Korea is the second dialogue partner with whom ASEAN has forged a free trade agreement. In 2005, ASEAN and Korea signed the Framework Agreement on Comprehensive Economic Cooperation (Framework Agreement), and subsequently, signed four (4) agreements that form the legal instruments for establishing the ASEAN-Korea Free Trade Area (AKFTA) which came into effect on 1 January 2010. 

The ASEAN-Korea Free Trade Agreement (AKFTA) helped raise ASEAN-ROK trade and investment levels. According to ASEAN preliminary data, bilateral trade between ASEAN and Korea reached US$ 156.5 billion in 2019, accounting for 5.6% of ASEAN’s total trade. Meanwhile, Foreign Direct Investment (FDI) inflow from the ROK stood at US$ 2.6 billion which accounts for 1.6% of all FDI into ASEAN. Korea is ASEAN’s fifth-largest trading partner and seventh largest source of FDI. 

The establishment of the AKFTA creates opportunities for the 700 million people of ASEAN and Korea with a combined GDP of USD 4.8 trillion through a more liberal, facilitative market access, and investment regimes among the Parties of the AKFTA. Through the effective implementation of AKFTA, ASEAN has much to benefit from Korea’s advancement in manufacturing industry and digital technology, and closer cooperation in this regard will boost ASEAN’s position in the regional production networks as well as better prepare the region for the 4th Industrial Revolution.

Following the signing of the Framework Agreement, the ASEAN-Korea Agreement on Trade in Goods Agreement (AKTIGA) was signed on 24 August 2006. The Agreement sets out the preferential arrangement on trade in goods between the ten (10) ASEAN Member States and Korea. This principally involves progressive tariff reduction and elimination for all tariff lines over a transition period. Under this Agreement, ASEAN exports would enjoy greater market access to Korea starting from 2006 and have free market access in 2010 as Korea eliminates tariffs for all tariff lines under the Normal Track. On a reciprocal note, imports of products under Normal Track of Brunei, Indonesia, Malaysia, Singapore, the Philippines, and Thailand enjoy zero tariff rates since 2012. For Viet Nam and CLM (Cambodia, Lao, and Myanmar), Korea would enjoy zero tariff on Normal Track products since 1 January 2018 and 2020, respectively.  

ASEAN and Korea continue to improve the AKTIGA by signing the Third Protocol to Amend the AKTIGA on 22 November 2015 and further liberalizing Sensitive Track products under AKTIGA. The Third Protocol aims to boost bilateral trade through: i) new provisions on customs procedures and trade facilitation; ii) clearer guidelines to apply the reciprocal arrangement, and the inclusion of the Parties’ line-by-line Tariff Reduction Schedules (TRS) to ensure transparency for businesses. 

The ASEAN-Korea Agreement on Trade in Services (AK-TISA), signed on 21 November 2007, provides a platform to further open greater market access for ASEAN and Korean service providers. Building on their existing commitments in the WTO under General Agreement on Trade in Services (GATS), ASEAN and Korea both improved their levels and depth of commitments through the addition of new sectors/subsectors in the list of commitments and easing up of restrictions on entry and treatment on a wide range of service sectors including business, construction, education, communication services, environmental, tourism services, and transport services.

The ASEAN-Korea Agreement on Investment (AK-IA), signed on 2 June 2009, aims to provide a transparent, facilitative and more secure environment for ASEAN and Korean investors and their investments. Major components of the AK-AI are the protection elements which include provisions on fair and equitable treatment and full protection and security of covered investments; transfers of funds relating to covered investments; and compensation in the event of nationalisation or expropriation of covered investments. 

Aware of the importance of economic co-operation in deepening bilateral relations towards inclusive and sustainable development, ASEAN and Korea have actively undertaken and are continuing to explore economic cooperation activities in areas of mutual interests, as provided for under the Framework Agreement. A dedicated Working Group on Economic Cooperation (AKFTA WGEC) was formed in 2006 to develop and monitor the economic cooperation activities. The ASEAN-Korea Economic Cooperation Fund (AKEC Fund) was set up in 2008 to support these economic cooperation projects. These projects have helped address various issues in the region that are at the core of ASEAN and Korea’s development agenda and are supporting a wide range of priority areas, including MSME development, trade facilitation, innovation, energy conservation, and other sectoral development.