Approved a free trade agreement between Israel and South Korea - First with an Asian country

South Korea's parliament approved a trade agreement with Israel and it is expected to enter into force in December. This is Israel's first free trade area agreement with an Asian country. With the entry into force of the agreement, mutual tariff reductions will apply to imported and exported products, alongside the improvement and facilitation of trade in a variety of other areas such as services, investments, and standardization.

The agreement will give Israeli companies a competitive advantage in the Korean market and is expected to increase and diversify Israeli exports to Korea, as well as encourage the attraction of Korean investments in the Israeli market.
The Minister of Economy and Industry, Orna Barbibai said: "This is significant news for relations between Israel and Korea, which is one of the world's leading economies and an important trading partner of Israel. Israeli exporters will benefit from the mutual trade facilitation and a competitive advantage, and I predict that additional importers will recognize the potential and increase the volume of imports and the variety of products to Israel, thereby allowing the Israeli consumer a significant discount on a wide range of products included in the agreement. I congratulate the Foreign Trade Administration for its professional and continuous work in formulating the agreement."
The Foreign Trade Administration at the Ministry of Economy and Industry led the negotiations on the agreement in cooperation with the Ministries of Foreign Affairs, Finance, Agriculture, Communications and Law, as well as the Population and Immigration Authority, the Customs Administration and the Competition Authority. In August 2019, the countries announced the end of negotiations on the agreement and in May 2021, the agreement was signed in a solemn ceremony in Seoul, the capital of South Korea. Now, after the ratification of the agreement, it is expected to officially enter into force on December 1, 2022.
As a result of the entry into force of the agreement, over 95% of Israeli exports to Korea will be duty-free, a move that is expected to lead to increased competitiveness of Israeli companies exporting to Korea. In the list of products on which a benefit in customs will be given when exporting from Israel to Korea, it is possible to name machines and electrical equipment, mechanical machines and devices, fertilizers, medical equipment, cosmetics, plastic and its products, metals as well as fruit juices and wine. On the other hand, tariffs have been lowered on products imported from South Korea to Israel, including: cars and their parts, industrial refrigerators, medical equipment, electronic components, toys and games, plastics and its products, and chemicals.
The volume of trade in goods and services between the countries in 2021 was approximately $3.5 billion, an increase of approximately 35% compared to 2020. From this figure, the export of goods and services from Israel to South Korea in 2021 reached over $1.5 billion, an increase of approximately 42% Compared to 2020. South Korea currently has 18 trade agreements in force with various countries and trade blocs, led by the USA, the European Union, India and China. The agreement between Israel and Korea will help to compare Israel's trade terms with these countries - and with the entry into force of this agreement, Israeli companies will benefit from similar trade and competition conditions in the Korean market.