As Korea-Colombia FTA(Free Trade Agreement) was officially inaugurated on July 15th 2016, South Korea has already entered into FTA with 52 countries through 15 agreements. So now we can say that we are living in an FTA era. But we still feel that the FTA is difficult and complex. In order to make the FTA feel closer, I prepared an article to see what the Korea FTA is.
FTA is an abbreviation of "Free Trade Agreement". It is an agreement that facilitates free trade between countries by mitigating or eliminating trade barriers. If you interact with a country that has an FTA, you will be subject to customs or low tariffs.
If an FTA is agreed, not all tariffs are completely eliminated. Depending on the competitiveness of the industrial sector, they are gradually eliminating or cutting down at different times.
It is important to remember that the FTA is not a trade organization but a free trade agreement between the all different countries. As the FTA is a non-trade organization, so it is the principle of bilateral negotiations. So, the FTA that Korea concluded will have different conditions depending on the country of conclusion. I understand, FTA, it sounds difficult to you, but in fact I can understand this simple!
But one of the biggest challenges in understanding the FTA is probably due to similar and different trade terms. What is the FTA different from GATT and WTO? GATT, WTO It seems like you've heard it clearly, but how do you get confused with the FTA? Let 's look at the differences, along with some unusual trade terms that seem to be the same or different.
The General Agreement on Tariffs and Trade(GATT) is a General Agreement on Tariffs and Trade, an international organization created in 1948 with the aim of eliminating trade barriers other than tariffs. Although GATT is an international organization, the signing of the agreement is optional, which is not only a multi-faceted tool, but also has many limitations in legal dispute resolution procedures.
The World Trade Organization (WTO), the World Trade Organization, was born in 1995 to solve the limitations of this GATT. The WTO has been created to replace the GATT, and it continues to maintain the character of relief organizations to reduce or eliminate trade barriers to promote world trade. However, the WTO has overcome many of the GATT limitations, strengthened its character as an international organization, not an agreement, and has been able to cope with legal disputes more effectively.
Since GATT and WTO are international organizations, multilateral negotiation is the principle, but FTA is a bilateral agreement in principle. In addition, the WTO is an international organization of multilateralism based on the principle of most-favored-nation treatment for the all member countries. Safeguards and anti-dumping are used as major trade remedies. However, FTAs are bilateral agreements. I have a difference.
The most important difference between the FTA and the GATT, WTO is that it is a trade agreement between individual countries, not an international organization.
I have just said that one of the features of the FTA is that it uses origin verification as a major trade remedy. In order to be eligible for the tariff concession of an FTA, the country of origin determination criteria must be met. Even if it is imported from an FTA country, if it does not meet the criteria for determining the origin, it will not be covered by the FTA concession tax rate and will be subject to the basic tax rate or elasticity tax rate. In fact, origin is very important.
In other words, if you can not keep the criteria of origin in the FTA, you do not get FTA benefits. Even if an FTA is concluded, it is a reasonable trade agreement, not a tariff benefit indiscreetly.
So far, I have reviewed what the FTA is about. FTA is simple concept but it is practically complicated. Regardless that, I hope that this article help you to understand Korea FTA!