South Korea and China to discuss liberalizing service and investment sectors

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Hankyoreh | 28 November 2017

South Korea and China to discuss liberalizing service and investment sectors

By Cho Kye-wan

Second round of negotiations likely to be announced during next month’s summit.

Two years after the South Korea-China FTA took effect, the two countries are expected to launch a second round of negotiations to further open up the service and investment sectors.

According to a diplomatic source in Beijing, the beginning of the second round of negotiations will be announced during the South Korea-China summit that will be held in China in the middle of next month.

“Dec. 20 will mark two years since the South Korea-China FTA took effect. The president’s visit to China is right before the deadline [for initiating follow-up negotiations]. The start of the second round of negotiations will be announced during the summit,” the source said. The two sides specified in the agreement that they would launch follow-up negotiations in the service and investment sectors within two years of Dec. 20, 2015, when the agreement took effect, but China’s continuing ambivalence about those negotiations has prevented them from beginning.

The South Korea-China FTA did much less to liberalize and open up the service and investment sectors than the commodity sector. South Korea initially aimed for major liberalization of the service sector using the negative method (liberalizing everything but the listed items) but China successfully pushed to limit the items being liberalized using the positive method on the understanding that they would be increased later. The subjects for liberalization in the investment sector appear in the agreement in the form of a negative list, but this only included a clause for protecting investment without the list of reservations to liberalization (which place limits on foreign investors’ share in items being liberalized).

“We have been asking China to launch the follow-up negotiations in the service and investment sectors since last year, but the Chinese have been putting us off without giving a clear response. Now we’re planning to expand liberalization in the service sector through the negative method and to produce a comprehensive list of reservations in the investment sector that covers services and commodities,” a senior South Korean government official said.

“Aside from the service and investment sectors, we aren’t considering the option of dealing with the commodity sector in the second round of negotiations,” the official added.

“The level of liberalization in the South Korea-China FTA is rather low. Since the manufacturing industry accounts for 40% of the Chinese economy and the service sector for 60%, opening up the Chinese service sector is important for South Korean companies,” said South Korean Trade Minister Kim Hyun-chong during a meeting with reporters on Sept. 13.

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source: Hankyoreh