BEIJING (AP) — South Korea says it has agreed to sign a free trade deal with China that will remove tariffs on more than 90 percent of goods over two decades but won't include rice or autos.
The announcement from South Korea's presidential office Monday came after South Korean President Park Geun-hye met with Chinese President Xi Jinping at the Asia Pacific Economic Cooperation summit being held in Beijing.
Negotiators held a 14th round of trade talks before Xi and Park met but failed to resolved outstanding issues.
A statement from South Korea's presidential office said Xi and Park declared that the agreement was now "virtually" reached. Xi said negotiations had made "significant progress."
Two-way trade between China and South Korea was $229 billion in 2013.
The deal covers 22 areas including finance and online commerce. South Korea said it was the first time for China to include finance, telecommunications and e-commerce industries in a free trade deal.
South Korea's rice industry will not be included in the trade deal but trade in 70 percent of agricultural goods will be liberalized.
South Korean trade officials said that LCDs and automobiles were among toughest areas to negotiate. They said South Korean automakers were concerned that foreign carmakers would ship their vehicles directly from China to South Korea if import tariffs on automobiles were removed.
For LCDs, which is an area where China is catching up with South Korean technology, the two sides agreed to remove tariffs 10 years after the trade deal takes effect.
Ahn Jong-beom, Park's top economic adviser, told reporters that the two parties have no outstanding "sensitive issues" and will finalize the agreement's wording. The China-South Korea trade deal will be formally signed early next year. South Korea's government will seek parliamentary approval in the following months.
China and South Korea began the trade negotiations in May 2012.
Jee Mansoo, an economist at the Korea Institute of Finance, said the impact of the trade pact is unclear because the economic situation has changed since negotiations began.
Some South Korea industries that were expected to benefit from increased exports to China, such as steelmaking, are no longer likely to benefit because China has made strides in improving its domestic industries, he said.