South Korea became the first Asian country to strike a free trade deal with Israel, giving it headway in the innovation hotbed state ahead of its Asian rivals China and Japan.

Korean Trade Minister Yoo Myung-hee and her Israeli counterpart Eli Cohen said the two countries reached a free trade agreement in Jerusalem Wednesday.

The trade pact, concluded after three years of negotiations, is Israel’s first such agreement with an Asian country and Korea’s first tariff-free relationship with the Middle East.

The agreement is expected to take effect in the first half of 2020 once it obtains legislative approval in both countries.

Korea has so far struck 17 free trade deals with 58 countries, starting with its first trade agreement in 2004 with Chile. Its most recent trade pact with five Central American countries - Costa Rica, El Salvador, Honduras, Nicaragua and Panama – is set to go into effect in October.

Korea’s trade volume with Israel totaled $2.72 billion last year. Exports to Israel reached $1.45 billion, accounting for 6.7 percent of Korea’s total Middle East-bound shipments.

Once the agreement takes effect, Israel would immediately lift tariffs on 97.4 percent of Korean goods.

Automobiles, which make up nearly half of all Korean exports to Israel, would also scrap their 7-percent duty. Korean automakers currently command a 15.5 percent share in the Israeli market.

Tariffs on Korean auto parts (7 percent), textiles (6 percent) and cosmetics (12 percent) would all be removed.

As for Israel, tariffs on its main export items to Korea, such as chip making equipment and electronic devices, would be phased out over three years. The 30 percent duty on grapefruit would be phased out in seven years, the 6.5 percent duty on compound fertilizer five years, and the 8 percent duty on medical equipment 10 years.

Selected agricultural, livestock and fishery items that are deemed sensitive – such as rice, pepper and garlic – would maintain their current tariffs.

The two countries pledged to open up their services and investment under a negative list approach – trading openly on all items that are not explicitly specified – to go beyond what was agreed in the General Agreement on Trade in Services of the World Trade Organization.

The existing bilateral investment agreement would be replaced with a stronger investor protection policy. Korea also agreed to open up its markets to Israeli retail services and cultural contents.

By Lim Sung-hyun and Kim Hyo-jin

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