South Korean Parliament Passes FTA With EU

Despite continued opposition from the main opposition Democratic Party (DP), the ruling Grand National Party (GNP) pushed approval of the South Korea-European Union (EU) free trade agreement (FTA) through the South Korean parliament on May 5.

The FTA’s passage through the National Assembly had been in doubt up to the last moment, despite the majority held by the GNP. For example, its ratification bill had been approved by the parliamentary foreign affairs and trade committee at the end of last month, but only after the government had made some concessions.

Those concessions were mainly aimed at supporting the local agricultural sector, by providing a capital gains tax exemption for livestock farmers wishing to sell their farms after the coming into force of the FTA, while also extending the law that restricts the establishment of large supermarkets near to smaller businesses.

However, when it was proposed to present the bill in a full parliamentary session, the DP failed to show up in the National Assembly despite its leaders having, the day previously, agreed to such a vote. In the end, despite the boycott of the DP, the vote went ahead in their absence, even though the GNP had been concerned that it could be accused of railroading the bill through parliament.

It can now be expected that the FTA will be effective from July 1, as had been provisionally agreed with the EU. It will eliminate about 98% of import duties and other trade barriers in manufactured goods, agricultural products and services over the next five years, and also covers trade-related activities such as government procurement, intellectual property rights, labour standards and environmental issues.

May 5^th, 2011

Source: tax-news.com