NZ, Korean officials head for FTA talks, Yonhap reports

New Zealand and South Korean officials are holding free-trade talks in Seoul for the next two days, amid hopes a deal can be concluded, the Yonhap News Agency reported.

The talks, scheduled for Wednesday and Thursday in Seoul, are the ninth round of talks aimed at concluding a free trade agreement, Yonhap reported, citing a statement from the South Korean government's Ministry of Trade, Industry and Energy, or MOTIE.

Prime Minister John Key said before the general election on Sept. 20 that conclusion of a Korea FTA was "close."

A spokesperson for New Zealand Trade Minister Tim Groser said today "these talks, as with previous others, are important in bringing the negotiations closer to conclusion."

The new round of trade talks comes two months after officials ended their eighth round of talks in Seoul on Aug. 8 where they failed to agree on goods market access, with MOTIE noting at the time that the two countries agreed they could finalise the negotiation if they find a compromise on the key issues of goods. Seoul officials said there was disagreement over the level of market opening for the countries' agriculture and fishery markets, according to Yonhap.

"The two sides have agreed to work toward narrowing their differences on all remaining issues, including products, country of origin and cooperating, acknowledging a mutual need to conclude the Korea-New Zealand FTA talks at an early date," the Korean ministry said in a statement, according to Yonhap.

South Korea's Trade Minister Yoon Sang-jick told reporters last month that one more round of negotiations with New Zealand may be enough to secure an agreement, Yonhap said.

South Korea is New Zealand's fifth largest trading partner, with total trade last year worth $3.59 billion, according to New Zealand's Ministry of Foreign Affairs & Trade. It is the country's fourth-largest source of foreign students and seventh largest source of overseas visitors.

New Zealand exporters pay an estimated $229 million in Korean tariffs each year, and the talks begun in 2009 have previously stalled amid Korean concern about the impact of New Zealand agricultural exports, according to MFAT.

Tariff elimination on agricultural products remains a challenge with New Zealand arguing that it doesn't compete with sensitive Korean production, given the country provides only about 3 percent of Korea's total agricultural imports, doesn't produce rice, is counter-seasonal, doesn't export fresh milk and produces grass-fed beef, according to MFAT.

An FTA between the two countries would be complementary, adding US$4.5 billion to New Zealand's GDP and US$5.9 billion to South Korea between 2007 and 2030, according to a report by the New Zealand Institute for Economic Research and the Korean Institute for International Economic Policy.

FTA negotiations with South Korea are the most pressing trade issue for the meat industry, the Meat Industry Association said in its 2014 annual report.

"With Australia and Canada both finalising their agreements with Korea during the year, if New Zealand does not secure its agreement shortly, there is the risk that the New Zealand meat exporters will very soon be at a major commercial disadvantage in this important market," the association said.

While the 2012 FTA between South Korea and the US gives the US a tariff advantage, New Zealand's grass-fed product reaches a different market than the US grain-fed product, the association said.

"Losing the ability to compete on a level playing field with Australia could increase New Zealand's strategic reliance on China, and remove what has recently been a top five export market," the association said. "It is imperative that a deal be concluded as soon as possible."

(BusinessDesk)