China and the World

Showing patience

South Korean trade pact overshadowed by MERS outbreak

Airport staff stand by to wait for arriving passengers to conduct a temperature check at Hong Kong Airport in Hong Kong

On high alert in Hong Kong

When the SARS (Severe Acute Respiratory Syndrome) outbreak was at its worst in 2003, 127 countries had imposed some sort of restrictions on travel from China. South Korea wasn’t one of them. Former South Korean President Roh Moo-hyun then visited Beijing less than a month after the World Health Organisation lifted the travel alert on the Chinese capital.

Beijing is returning the favour 12 years later. As of Wednesday, the MERS (Middle East Respiratory Syndrome) virus had claimed nine lives in South Korea. Another 13 people had contracted the virus and nearly 3,000 remain quarantined. Yet the Chinese authorities haven’t advised against travelling to their east Asian neighbour. (In contrast, Hong Kong issued its first-ever formal advice against trips to South Korea on Tuesday.)

China has already reported its first MERS case: a South Korean man, who was supposed to have been under medical surveillance, but instead boarded a plane to Hong Kong, and subsequently caught a bus to Huizhou in Guangdong province.

South Korea is one of the most popular destinations for Chinese tourists. Last year more than 6 million Chinese visited, while 4.2 million South Koreans made the opposite journey.

One unintended consequence of the MERS outbreak, says the Korean Herald, could be slower adoption by Korean legislators of a landmark free trade agreement (FTA) which has just been signed with the Chinese. Representatives of the two countries inked the pact at a ceremony last week in Seoul. But approval from South Korea’s legislature is still needed to seal the deal. “MERS and other current affairs top our priority list as of this moment. I haven’t heard any major discussion on the free trade deal taking place right now,” New Politics Alliance for Democracy spokesperson told the newspaper.

The Korean FTA is the biggest bilateral deal that China has signed to date. Under the pact South Korea will eliminate tariffs on 92% of Chinese exports over the next 20 years. In return the Chinese are set to scrap import duties on 91% of South Korean goods.

Critics of the deal are focusing mostly on the timeframes. Xinhua notes that other FTA arrangements have tended to eliminate tariffs within five years of an agreement being signed. But in this particular case the window has been lengthened considerably to “reduce possible damage to the farmers and industries of both countries”.

That said, the free trade pact could serve as a launchpad for China to entice other Asian countries into similar agreements, most notably the Japanese, where discussion on a trilateral deal with China and South Korea has been taking place at the same time.

Meanwhile the Nikkei newspaper says the South Korean FTA won’t have much impact on Japan’s trade with China, because car exports to the Chinese market – where Japanese firms compete fiercely with the South Koreans – are excluded from the new accord.

Still, the mood in China is much more upbeat. State broadcaster CCTV notes that Chinese manufacturers that rely on Korean imports of lithium batteries and LCD parts (about 60% are imported from South Korea) will achieve significantly lower production costs, while prices for popular Korean consumer goods like cosmetics and fashion items are also likely to fall.

There’s even better news for narcissists: plastic surgeons with Korean licences will be able to work in China for six months of the year.

But it’s kimchi which looks set to be one of the first Korean imports to get the benefit of duty-free treatment in China. That may help to avert the rather embarrassing trade deficit that the Koreans have been running with the Chinese over their traditional dish (see WiC282). Consumption of the pungent pickles was one of the reasons given by the South Koreans for why their collective immune system seemed capable of fending off the worst of the SARS outbreak in 2003. MERS looks to be more kimchi resistant…

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