[Ferro-Alloys.com] Korea and China have initialed their free trade agreement, the Ministry of Trade, Industry and Energy said on Feb 25th. 

Assistant Trade Minister Woo Tae-hee told reporters that Seoul and Beijing will formally sign the trade pact in the first half of this year and ensure it is approved by the National Assembly to go into effect this year.

Under the deal, products manufactured at the joint-Korean Kaesong Industrial Complex will be labeled as made in South Korea when exported to China. 

Beijing will also scrap a regulation requiring foreign companies that win project orders from the Shanghai Free Trade Zone to have a majority stake of at least 50 percent in a company in the zone.

The agreement revealed Wednesday contains some new details such as specific tariff abolition dates for individual products. 

China will scrap tariffs on 91 percent of Korean-made imports worth US$141.7 billion within the next 20 years. Chung In-kyo at Inha University said the updated agreement contains clauses that are more "advantageous" to Korean businesses than the previous draft.

However, a closer look at the agreement shows a large number of Korea's flagship products have been left off the list of goods for tariff cuts. This could result in a negative impact on Korean businesses.

They include OLED panels, rechargeable batteries and color TVs. Samsung and LG are the dominant players in those industries. 

And LCD panels made in Korea will benefit from tariff cuts only nine years down the road, or in 2024 if the FTA goes into effect this year.

One industry source said, "Considering how fast Chinese display makers are catching up, a tariff cut will be meaningless nine or 10 years from now."

These concerns were raised in November last year when the two sides announced the end of prolonged negotiations. Other popular Korean products have been left out of the tariff-cut list too, including personal care products, ship engines, automotive steel plates and other high value-added goods.

Chung said Seoul "ceded them in return for protecting farmers" by keeping agricultural tariffs in place.

• [Editor:Yueleilei]