Economic Impacts of Korea-Turkey FTA

The trade volume and diversity of the products traded between Korea and Turkey have been increasing since early 2000s. On top of this, the enthusiasm of the countries in exploring new opportunities led them to start the negotiations on signing a free trade agreement in 2010. The process was finalized in 2012. The agreement foresees that all of the trade tariffs on industrial products and most of the tariffs on agricultural products will be removed in seven and ten years, respectively. To the best of our knowledge, this study is the first one that investigates possible economic impacts of this agreement on Korean and Turkish economies. It employs a computable general equilibrium model and uses the Global Trade Analysis Project database. It finds that the agreement will benefit both parties in terms of GDP and export. In particular, total gains of Korea and Turkey would be as high as 0.129 and 0.054 percent of their respective GDPs. Finally, the exports of Korea might increase by up to 0.139 percent where that of Turkey might increase by 0.164 percent.