The signing of the trade agreement is scheduled for late February, a measure that bodes well for improving access to Korean high-tech products and increasing agro-exports from Central America.
The report affirms that “…In exchange for preferential market access to Korea’s high-tech manufactured goods, El Salvador and its Central American neighbors’ key commodity exports will gain preferential access to South Korea, the world’s ninth-largest importer. The agreement comes after more than two years of negotiation and legal review between the region and Korea, and although 90% of goods traded between Central America and Korea were negotiated on a regional basis, a handful of bilateral provisions penciled into the agreement will uniquely benefit El Salvador.”
“… El Salvador’s raw sugar exports will be able to enter the Korean market free of import quotas or tariffs, a key benefit for a sector that comprised 3.5% of exports through November 2017. Rules-of-origin provisions have remained strong for El Salvador’s textile sector, with the agreement defining that neither El Salvador nor Korea can export to the other textile goods not made entirely within their domestic boundaries.”
“… Although trade with Korea has been relatively limited historically, the agreement has the potential to create stronger trade relations and export opportunities, as has been the case with previous trade agreements by the Central American Free Trade Agreement (CAFTA) bloc. Exports from Central America to Korea have historically been dominated by Panama and have declined in recent years (see Exhibit 1). In 2016, the CAFTA countries exported about $550 million to Korea, or 1.8% of all the bloc’s exports to the world, down from a high of 7.2% in 2009.”
See report “Credit Outlook” by Moody’s.