South Korea and Pakistan are likely to announce negotiations to clinch a free trade agreement (FTA) soon, according to a source familiar with the issue, The Korea Times reported on Sunday.
The Pakistani trade minister will visit Seoul this week to discuss the matter with his Korean counterpart, he told The Korea Times on condition of anonymity because he was not authorised to speak to the media regarding the issue.
If the two sides reach an agreement on details, he said, they would be able to announce the beginning of the talks shortly. Experts say the trade pact, if signed, will be a win-win for both countries. For instance, Pakistan faces steel production shortages, while Korea has been dealing with a production glut, they said.
Pakistan’s demand for steel is nearly 7 million tons per year. Due to the limited domestic steel production, a recent Korea Trade-Investment Promotion Agency (KOTRA) report said that the Southeast Asian country imports 3.5 million from foreign countries.
China is one of the largest steel exporting countries to Pakistan. The China-Pakistan free trade pact went into effect in 2007, facilitating steel trade.
As Korea has been facing a steel production glut as a result of production increases in Korea and China, it strove to find a new overseas market. The Korean government has aggressively pursued signing of the free trade pacts with foreign countries because the economy is heavily reliant on trade.
Some industry experts say the strategy has helped Korea achieve positive economic growth even during the global recession following the financial crisis that began in 2008.
Since April 2014 when the Korea-Chile trade pact went into effect, Korea has finalised free trade pacts with 16 countries, including the European Union. Of them, 11 pacts took effective. Four free trade pacts, including the Korea-China FTA, are waiting for the implementation as domestic procedures, including the parliamentary ratifications, are not finalised.