President Lee Myung-bak and Turkish Prime Minister Recep Tayyip Erdogan announced the conclusion of bilateral free trade talks when they met at Cheong Wa Dae on Monday.
Turkey will be Korea's 46th FTA partner once the pact goes into effect after being ratified by the parliaments of both countries. But this is only Korea's ninth FTA since several are with groups of countries like the EU.
The FTA with Turkey would secure Korea a beachhead to expand trade with other Muslim nations, the government believes.
Kang Boo-seong of the Ministry Strategy and Finance expressed expectations, saying, "Turkey is strategically located between Europe, Asia, the Middle East, and Africa. The country will serve as a good strategic foothold for us to seek expansion of trade with the Islamic countries of the Persian Gulf."
Turkey is Korea's 33rd largest trading partner, with bilateral trade at US$5.89 billion or about 0.5 percent of Korea's total trade volume last year. Korea posted a trade surplus of $4.28 billion last year, with exports to Turkey of $5.08 billion and imports of $804 million.
Korean carmakers are expected to benefit the most.
Kim Hyung-joo, a researcher at the LG Economic Research Institute, said, "The current tariff of 10 percent for cars will be gradually lowered and abolished completely after seven years, so Korean cars will become more competitive in Turkey."