Jakarta. ASEAN is currently in the process of upgrading its existing free trade agreement with dialogue partner South Korea, according to Satvinder Singh, the deputy secretary-general for ASEAN Economic Community.

Singh revealed that two-way trade totaled almost close to $200 billion in 2021. These figures made South Korea ASEAN’s fifth-largest trading partner. In 2021, foreign direct investment inflows from South Korea in ASEAN reached $7.1 billion. And an upgraded free trade agreement is expected to pave the way for stronger economic ties.

“Many other free trade agreements between ASEAN and other dialogue partners, including Korea, are in the pipeline for upgrade and review,” Singh told the 2023 ASEAN-Korea Trade & Investment Roundtable on Wednesday.

“As we are negotiating some of these upgrades, where we would like to see the innovations that come in supporting our region-to-region, [as well as the] strengthening of our global supply chain. This is an area where many Korean conglomerates are looking to diversify from their current operations in Asia, North Asia,” Singh said.

Singh expressed ASEAN’s readiness to help South Korean firms to not only reorganize their global supply chain for diversification but also to have a low carbon footprint.

In 2005, ASEAN and Korea inked the Framework Agreement on Comprehensive Economic Cooperation. This led to the signing of four key agreements, including a deal on progressive tariff reduction and elimination, that became the legal instruments for the ASEAN-Korea Free Trade Area (AKFTA). The AKFTA came into effect in 2010. 

The 10 ASEAN member states and South Korea are also signatories of the Regional Comprehensive Economic Partnership (RCEP) agreement. This is the world’s largest trade deal, with its signees representing about 30 percent of the global gross domestic product (GDP). The RCEP will ultimately remove 90 percent of the trade tariffs between its signatories within 20 years of coming into force.

Trade between ASEAN chair Indonesia and South Korea are also on the rise. 

Indonesia-South Korea trade rose from $18.4 billion in 2021 to $24.5 billion a year later. Indonesia has also forged a comprehensive economic partnership agreement with Korea, better known as the IK-CEPA. 

The IK-CEPA removes 95.5 percent of South Korean tariffs. Under this agreement, Indonesia has agreed to eliminate 92 percent of its tariff posts.