Israel and South Korea signed a free trade agreement to improve bilateral trade by reducing customs duties and providing safety nets on investments. Bilateral trade between the two countries was $2.4 billion in 2020, two-thirds of which were goods and services imported into Israel. There are expectations that the deal could increase trade to over $3 billion.
Impacts of the Trade Deal
This trade deal is the first for Israel with an Asian partner and vice versa. It will likely affect more than 95% of exports between the two.
Israeli exports to South Korea include machinery and electrical equipment, mechanical devices, fertilizers, medical supplies, cosmetics, plastic products, metals, fruit juice, and wine. As part of the agreement, Israel will eliminate tariffs on semiconductor manufacturing equipment, which is Israel's largest export to South Korea. Furthermore, the agreement will eliminate those on applied electronics (Israel's second-largest export to South Korea) within three years.
On the other hand, South Korean exports to Israel include vehicles and vehicle parts, refrigerators, medical equipment, electronic components, toys and games, plastic products, and chemicals.
Before the deal, South Korean cars and relative tools had tariffs of 7% and 6-12%, respectively. Since both countries finalized the agreement, they will cancel these tariffs, which is a boon for South Korean commodities to Israel. Automobile products accounted for 46.9% of South Korea's exports to Israel in 2020. Car brands Hyundai and Kia have a 33% share of the Israeli car market.
During the signing of the free trade agreement, the two countries also used the opportunity to amend the Korea-Israel Technological Cooperation Treaty. The amendments doubled the amount invested by each government in the Korea-Israel Industrial R&D Foundation (KORIL-RDF) from $2 million to $4 million. They also opened research and development programs to more universities and research institutes. Israel is thus actively seeking to sign similar deals with China, Vietnam, and India.
Learn More with EXIMA News
EXIMA News is committed to making international trade easy and ensuring our users have all the necessary information they may need to trade confidently. Take a look at our News Page to learn more about current events today!