October 11, 2010

EU and South Korea ink landmark FTA

EU Trade Commissioner Karel De Gucht, the Belgian Minister of Foreign Affairs Steven Vanackere, and the Korean Minister for Trade Kim Jong-hoon have signed a Free Trade Agreement (FTA), marking a significant achievement in improving trade links between the EU and South Korea.

This FTA is the most ambitious trade agreement ever negotiated by the EU and the first with an Asian country.

"The agreement 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 Commissioner 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," he added.

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 FTA is in place.

The agreement will remove virtually all import duties between the two economies as well as many non-tariff barriers. 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 EUR1.6 billion (US$2.2 billion) annually. Half of these savings will be applicable already on the day of the entry into force of the Agreement.

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.

For agricultural products South Korea is one of the more valuable export markets globally for EU farmers, with annual sales of over EUR1 billion (US$1.4 billion). On services, the EU has a surplus with South Korea of EUR3.4 billion (US$4.7 billion), with exports of EUR7.8 billion (US$10.8 billion) in 2008 and imports of EUR4.4 billion (US$6.1 billion).

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 five years from the entry into force of the FTA. By the end of the transitional periods, duties will be eliminated on almost all products, with a few exceptions in the agricultural sector. This is the most ambitious trade coverage ever achieved in a FTA negotiated by the EU.