South Korean exporters are expected to be among the main beneficiaries of the Regional Comprehensive Economic Partnership (RCEP) preferential trade agreement signed by 15 countries in the Asia Pacific region last month.
The agreement brings together China, Japan, South Korea, Australia, New Zealand and the 10 south east Asian nations which make up the ASEAN free trade area – Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Thailand, Singapore and Vietnam. These countries combined are estimated to account for roughly one third of the world's GDP.
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The South Korean Ministry of Trade, Industry and Energy suggested major steel and automobile exporters stood to be among the biggest gainers from the improved foreign market access that RCEP is expected to bring, adding that it will actively help domestic manufacturers make the most of the "mega trade pact".
The ministry pointed out that "amid the growing uncertainties facing South Korean exports, from the COVID-19 pandemic to rising protectionism, the RCEP will grant exporters access to new markets along with unified trade rules".
The ministry suggested the government and local businesses "need to prepare for the official implementation of the RCEP by finding prominent export goods and by coping with the changing value chain within the new trade bloc".
The RCEP agreement coincides with South Korea's "New Southern Policy" which aims to strengthen the country's strategic and economic relations with south east Asian countries.
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By GlobalDataExports to RCEP countries are expected to account for over 52% of South Korea's total steel exports in 2020 and the ministry is targeting further strong demand growth, particularly from south east Asian countries.
Hyundai Motor is currently building a full scale vehicle manufacturing plant in Indonesia the first phase of which is expected to be completed at the end of 2021.
The ministry also anticipates a sharp rise in exports to ASEAN countries such as Malaysia and Cambodia driven also by rising demand for textiles and machinery.
