1. The effectuation of the Korean-Chile FTA a year ago on April 1, 2004, has reaped successful results that 
have exceeded many expectations. Korea’s Chile-bound exports, which consist mostly of industrial products, 
have increased 58.6% in the past 11 months, more than double the rate of increase in Korea’s overall 
exports. In contrast, neither the rise of Chilean imports of agricultural goods nor the negative impacts 
resulting from it were greatly significant, and the country as a whole is experiencing concrete gains as a 
result of the FTA.

2. The Ministry of Foreign Affairs and Trade (MOFAT) has reported that since the effectuation of the Korea-
Chile FTA last April, the bilateral trade amounted to 2.49 billion dollars as of last February, up 55% from 1.6 
billion dollars at the same time last year. This development is commendable in that it exceeds double the 
25% increase rate of Korea’s overall trade over the past 11 months.

3. The export of mobile phones, color TVs and camcorders has doubled or tripled as well. In particular, the 
mobile phone market has jumped 225.7% to the export amount of $70 million, exceeding the overall 
increase of 33.8% by 6 times. On the other hand, the relatively low increase in export rates of washing 
machines and refrigerators, which were excluded by the Chilean authorities from tariff elimination in 
correspondence to the exclusion of certain agricultural products by the Korean side during the negotiation 
process, 36% and 16.2% respectively, clearly attest to the effectiveness of the FTA in improving exports.

4. Imports have also increased greatly by 54.3%, but according to MOFAT, this is due to a large increase in 
import amount resulting from the sudden rise in the international market price of copper products, which 
occupy 75% of the total imports from Chile. Copper products are used as raw materials in manufacturing 
various products that are not consumption goods, and since Korea relies entirely on import for copper, this is 
unrelated to the domestic industry.

5.  Imports of Chilean wine and pork have also increased greatly, recording a growth of 151.6% and 64%, 
respectively, from last year. A growing interest in health and living standards most likely contributed to 
consumers’ interest in Chilean wine, in addition to an increase in the demand for wine. MOFAT stated that 
the tariff on Chilean wine will be eliminated over a period of five years, and at present, is only 2.5% lower 
than the tariff on wine from other countries. Therefore, in spite of the small tariff reduction effect, the sudden 
increase in the market occupancy of Chilean wine within Korea’s domestic market points to the effects of the 
FTA not only in price reduction but also in the indirect effect of creating a sense of partnership. The increase 
in Chilean pork imports is likely due to a changing preference for pork in Korea due to mad cow disease and 
the avian flu. The increase in pork imports from Chile is not significantly greater than that from other 
countries.

6. A close look at bilateral trade over the past 11 months shows that the concerns about the expected 
effects on the agricultural sector have been unnecessary. At the time of the conclusion of the Korea-Chile 
FTA, the Korean agricultural sector was expected to suffer a loss of 586 billion won over ten years, at an 
average of 58.6 billion won per year. However, during the 11 months after the conclusion of the FTA, the 
increase in agricultural imports was 5.78 billion won, only 10% of the amount expected. Moreover, 92.5%
(5.34 billion won) of this was due to the increase in the import of wine. Therefore, excluding the increase in 
wine imports, the actual loss amounts only to 440 million won.

7. After the conclusion of the Korea-Chile FTA, Korean brands became well-known in Chile, changing 
Chileans’ view of Korea, and as a result, the national pride of Koreans living in Chile was also heightened. 
The Chilean government has concluded numerous FTAs, but regards the Korea-Chile FTA significantly in 
that it is the first FTA that Chile has concluded with an Asian country. With the help of such a friendly 
atmosphere, a large number of companies are promoting investment in Chile, and at the beginning of 2005, 
the Korea Exchange Bank set up an office in Chile. This signifies that the actual benefits from the conclusion 
of an FTA does not remain simply at the profit and loss in the short-term trade balance, but encompasses 
long-term cooperation between the two countries involved. Moreover, concluding an FTA with Chile expanded 
trade and economic relations with Chile, served as an opportunity to establish cooperative relations in many 
areas such as human exchange, politics, society, culture, and also secured an inroad into the South 
American market.

8. The success of the Korea-Chile FTA seen in the past year since its effectuation will serve to be a valuable 
experience in removing Korea’s fear of opening up its market and in pursuing trade liberalization more 
actively. In this light, MOFAT will hold a joint seminar with the Korea Institute for International Economic 
Policy, the Korea International Trade Association, and the Korea Rural Economic Institute at the Trade 
Center in Samsung-dong, at 2pm on April 1, 2005. About 150 people, including Mr. Hong Jong-ki, Deputy 
Minister for Trade at MOFAT, Mr. Lee Kyung-tae, Head of KIEP, and Mr. Adolfo Carafi, Chile’s Ambassador to 
Korea, will attend the seminar. The seminar will be held under two themes: “Evaluation of the overall effects 
of the Korea-Chile FTA” and “Analysis of the FTA’s effects by industry (IT, agriculture, etc.).” The participants 
will assess the effects of the FTA and discuss ways to further maximize the positive effects. 

9. MOFAT is simultaneously pursuing negotiations for an FTA with the EFTA, ASEAN and Japan, and is 
conducting joint studies and preliminary working-group meetings with Canada, India and Mexico.

                                                     Spokesperson for MOFAT

* unofficial translation