Positive Review Of South Korea-EU FTA After One Year

During a workshop organized by the European Parliament, Karel De Gucht, the European Commissioner for Trade, noted that the functioning of the European Union (EU)-South Korea free trade agreement (FTA) during its first year of operation has shown that European companies are competitive enough to take advantage of international markets.

De Gucht has, on a previous occasion, called the FTA with South Korea the most comprehensive that the EU has ever negotiated, and its first with an Asian trading partner. On this occasion, he also defined it as the EU’s “first agreement with a developed country outside of Europe, and (its) first agreement that really focuses on dealing with regulatory barriers to trade”.

While 99% of trade between the two signatories will be duty free within four years, the FTA, which went into effect on July 1 last year, also provides new market access for exports of telecommunications, environmental services, shipping, finance and legal services.

It also removes barriers to investment in both services and in industrial sectors; makes progress on regulatory barriers to trade, including those in sectors of most importance to EU industry such as automobiles, pharmaceuticals and electronics; includes measures to enhance the protection of intellectual property rights; and delivers new market access in government procurement.

As regards trading performance under the FTA, and while some of the tariff cuts have not yet taken place, he professed himself “very pleased with the results for Europe”.

“Where trade barriers have already been removed or reduced,” he said, “(EU) exports to South Korea are significantly up. On products where tariffs have been removed altogether exports are up by 54% compared to the reference period. This includes many products in the machinery, chemicals and textiles sectors, for example.” This, he said, equates to an extra EUR2bn worth of additional exports for those products, and EUR600m in duty savings for EU exporters.”

However, he also considered that Europe now expects concrete progress from South Korea on the issues of concern, including problems with regulatory barriers in the automotive sector, in the food sector and in the pharmaceuticals sector, in addition to questions around some specific customs rules.

He hoped that solutions could be found in the near future, but thought that the process of consultation within the terms of the FTA showed that “it is possible to tackle non-tariff barriers effectively in a trade agreement”.

“Some of the European sectors that are doing best out of this deal,” he added, “are those who faced real problems with regulatory barriers in the past – this includes the car sector, but also the machinery and appliance sector, where the agreement was able to remove significant double conformity testing requirements.”

The EU-Korea FTA went into effect on July 1, 2011 and will eliminate about 98% of import duties and other trade barriers in manufactured goods, agricultural products and services over the first five years of the agreement.

October 18, 2012

Source: Tax News