S Korea, India formalise free trade pact

South Korean Parliament today ratified its free trade agreement with India, paving the way for a cut or elimination of tariff on a number of items, including automobile parts from January.

The agreement between Asia's third and fourth largest economies, signed in August, was passed by South Korean National Assembly, the Yonhap news agency said here.

The pact, officially known as Comprehensive Economic Partnership Agreement (CEPA), is likely to help increase the bilateral trade of about $13 billion.

Under the CEPA, import duties will be reduced or eliminated on 93 per cent of South Korea's and 85 per cent of India's tariff lines.

At present, the trade is highly imbalanced in favour of South Korea, which exported $8.5 billion to India against imports of $3.9 billion in 2008-09.

India has signed a similar but more ambitious FTA with the 10-nation Association of Southeast Nations, which will also largely be implemented from January.

While South Korea needed Parliamentary approval for the pact, no such clearance is required in India where Prime Minister Manmohan Singh-headed Committee on Trade and Economic Relations and Cabinet give the political clearance to the multilateral trade pacts.