wen called for the two nations to pursue studies into a free trade agreement, saying trade "has an inordinate amount of potential for growth."

Their two economies are complementary, he told Chinese and South Korean business leaders at a lunch. "Korea leads in technology and management while China has plenty of labour resources and a large market."

China is already South Korea’s largest commercial partner. Trade between Asia’s second and third largest economies reached 134 billion dollars last year.

"A China-Korea FTA would be significant in the long-term development of bilateral economic trade," said Wen, who was to go on to Japan later Wednesday.

South Korea has been reluctant to rush into an FTA with China amid fears that cheap food could flood the domestic market.

But South Korean officials said they would consider starting free trade talks with China, after Seoul and Washington sealed a trade agreement last week.

The trade ministry said Wednesday that the two countries would begin their second feasibility study in June.

Wen urged Seoul to ease import barriers to Chinese products and said Beijing is also ready to open its market wider to South Korean products.

"The Chinese government highly recognises South Korea’s efforts to decrease the trade deficit with China. We are willing to open our market to Korea, and increase imports from Korea," he said.

"We must jointly try to erase barriers that affect bilateral investment and speed up efforts to facilitate more investment."

The Chinese premier called for cooperation in science and technology, saying China wants to learn from South Korea’s advanced technology.

Wen’s visit here has focused on strengthening economic and security ties.

On Tuesday he and President Roh Moo-Hyun agreed to set up military hotlines to prevent clashes in the Yellow Sea. They also agreed to cooperate in helping persuade North Korea to scrap its nuclear programme.

Chinese troops fought for North Korea during the 1950-53 war. But Seoul and Beijing have greatly stepped up economic and diplomatic cooperation since they normalised ties in 1992, when trade was worth just five billion dollars.