South Korea and Indonesia have reached a preliminary trade deal equivalent to a free-trade settlement but also including broader economic cooperation. The settlement is expected to help inflate trade between the two nations by practically 50% by 2022.
The step is part of South Korea’s on-going efforts to expand exports in the area and comes after a five-year break from discussions between the two countries. Under the agreement, South Korea and Indonesia will eliminate tariffs on 95.5% and 93% of products, respectively. Tariffs on steel, automobiles, auto parts, and synthetic resin will probably be removed, allowing South Korean exporters to boost supply into Indonesia, however, many agricultural products are not going to be included to protect South Korean farmers.
Indonesia’s exports to South Korea include coal, copper, rubber, and tin. The tariffs are anticipated to expedite the export of Indonesia fish and beer further.
The tariff cuts are more than 90% and 80% in existing free trade settlement between South Korea and ASEAN member nations. They’re anticipated to be managed in the first half of 2020.
Trade volume between South Korea and Indonesia stood at $20 billion last year, up from $17.9 billion in 2017, according to South Korean government data.
South Korea’s exports dropped 11.7% year-on-year to $44.7 billion in September, part of a drop that has been experienced this year because of weak prices of semiconductors and the trade conflict between the U.S. and China.