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EU And South Korea Resume FTA Negotiations

by Ulrika Lomas, Tax-News.com, Brussels

19 September 2007


The EU remains hopeful that its ambitious proposal to offer South Korean exporters 100% tariff-free access to the EU market will be reciprocated by Seoul as European and South Korean negotiators kicked off their third round of free trade negotiations in Brussels.

The negotiations towards a Free Trade Agreement began in Brussels on September 17, with the EU's bold offer still on the table from the last round of talks in July 2007. The EU has never before taken such an ambitious position in bilateral free trade negotiations. However, in return, the EU is looking for substantial new access to the growing Korean market in key areas such as automobiles, manufactured goods, investment and business services.

The EU-Korea FTA is part of the Global Europe strategy set out in October 2006 by the European Commission, to boost the EU's presence in growing emerging markets, and complement the multilateral WTO system by pushing liberalisation in key areas like investment, which are not currently covered by WTO rules.

The EU says that FTAs with growing markets such as Korea will provide new opportunities for EU companies, and help generate jobs and growth in Europe. They are also a crucial part of the European Commission's new focus on the removal of non-tariff barriers such as excessive regulation and unnecessary red tape.

Studies commissioned by the EU suggest that an ambitious EU-Korea FTA could increase EU exports to Korea and Korean exports to the EU by between 30 and 40%. For Europe, an FTA means wider access to the prosperous Korean market with its huge appetite for quality European goods. Korea is likely to see big gains in areas like manufacturing and access to competitive EU business services. Launching the negotiation in May, Mandelson suggested that they represented the EU "turning towards a stronger focus on Asia".

The EU insists however, that both its and South Korea's main focus is on the successful completion of the Doha round of trade talks.

"An EU-Korea FTA is a complement to an ambitious Doha Agreement, not an alternative to it," the Commission stated.

EU-Korea trade reached EUR60 billion (US$84 billion) in 2006. The EU is Korea’s second largest export destination after China. Korean exports to the EU include automobiles, consumer electronics, semiconductors and ships. Important EU exports to Korea include machinery, chemicals and transport equipment. The EU also exports more than EUR1 billion in agricultural products like pork and wines to Korea every year.

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