The Kaesong Industrial Complex and FTAs

 

Since taking an international trade class at Wellesley this year, I found myself paying more attention to trade-related news, especially businesses between the two Koreas. It wasn’t all that unapproachable and boring as I thought it would be before taking the class; now that I understand some of the terms and basic concepts behind international trade, reading about current events became a lot more enjoyable. One of the news items that caught my eye recently was the Kaesong Industrial Complex and its status in the Korea-China FTA.

Last month, South Korea and China started their process of free trade agreement (FTA) negotiations. China, which is currently South Korea’s largest trading partner, obviously has a great impact on Korea’s economy. In this sense, the decision to give preferential tariff on goods produced in designated outward processing zones (OPZ)* such as Kaesong Industrial Complex as part of the Korea-China FTA carries significance. This acknowledgement means that items partially or wholly produced in Kaesong by South Korean businesses would be categorized as South Korean in origin. This is meant to offer bigger business opportunities for corporations, which will contribute to peace between the two Koreas. Continue reading