Three years after the start of the negotiations, China and South Korea have officially signed a new free trade agreement. On June 1, 2015, China and South Korea signed a free trade agreement that came into force on December 20, 2015.   The governments of China, South Korea and Japan are expected to begin negotiations for a possible trilateral free trade agreement between the three countries in 2012, first concluding bilateral agreements. An Introduction to Tax Treaties Across Asia In this issue of Asia Briefing Magazine, we examine the different types of trade and tax agreements that exist between Asian nations. These include bilateral investment agreements – somewhat outdated, but still the main priority of bilateral trade between many small emerging economies – as well as more fleshy double taxation agreements and free trade agreements that directly affect businesses operating in Asia. Although China and South Korea have other free trade agreements on their books, this agreement is of unique importance. China is already South Korea`s largest trading partner and Seoul expects the agreement to produce one-off dividends across trade relations. The free trade agreement with South Korea is also China`s largest of its kind in terms of trade volumes. Chris Devonshire-Ellis is the founding partner of Dezan Shira Associates – a specialized foreign direct investment practice that provides multinational companies, business advice, business advice, tax and compliance consulting, accounting, payroll, diligence and financial investigation services for multinationals investing in emerging Asia. Since its inception in 1992, the company has become one of Asia`s most versatile full-service consulting firms with operating subsidiaries in China, Hong Kong, India, Singapore and Vietnam, as well as alliances in Indonesia, Malaysia, DenPhilippinen and Thailand, as well as liaison offices in Italy, Germany and the United States.
For more information, please email firstname.lastname@example.org or visit www.dezshira.com. In January 2012, the South Korean and Chinese presidents announced that they were moving towards negotiating a bilateral agreement between the two countries. In March 2012, the three countries concluded an investment agreement between them, seen as a step towards a broader free trade agreement. In May 2012, China and Korea held their first round of negotiations for a free trade agreement in Beijing. The agreement will eliminate tariffs on 71 percent of South Korean exports to China within 10 years and 91 percent in 20 years. In exchange, Seoul will eliminate tariffs on 79 percent of Chinese imports in 10 years and 92 percent in 20 years. In fact, with respect to this free trade agreement, China was in a rather strange place with South Korea. The draft treaty between China and Japan and South Korea came to a halt following disagreements with Japan over the controversial islands. It should also be noted that the recently signed free trade agreement applies only to mainland China. This is not Hong Kong, which maintains its own agreements, including a double taxation agreement with South Korea, signed at the end of last year. Seoul has not been able to include Kaesong-made products in free trade agreements with the United States and the European Union.
The agreement was reached more than six months ago, in November 2014. On the sidelines of the APEC meeting in Beijing, Xi and Park announced that negotiations were over for an agreement that would ultimately remove tariffs on 90% of goods traded between China and South Korea. Now that it has been formally signed, the free trade agreement is expected to enter into force this year, once both lawmakers have approved it. In her letter to Xi, Park called the agreement a „historic milestone in countries` efforts to deepen their strategic cooperation partnership,“ according to Yonhap News. Similarly, Mr. Xi hailed the free trade agreement as a „monumental event“ that „results in