FTA

FTA

Introduction to FTA introduction to FTA

What is Free Trade Agreement (FTA)?

Free Trade Agreement(FTA) is the agreement on mutually providing the exolusive trade preferences by abolishing the tariffs and trade barriers on the commodity and service trade between the countries concluding the arrangement. FTA has been mainly made between the neighboring countries or in a certain region such as EU(European Union) or NAFTA(North American Free Trade Agreement) so that it tis ussually called RTA (Regional Trade Agreement).

Status of FTA with Each Country

Economic Effects of FTA

  • The export competitiveness of Korean companies can be enahnced by abolishing or reducing the tariffs through FTA.
    → Increasing the export, production, and employment
    → Playing the role of the motive power for the growth into the world's top-notch country

Characteristics of the FTA Trade System

  • Generaliy, companies suppose that the FTA preferential tariffs are provided without any separate procedures if the FTA is made. However, in order for our companies to enjoy the FTA tariff preferences, the regulations and procedures that are required by FTA and are different from the current trade system should be observed.

Characteristics of the FTA Trade System

  • (Case 1) Importing copper from Chile without a tariff
    The company an importing copper as a raw material paid the 3% tariff before. However, it pays the 1.3% tariff by applying the Korea-Chile FTA tariff rate so that it reducess the tariff of KRW 10 million or more annually.
  • (Case 2) Exporting set-top boxes without a tariff
    Thert company b exporting set-top boxes to Norway paid th 10% tariff. However, it exports them without a tariff by using Korea-EFTA FTA so that the export size is increased by three times.