New Zealand – Korea FTA Feasibility Study

A joint independent study into the possible benefits of a Free Trade Agreement (FTA) between New Zealand and the Republic of Korea (Korea) was completed in December 2007.

The resulting report, entitled ‘Benefits and Feasibility of a Korea – New Zealand Free Trade Agreement’, is the product of joint research by the New Zealand Institute of Economic Research (NZIER) and the Korean Institute for International Economic Policy (KIEP).

The research found that an FTA would offer economic benefits to both countries. Other findings included:

• New Zealand and Korea are two of the most complementary economies in the Asia Pacific region. New Zealand’s main exports to Korea are raw or intermediate materials (e.g. logs, beef, kiwifruit and aluminium), while Korea largest exports to New Zealand are manufactured goods (e.g. electrical equipment, cars and machinery).
  
  
  
• The report shows that New Zealand and Korea would enjoy economic gains from trade liberalisation, the reduction of non-tariff barriers, and from dynamic productivity improvements.
  
  
  
• An FTA would help to avoid trade-diversion costs for New Zealand and Korea in each other’s markets, given the number of other FTAs each has negotiated;
  
  
  
• An FTA would support the growth of bilateral services trade and investment;
  
  
  
• Overall, the research indicates that a New Zealand - Korea FTA would increase real GDP by US$5.9 billion for Korea and US$4.5 billion for New Zealand over the 2007-2030 period.