Israel and South Korea announced on Wednesday that they have concluded a free-trade agreement to eliminate tariffs on goods ranging from cars and medical equipment to lipstick and video games.
The deal had been delayed by several years due to a dispute over including goods from Israeli settlements in the West Bank and communities from the Golan Heights.
Prime Minister Benjamin Netanyahu hailed the deal, saying it was Israel’s first such agreement with an east Asian nation.
“We’ve had free-trade agreements with other parts of the world with the United States, with Europe and elsewhere but this is the first free-trade agreement we have with an Asian economy, and what an economy, a global leader, a vibrant, advanced economy,” Netanyahu said.
It was not clear when the agreement would enter into force.
Netanyahu said the agreement would go beyond economic ties.
“Technological exchanges will give us great advantage for the future. The people of Israel are delighted with this increased cooperation between our two countries,” Netanyahu said at a meeting at his office. “Welcome.”
Economy Minister Eli Cohen echoed these remarks at a ceremony announcing the deal.
“I’m confident that this will also mark the start of a new era and an even closer friendship between Israel and Korea.”
Israeli officials said that the move should see a drop in prices in a wide range of goods, a boon in a country with a very high cost of living.
“I hope that Israeli companies will take full advantage of Korea as a stepping stone into the vast Asian market,” South Korean Trade Minister Yoo Myung-hee said at the ceremony.
The talks had been stalled for years over South Korea’s demand not to include in the deal the West Bank and Golan Heights, areas controlled by Israel but not recognized as Israeli by most of the international community.
Cohen denied that Israel had agreed to this demand. The economy minister said if businesses in settlements were in any way disadvantaged, they would be compensated by the government, as is the case with other trade deals.
Israeli officials clarified that while there was no differentiation in the agreement, South Korea could nevertheless withhold benefits from settlement products. In that case, Israel would compensate those companies.
The umbrella Yesha Council chairman Hananel Dorani praised the government for officially refusing to distinguish between Israel and the West Bank.
“It is an important ideological stand that Judea, Samaria, the Jordan Valley and the Golan Heights are an integral part of Israel,” he said, referring to the Israeli names for the parts of the West Bank and the Golan.
The issue is a sensitive one in Israel, particularly ahead of the September 17 elections. Israeli settlements are viewed as illegal under international law.
Negotiations on the agreement stretched three years.
According to the Economy Ministry, trade between the two countries reached $2.5 billion last year, an increase of nearly 15 percent over 2017.
South Korea is home to companies including Samsung, the world’s biggest smartphone and memory chip maker, and carmaker Hyundai.
The deal foresees tariffs removed on Israeli imports of goods, including vehicles, industrial machinery and video game consoles, according to the Economy Ministry.
Israeli exports to South Korea of goods, including medical equipment, fertilizer, wine, and cosmetics would also see tariffs eliminated, it said.
Israel is a major exporter of arms and defense equipment, but there was no mention of those being part of the deal.