Vietnam-South Korea Trade Booms on FTA

South Korea has become Vietnam’s second-largest trade partner while the latter has climbed to the fourth place of the former's top trade list.

Trade between South Korea and Vietnam has jumped for three consecutive years since a bilateral free trade agreement (FTA) pact took effect in December 2015 as the Southeast Asian nation seeks to diversify its trade partners.

Trade between the two nations has grown at a double-digit pace for two years in a row since the implementation of their FTA. The growth was 23.8% in 2015 and 20.1% in 2016. Korea has surpassed the United States to become Vietnam’s second-largest trade partner, after China.

According to the Korea Trade-Investment Promotion Agency (KOTRA), the FTA enabled tariff reductions in the category of intermediate goods such as electronic components, semiconductors, telecom devices and displays.

Bilateral trade increased 43% year-on-year to reach $58.5 billion in the 11 months through November this year, making Vietnam South Korea’s fourth-largest trading partner, according to the Korean Ministry of Trade, Industry and Energy.

Ministry data showed that South Korea’s combined exports to Vietnam reached $43.7 billion between January and November this year, up by 48.4% from a year earlier, with semiconductors, displays, wireless communication equipment and electronic parts accounting for 46.7% of the exports to Vietnam..

Meanwhile, Korea spent $14.8 billion on imports from Vietnam, up 22.3% during the same period, mostly in wireless communication equipment, clothing and other daily necessities.

With fast-growing exports, Korea’s trade surplus with Vietnam also widened to $28.9 billion in the first 11 months of the year.

Tuan Minh / BizLIVE