South Korea and Mercosur agreed to begin formal negotiations for a trade deal in the latter half of this year to facilitate commerce and investment, the Seoul government said on Friday. South Korea signed an agreement to launch the negotiations with four Mercosur member states -- Brazil, Argentina, Paraguay and Uruguay -- during a ceremony held in Seoul. Mercosur expelled Venezuela in 2016 for failing to meet its basic standards.
This represents a significant step toward deepening the important relationship between the Mercosur Member States and the Republic of Korea, the joint statement said, referring to South Korea's official name. Strengthening ties through enhanced trade and investment flows is an expression of our shared interest in prosperity and shared commitment to trade liberalization and open markets.
The Korean government expressed hope for expanding its trade network in countries in the fast-growing part of Latin America.
If the trade deal is struck, South Korea is expected to expand its FTA network beyond North America and Central America, the Ministry of Trade, Industry and Energy said. It is expected to boost South Korea's exports of auto, auto parts and electronics to Mercosur member states.
South Korea exported US$6.6 billion worth of goods to Mercosur states in 2017, up 20.6% from a year earlier, mostly electronics parts and autos. The nation imported US$4.52 billion from Mercosur purchasing agricultural products and steel.
Mercosur has a total population of 290 million people, and its economic size is estimated at US$. 2.7 trillion, and accounts for 45% and 52% of the South American population and GDP.
South Korea has been widely focusing on expanding free trade agreements (FTAs) with many economies since 2003, when it first signed an FTA with Chile. Currently it has FTAs with world economic powerhouses: European Union, United States and China, including the latest FTA with six Central American countries.