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THE INVESTOR

Economy

Eyes on Korea-China FTA meeting amid THAAD tension

  • PUBLISHED :January 12, 2017 - 18:08
  • UPDATED :January 12, 2017 - 18:08
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[THE INVESTOR] South Korea and China are scheduled to hold the first meeting of the free trade agreement joint committee on Jan. 13, amid increasing trade sanctions imposed by China seen as retaliation for South Korea’s decision to deploy a US Terminal High Altitude Area Defense anti-missile battery in June. 

The meeting, held for the first time since the FTA went into effect in December 2015, will discuss the current issues on bilateral trade and progress made under the FTA. But with unprecedented trade issues emerging recently, attention is being drawn to whether the meeting will discuss the recent ban on cosmetics and other trade issues. 


Yim Jong-yong (right), chairman of the Financial Services Comission, talks with Zhin Woong-seop, governor of the Financial Supervisory Service, during a joint session of top officials vowing close cooperation on risk management in a year of uncertainties in Seoul on Jan. 12. The two are key players in South Korea's financial authorities but have often faced concerns that their duties overlap and their work lack synergy. Yonhap


Earlier this week, local media reported that the General Administration of Quality Supervision, Inspection and Quarantine of China released a list of food items and cosmetics banned as imports. Nineteen out of 28 cosmetics included in the list were South Korean cosmetics in November. A total of 11 tons of products were returned due to the ban, fanning fears over China’s economic retaliation over the planned THAAD deployment. 

“We would like to deliver the concerns of Korean companies doing business with China and hear opinions of Chinese counterparts,” an official from the Ministry of Trade, Industry and Energy said on Jan. 12. 

“But the issue of banning cosmetics is not included as an official agenda item, as the issue emerged at the last minute,” the official said. 

The trade industry had Wednesday said it would bring up the issue at the meeting if it is found to be an unfair measure. “Via phone interviews, we concluded that the cosmetic companies did violate Chinese regulations.” 

The Ministry of Food and Drug Safety on Wednesday also announced that the 19 products violated regulations of China’s inspection regulations such as insufficient certificates or not meeting requirements by the Chinese regulations. “As the volume of cosmetics shipments increase, so have inspections and disqualifications,” an official from the MFDS said. “It is too early to tell if the banning was linked to any political dispute. 

China has never admitted that it is taking measures against Korean companies as part of retaliation for THAAD and is likely to reiterate that the measures are in line with their regulations and laws, making negotiations difficult. 

“Businesses are helpless and want the government to take some kind of action,” a China business expert said on condition of anonymity. “When China tightens up the enforcement of their regulations suddenly and says it is in accordance with their regulations, there is nothing much we can do about it.” 

Other trade sanctions include banning K-pop and Korean TV dramas from Chinese television. The Chinese government launched a massive tax investigation and safety inspection on Lotte’s businesses in China.  Ion-batteries made by Samsung SDI and LG Chem, South Korea’s leading electric vehicle battery makers, were excluded from the list eligible for government subsidies in China, dampening the companies’ business prospects in the world’s largest electric vehicle market. 

China has strengthened its visa issuance process starting from Jan. 1 and the Chinese aviation authority declined a request for unscheduled charter fights on eight different routes to South Korea in January and February. The airlines applied for flights in December in order to cater to growing demand during the seven-day of holidays for the Spring Festival, which falls from Jan. 27 to Feb. 2.

By Park Ga-young/The Korea Herald (gypark@heraldcorp.com)
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