South Korea and China have agreed to embark on negotiations to include the services sector in their bilateral free trade pact, which could provide momentum to tourism and other service areas that had been hard hit from a row over an antimissile system installation.

Korean President Moon Jae-in said on Wednesday in Beijing during his four-day state visit to China that he expects to sign a memorandum with his Chinese counterpart Xi Jinping to begin follow-up FTA discussions on liberalizing the service and investment sectors.

An FTA between Seoul and Beijing took effect in December 2015 after three years of negotiations. It did not include the services and investment segment.

According to Korea Trade-Investment Promotion Agency (KOTRA), China has currently opened 90 of 155 service sectors to Korea. Of the 90 sectors, only six are completely open, such as data processing and financial data services, with the majority 84, including environment and entertainment, partially open. Korea has no access to the remaining 65 areas, including military security, healthcare, and research and development. China’s services market is estimated to be worth over $1 trillion by 2020.

The Korean government is hoping to set grounds for greater access to legal, financial, tourism and healthcare services. Last year Korea’s services exports to China stood at $20.5 billion and imports at $16.4 billion.

Moon is visiting China after a year-long standoff between the two countries over Seoul’s decision to deploy a U.S.-made missile defense system to counter the North Korean threat. China, fearing the powerful radar could be used to spy on its military, reacted with economic retaliations including travel bans and boycotts on Korean products. While the two governments agreed in late October to move beyond the dispute, Korean firms believe the retaliatory measures are still in place.

By Kang Gye-man and Kim Hyo-jin

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