By Kang Yoon-seung
SEOUL, Oct. 16 (Yonhap) -- South Korea said Wednesday it has reached a preliminary agreement with Indonesia on a comprehensive trade deal in Seoul's latest efforts to expand its export portfolio in the Southeast Asian market.
South Korea and Indonesia have reached the agreement on the Comprehensive Economic Partnership Agreement, according to the Ministry of Trade, Industry and Energy.
The deal is equivalent to a free trade agreement but also focuses on a broader scope of economic cooperation.
The announcement came after the two resumed their negotiations this year after a hiatus of five years.
"The agreement will help South Korean firms find new growth opportunities and help the country diversify its trade portfolio," Trade Minister Yoo Myung-hee said.
Under the deal, South Korea and Indonesia will eliminate tariffs on 95.5 percent and 93 percent of products, respectively.
The figures mark a significant increase from 90.2 percent and 80.1 percent stipulated under the existing free trade agreement between South Korea and the 10-member Association of Southeast Asian Nations.
ASEAN comprises Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Thailand, Singapore and Vietnam.
Tariffs on steel, auto parts, and synthetic resins will be eliminated immediately once the deal takes effect, paving the way for South Korean exporters to penetrate deeper into the market.
Major agricultural products, however, will not be included in the deal to protect South Korean farmers, the ministry added.
South Korea and Indonesia also agreed to significantly open their service markets and ease related regulations. The two countries vowed to expand exchanges in the robot and software industries as well.
The two countries plan to officially strike the deal within this year before holding a signing ceremony in the first half of 2020. The deal has to be ratified by the respective legislatures of Seoul and Jakarta.
Trade volume between South Korea and Indonesia stood at $20 billion in 2018, up from $17.9 billion in 2017, according to the South Korean government data.
South Korea is currently working to clinch FTAs with Malaysia and the Philippines as well by the end of the year in time for the South Korea-ASEAN summit slated for November in the southeastern port city of Busan.
If all the negotiations under way are successful, South Korea will have free trade deals with all five of its top ASEAN trading partners.
South Korea has sought stronger economic ties with Southeast Asian countries to reduce its heavy reliance on large markets like the United States and China, and to foster new growth drivers.
South Korea has clinched a series of free trade agreements with major trading partners, including the U.S. and China, as well as Chile, Peru and Colombia in recent years as part of its efforts to boost growth in the country's export-driven economy.
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