With the re-addition of Guatemala, the only Central American country that had previously withdrawn from the Free Trade Agreement (FTA) with South Korea and Central American nations, the FTA has reached its completion.
The Ministry of Trade, Industry, and Energy (MOTIE) announced that it formally signed the “letter of intent for Guatemala’s accession to the South Korea-Central America FTA” in Guatemala on Jan. 9. The ceremony was presided over by Alejandro Giammattei, president of Guatemala. Representing the South Korean government, Roh Keon-ki, the deputy minister for FTA negotiations at the MOTIE, also signed the agreement. On the Central American side, Mario Bucaro, foreign minister of Guatemala, and representatives from the other six countries party to the agreement signed it.
With the re-addition of Guatemala, the only Central American country that had previously withdrawn from the Free Trade Agreement (FTA) with South Korea and Central American nations, the FTA has reached its completion.
The Ministry of Trade, Industry, and Energy (MOTIE) announced that it formally signed the “letter of intent for Guatemala’s accession to the South Korea-Central America FTA” in Guatemala on Jan. 9. The ceremony was presided over by Alejandro Giammattei, president of Guatemala. Representing the South Korean government, Roh Keon-ki, the deputy minister for FTA negotiations at the MOTIE, also signed the agreement. On the Central American side, Mario Bucaro, foreign minister of Guatemala, and representatives from the other six countries party to the agreement signed it.
The recent addition of Guatemala to the South Korea-Central America FTA does not directly impact the existing FTAs with the other five Central American countries. However, even though the existing nations are not affected, they joined the ceremony together as signatories to the letter of intent, recognizing that procedures such as joint signing and ratification of the accession agreement are required for all participating countries in the South Korea-Central America FTA.
Before the signing ceremony on that day, South Korea and the five Central American countries held a joint committee meeting for the South Korea-Central America FTA. During the meeting, they adopted a resolution approving Guatemala’s accession to the FTA.
Guatemala was originally a participating country during the South Korea-Central America FTA negotiations from 2015 to 2016.
However, it withdrew from the negotiations due to disagreements, particularly related to product permissions. Subsequently, Guatemala declared the conclusion of the negotiations and its decision to join the FTA in September of the previous year, approximately two years after the renewed negotiations began in September 2019.
The effective years of the FTA with the five Central American countries, excluding Guatemala, are as follows: Nicaragua and Honduras in October 2019, Costa Rica in November 2019, El Salvador in January 2020, and Panama in March 2021.
The formal signing on this day took place following the completion of domestic procedures in South Korea and the other five Central American countries, which had been ongoing since the conclusion of the negotiations in September of the previous year. The agreement will now undergo the final ratification process in each country. The government plans to seek approval from the National Assembly within this year and aims to implement the agreement in the second half of the year.
The significance of this FTA lies in the completion of the South Korea-Central America FTA with the inclusion of Guatemala, the largest economy among the six Central American countries. In Guatemala, there are approximately 6,000 Korean expatriates and over 150 companies engaged in local operations or branch management. The FTA is expected to further strengthen bilateral trade, investment, and people-to-people exchanges between the two nations in the future.
South Korea mainly imports agricultural products and minerals, including coffee, bananas, nickel, copper, aluminum, and textiles, from Guatemala. The major items exported to Guatemala from South Korea include automobiles, textile materials, petroleum, and chemical products. Both countries have committed to eliminating most tariffs either immediately or gradually.
Guatemala will eliminate import tariffs on a total of 6,677 items, equivalent to 95.7% of its total imports. Immediate tariff removal is planned for 3,927 items, which include knitted textiles with the current tariff ranging from 0 to 10%, tires with 5 to 15%, and automotive components with 10%. For 770 items, such as tire tubes with the current tariff of 5%, fibers with 5%, and audio equipment with 15%, tariffs will be phased out within five years.
In particular, with the immediate elimination of import tariffs on raw materials imported by South Korean companies operating in Guatemala, such as knitted textiles and cotton yarn, the supply chain between the two countries is expected to strengthen further. Approximately 150 South Korean companies operating in Guatemala predominantly engage in the textile and clothing sector.
South Korea will eliminate import tariffs on a total of 11,673 items, accounting for 95.3% of the total. Immediate tariff removal will apply to 9,791 items, including cane sugar with a current tariff of 3%, roasted coffee with 8%, unroasted coffee with 2%, syrup with 3%, and cotton fabrics with 10%. Tariffs on certain fruits, such as bananas with a tariff of 30%, will be phased out over five years. (https://www.businesskorea.co.kr/news/articleView.html?idxno=209253)
