EU and South Korea sign Free Trade Agreement

[News_Editor]

EU and South Korea sign Free Trade Agreement

2010-10-06 19:15:54 GMT+7 (ICT)

BRUSSELS (BNO NEWS) -- The European Union (EU) and South Korea on Wednesday signed a Free Trade Agreement (FTA), marking the most ambitious trade agreement ever negotiated by the EU and the first with an Asian country.

Wednesday's agreement signals a significant step on the road to its implementation and is one of the main events of the EU-Korea Summit currently taking place in Brussels.

One study estimates that the deal will create new trade in good and services worth €19.1 billion ($26.4 billion) for the EU; while another study calculates that it will more than double the bilateral EU-South Korea trade in the next 20 years compared to a scenario without the FTA.

In 2009, the EU-South Korea goods trade was worth around €54 billion ($74.7 billion). The EU currently runs a deficit with South Korea in goods trade, although trends suggest that the Korean market offers significant growth potential.

The agreement will remove virtually all import duties between the two economies as well as many non-tariff barriers. In addition, it will relieve EU exporters of industrial and agricultural goods to South Korea from paying tariffs. Once the duties are fully eliminated, EU exporters will save €1.6 billion ($2.2 billion) annually, of which half will be applicable already on the day of the entry into force of the Agreement.

In terms of tariffs, South Korea and the EU will eliminate 98.7% of duties in trade value for both industrial and agricultural products within 5 years from the entry into force of the FTA, and by the end of the transitional periods, duties will be eliminated on almost all products, with a few exceptions in the agricultural sector.

For products like chemicals, pharmaceuticals, auto parts, industrial machinery, shoes, medical equipment, non-ferrous metals, iron and steel, leather and fur, wood, ceramics, and glass, the EU enjoys a solid trade surplus. Similarly, for agricultural products South Korea is one of the more valuable export markets globally for EU farmers, with annual sales of over €1 billion ($1.3 billion). 

On services, the EU has a surplus with South Korea of €3.4 billion ($4.7 billion), with exports of €7.8 billion ($10.8 billion) in 2008 and imports of €4.4 billion ($6.0 billion).

The FTA will also create new market access in services and investment and will make major advances in areas such as intellectual property, procurement, competition policy and trade and sustainable development.

"The agreement between the EU and South Korea marks a significant achievement in improving our trade links. It will provide a real boost to jobs and growth in Europe at this critical time. This wide-ranging and innovative deal is a benchmark for what we want to achieve in other trade agreements," said EU Trade Commissioner Karel De Gucht.

"Tackling the more difficult non-tariff barriers to international commerce can cut the costs of doing business as much if not more than getting rid of import duties," De Gucht added.

Since the initiation of the FTA text between the European Commission and South Korea on October 15, 2009, the Agreement was translated into Korean and 21 EU languages.

All EU Member States have signed the FTA ahead of Wednesday's official signing ceremony, which gathered De Gucht, the Belgian Minister of Foreign Affairs Steven Vanackere representing the Presidency of the Council of the European Union (EU), and the Korean Minister for Trade Kim Jong-hoon signed the FTA on Wednesday.

The date of provisional application will be July 1, 2011, provided that the European Parliament has given its consent to the FTA and the Regulation of the European Parliament and of the Council implementing the bilateral safeguard clause of the EU-South Korea FTA is in place.

The EU Member States will have to also ratify the agreement according to their own laws and procedures.

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