By Byun Duk-kkun

SEJONG, Feb. 25 (Yonhap) -- South Korea and China initialed their free trade agreement (FTA) Wednesday, taking a step closer to implementing what South Korean officials hail as the most significant trade deal for the country.

The initialing came about three months after the two countries concluded their FTA negotiations that began in May 2012.

The agreement, currently written only in English, will be translated into the two parties native languages before it is officially signed.

"The two countries governments have agreed to work for official signing of the Korea-China FTA within the first half of 2015," the Ministry of Trade, Industry and Energy said in a press release.

The free trade pact requires approval from the countries respective legislatures for implementation.

"The government will do its utmost to have the agreement ratified by the National Assembly without any disruption so that our companies can start benefiting from the Korea-China FTA at an early date," the ministry said.

Some new and positive elements have been added to the agreement since the conclusion of negotiations on Nov. 10, Woo Tae-hee, South Koreas deputy trade minister, said at a press briefing.

Firstly, 310 products from the inter-Korean joint industrial complex in Kaesong, North Korea, will immediately benefit from a reduction or elimination of Chinas import tariffs, he said.

Such an agreement compares with only 100 products in South Koreas FTAs with Peru and the Association of Southeast Asian Nations.

The two countries have also added a new standstill clause in their bilateral agreement that will prevent either side from raising or adopting new customs duties on any products or services, according to Woo.

"We cannot say every element in the agreement is more favorable to us as negotiations always involve more than one party," he said. "But I believe we have in our hands a well-balanced agreement that reflects the interests of both parties in negotiations."

   Through additional dialogue, South Korea has gained better market access and established a better business environment in China for financial and communications service providers, the trade ministry said.

Under the FTA initialed and exchanged with Chinas Ministry of Commerce in Beijing, the two countries have agreed to provide preferential treatment to each others financial firms and to set up a new committee to jointly deal with any business problems for the firms.

They also guarantee nondiscriminatory access to communication networks by companies entering each others market, the ministry said.

South Koreas deputy trade minister Woo Tae-hee briefs reporters on Feb. 25, 2015 in Sejong on the details of a free trade agreement (FTA) with China. The FTA was initialed by the two parties on the same day. (Yonhap)

The FTA is expected to become the most significant trade pact for South Korea as China is already its largest trading partner.

China, the worlds largest single importer of South Korean goods, accounted for more than one-fourth of South Koreas overall exports in 2014, according to the trade ministry.

Under the Korea-China FTA, South Korea will completely eliminate its tariffs on 79 percent of all products, or 9,690 items, imported from China within 10 years following its implementation.

China will reciprocate the move on 71 percent of the products, or 5,846 items, from South Korea over the cited period.

Within 20 years after the FTA goes into effect, South Korea will eliminate its tariffs on 92 percent of all goods from China, with China eliminating its own import duties on 91 percent of products from South Korea.

The Seoul government has maintained the proposed FTA with the worlds second-largest economy will cause little or no damage to local farmers as 596 out of 2,240 agricultural and fisheries products currently imported from China will be permanently excluded from market liberalization while 16 others, including rice, were not subjects of negotiations from the beginning.

The government, however, acknowledged Wednesday that 44 items from China, including tobacco and onions, will not be protected under special agricultural safeguards (SSGs), which allow temporary import restrictions for special market circumstances, such as a sudden increase in imports.

"No SSG has ever been implemented for any of the items that have been excluded from the safeguard mechanism in the Korea-China FTA, and there is very little possibility that any of them will require such a measure in the future," an agriculture ministry official told reporters.

Following its implementation, the Korea-China FTA is expected to help boost the countries annual bilateral trade to over US$300 billion, a 39.5 percent hike from $215.1 billion in 2012.

Also, South Koreas trade territory, represented by the combined gross domestic product (GDP) of countries with which South Korea has a free trade pact, will grow to 73 percent of global GDP from the current 61 percent.

bdk@yna.co.kr