SEOUL, South Korea – South Korea’s parliament on Monday approved a free trade pact with China after opposition lawmakers secured a $1.4 billion relief package for farmers.
The ratification, which comes five months after the trade pact was signed, paves way for the deal with South Korea’s largest export market to take effect this year. South Korea already has trade deals with the European Union and United States.
Lawmakers passed the deal after agreeing to spend 1.6 trillion ($1.4 billion) won over the next decade on tax breaks and other aid for farmers and fishermen.
The main opposition party was against ratifying a deal that would hurt agriculture and fisheries. Both industries feared greater competition from less expensive Chinese imports.
To further appease concerns about the deal’s impact, lawmakers agreed to seek donations to establish a 1 trillion won fund for the agriculture and fishing industries over the next decade.
Once put into effect, the deal would eliminate tariffs on $42 billion of South Korea’s imports from China and on $73 billion in South Korean exports to China. Eventually, it will remove tariffs on more than 90 per cent of goods. Autos and rice remain protected.
South Korea’s government said the deal would create about 54,000 jobs over the next 10 years and bring other economic benefits, such as boosting sales of fashion items, cosmetics and electronics goods made by small-and-medium Korean companies in the Chinese market.
South Korea, Asia’s fourth-largest economy, has been struggling to boost exports, which sank 16 per cent in October from over a year earlier, the biggest drop in six years.
Earlier in November, South Korean President Park Geun-hye and Chinese Premier Li Keqiang agreed during their meeting in Seoul to work toward ratifying the deal by the end of the year.
South Korea was China’s fourth-largest trading partner in 2014 after the U.S., Hong Kong and Japan.