Is Latin America Korea`s new `El Dorado` for external trade?

Korea’s exports to Peru have surged since the effectuation of the bilateral free trade agreement on Aug. 1 last year, statistics released by the Korea International Trade Association said Tuesday.

Korean exports to Peru in an 11-month period from August last year to June surged 28.9 percent. Korea`s average export growth rate was 6.2 percent over the same period.

Korea’s export of assembled goods, including cars and color TVs, to the Latin American country also made notable gains. The market share of Korean passenger cars increased from 25 percent in 2010, before the effectuation of the accord, to 32.1 percent from January to May this year. The market share of Japanese passenger cars dropped from 43.3 percent to 29.2 percent over the same period, allowing Korea to overtake Japan.

The market share of Korean-made color TVs jumped from 3.7 percent in 2010 to 27.9 percent from January to May this year, as Korea ranked second in the Peruvian market after Mexico. Additionally, Korea has continued to post export growth in the Peruvian markets for construction machinery and resin.

Latin America is emerging as Korea’s “second emerging market” after Asia, as Korean exports to the region gained an annual average of about 5 percent over the past 10 years due to the continent`s massive consumption market and population of 600 million. Last year, Korea’s trade with Latin American countries exceeded 60 billion U.S. dollars, an all-time high, while cumulative investments reached 15 billion dollars.

Due to a similar trade deal, Korea’s trade with Chile has jumped 4.6 times since the agreement took effect in 2004. The market share of Korean electronic appliances, including TVs, mobile handsets and air conditioners, ranged from 60 to 70 percent. Korea`s exports of diesel and steel sheet to Chile also jumped up to 10 times due to the benefit of non-tariffs if compared to the period prior to the effectuation of the trade agreement.

Colombia and Mexico are also major economic players in Latin America, and Korea is expected to reap a big windfall if and when similar deals with those two countries take effect.

Korea`s agreement with Colombia will take effect as early as this year after ratification by the Korean National Assembly. Negotiations over a Korea-Mexico accord, which were suspended in 2008, will also resume before September.

jjy2011@donga.com