CEPA will be India's second ecoomic agreement and seventh for Korea, and its strategic vision and goal will be the same for both countries. Through the effects of CEPA, Korea wants to grow as the economic and logistic hub in East Asia, and India wants to diversify its trade partners from traditional Western countries to Asian countries. While trade between Korea and India has continously improved, there was a problem of imbalance. The Korean imports from India traditionally consisted of low value added items slowly shifting to industrial products while Korea's exports to India were high value added products - brands like LG, Samsung and Hyundai have a huge presence in India.
Witthis new agreement, which took three years and six months of negotiating, Korea has abolished the import tariff of 93% on Indian imports and India has done the same on 75% of Korean imports. Besides, the agreement would increase the interactive trade account as it includes investment in various sectors like goods, services and even interllectual property. It will thus have a ripple effect in diverse fields.
Korea can now expect increased diversity and investment effects not only for large companies, but also for small and medium sized ones. Famous economic experts are of the opinion that the lack of a strong presence of small and medium sized firms is one of the weak points in the Korean economy. The abolition of tariffs between the two countries will help these companies advance into the global market through the huge Indian market consisting of 1.2 billion people.
SungHan LEE, a vice minister of the Ministry of Strategy and Finance, recently said, ``With CEPA, small Korean exporters will have price competitiveness in the Indian market.'' For example, in the case of automobile parts, the tariff will be cut down from the current 12.5 percent to between 1 and 5 percent in 8 years, and export tariffs on steel will reduce by 50 percent in 10 years, while the general tariff on steel will be phased out in 5 to 8 years. The effect will be an increase in exports of raw industrial materials to Korea.
According to the KIEP, due to the CEPA agreement, it is expected that the trade account between the two countries will increase by 3.3 billion dollars, and Korea's GDP will increase by approximately 1.3 trillion won.
As these facts show, CEPA, which is now in its initial stage, is expected to improve the relations between the two countries and bring unprecedented economic growth. As the two countries welcome the new agreement, farsighted policies and investment based on prudent decisions are essential. It will contribute to the stable industrial structure that will help small and medium companies with high-end technology and open management expand into the gloabl market.
With CEPA, Korea and India will break the existing trade barrier and not only will they open up the global market for small and medium companies with strong technology and transparnet business management, they will also form a safe industrial structure. The countries will develop their industries together. Ten years from now, I expect to see not only the expansion of their bilaterial trade to a greater height, but also a solid friendship like no other in the world.
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