EU Trade Commissioner Karel De Gucht, the Belgian Minister of Foreign AffairsSteven Vanackere representing the Presidency of the Council of the EuropeanUnion (EU), and the Korean Minister for Trade Kim Jong-hoon today signed aFree Trade Agreement (FTA) between the EU and South Korea. This FTA is themost ambitious trade agreement ever negotiated by the EU and the first with anAsian country. The signature signals a significant step on the road to itsimplementation and is one of the main events of the EU-Korea Summit takingplace in Brussels.
"The agreement between the EU and South Korea marks a significant achievement inimproving our trade links. It will provide a real boost to jobs and growth in Europe at thiscritical time. This wide-ranging and innovative deal is a benchmark for what we want toachieve in other trade agreements", said Commissioner De Gucht. "Tackling the moredifficult non-tariff barriers to international commerce can cut the costs of doing businessas much if not more than getting rid of import duties."
The text of the FTA was initialled between the European Commission and South Koreaon 15 October 2009. Since then the text of the Agreement was translated into Koreanand 21 EU languages. All EU Member States have signed the FTA ahead of the official signing ceremony.
The date of provisional application will be 1 July 2011, provided that the EuropeanParliament has given its consent to the FTA and the Regulation of the EuropeanParliament and of the Council implementing the bilateral safeguard clause of the EUSouthKorea FTA is in place. The EU Member States will have to also ratify theagreement according to their own laws and procedures.
One study estimates that the deal will create new trade in good and services worth €19.1billion for the EU; another study calculates that it will more than double the bilateral EUSouthKorea trade in the next 20 years compared to a scenario without the FTA. Theagreement will remove virtually all import duties between the two economies as well asmany non-tariff barriers. It will relieve EU exporters of industrial and agricultural goods toSouth Korea from paying tariffs. Once the duties are fully eliminated, EU exporters willsave € 1.6 billion annually. Half of these savings will be applicable already on the day ofthe entry into force of the Agreement.
The FTA will also create new market access in services and investment and will makemajor advances in areas such as intellectual property, procurement, competition policyand trade and sustainable development.
EU-South Korea goods trade was worth around €54 billion in 2009. The EU currentlyruns a deficit with South Korea in goods trade, although trends suggest that the Koreanmarket offers significant growth potential. For products like chemicals, pharmaceuticals,auto parts, industrial machinery, shoes, medical equipment, non-ferrous metals, iron andsteel, 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. On services, the EUhas a surplus with South Korea of €3.4 billion, with exports of €7.8 billion in 2008 andimports of €4.4 billion.
In terms of tariffs, South Korea and the EU will eliminate 98.7% of duties in trade valuefor both industrial and agricultural products within 5 years from the entry into force of theFTA. By the end of the transitional periods, duties will be eliminated on almost allproducts, with a few exceptions in the agricultural sector. This is the most ambitious tradecoverage ever achieved in a FTA negotiated by the EU.