The free trade pact between South Korea and the United States came into effect on Thursday, ushering in a new era of expanded economic and political ties between the two allies.
The free trade accord, signed in 2007 and ratified by lawmakers in both countries, is one of the most ambitious deals that South Korea has ever finalized.
The U.S. is the second-largest trading partner for South Korea after China. Last year, trade between South Korea and the U.S. totaled US$108 billion. South Korea's exports to the world's largest economy reached $56.2 billion last year, with Asia's fourth-largest economy importing $52.1 billion worth of goods.
Experts said that the free trade deal will pave the way for South Korean companies to tap deeper into the world's biggest economic entity.
Overall, the free trade pact, known as the KORUS FTA, will help South Korea's economy expand by more than 5 percent in the long term as it will lead to more exports by reducing trade barriers, a study showed. The deal will create about 350,000 jobs, helping ease tightened labor market conditions here.
The report compiled by 10 local think tanks predicted that South Korea will see its trade surplus with the U.S. increase by $140 million annually over the next 15 years after the FTA goes into effect. The nation's total global trade surplus, however, will expand by an annual average of $2.77 billion, the report showed.
"The free trade pact with the U.S. will help South Korean firms secure a firm footing in the world's largest economy as well as help deepen the economic alliance in addition to the existing military and security alliance," the ministry said in a statement.
Under the deal, Seoul and Washington would eliminate or phase out tariffs on 85.7 percent of U.S. goods and 87.3 percent of South Korean goods in three years after the accord takes effect. They have also agreed to abolish tariffs on most industrial goods within five years of the deal taking effect.
One of the most sensitive issues was auto trade.
Under the terms revised in 2010, the two countries agreed to scale back tariff cuts for cars.
The U.S. will eliminate its 2.5 percent tariff on automobiles in four years, instead of immediately or after three years, as was previously agreed, after the deal takes effect.
South Korea will cut its 8 percent tariff on U.S. car imports to 4 percent immediately, instead of immediately eliminating it.
The free trade pact with the U.S. is the eighth of its kind that South Korea has sealed.
Currently, South Korea has free trade agreements with Chile and Singapore as well as similar pacts with the Association of Southeast Asian Nations and India.
South Korea and the European Union (EU) also implemented their free trade deal in July last year.
The country is actively seeking similar pacts with China, Canada, Turkey and Colombia, among several other countries.