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European Union–South Korea Free Trade Agreement

The European Union–South Korea Free Trade Agreement is a free trade agreement between the European Union (EU) and South Korea. The agreement was signed on 15 October 2009.[1] The agreement was provisionally applied from 1 July 2011,[2] and entered into force from 13 December 2015, after having been ratified by all signatories.[3]

European Union–South Korea Free Trade Agreement
European Union Korea Locator.png
South Korea (orange) and the European Union (green)
TypeTrade agreement
Signed6 October 2010
LocationBrussels
Effective13 December 2015
ConditionRatification by all signatories
Provisional application1 July 2011
Signatories
Ratifiers30 (South Korea, the EU and its 28 member states)
LanguagesKorean

The agreement was the most comprehensive the EU had ever negotiated up until that point: import duties are near eliminated on all produce and there is deep liberalisation in trade in services. It includes provisions for intellectual property (including geographical indications), public procurement, competition, transparency of regulation and sustainable development. There are also specific commitments against non-tariff obstacles on sectors such as automobiles, pharmaceuticals and electronics.[4]

BackgroundEdit

This is the third trade related agreement that South Korea and the European Union have signed between themselves. The first, the Agreement on Co-operation and Mutual Administrative Assistance in Customs Matters was signed on 13 May 1997.[5] This agreement allows the sharing of competition policy between the two parties.[6] The second agreement, the Framework Agreement on Trade and Co-operation, was enacted on 1 April 2001. The framework attempts to increase co-operation on several industries, including transport, energy, science and technology, industry, environment and culture.[6][7]

Trade between the two parties was €64 billion in 2007. The EU is the second largest importer of South Korean goods. South Korea is the eighth largest importer of EU goods.[6] The agreement is commonly referred to as the first of the next generation FTAs signed by the EU that addresses trade concerns beyond tariffs. Chief among these concerns are non-tariff barriers (NTBs); they are significant barriers to trade both in Korea and the EU. In fact, NTBs have been estimated to have the same protection level as a tariff at 76 percent in Korea and 46 percent in the EU.[8] According to some studies, an agreement can increase trade as much as 40% over the long term.[9]

Negotiations and oppositionEdit

Negotiations started in May 2007[6] and were expected to be completed in March 2009; however, several issues had to be resolved before the agreement could be finished.[10] Seven rounds of negotiations over various aspects of the agreements were completed[10] which addressed problems over several issues including rules of origin, auto trade issues, and allowing certain tariff reductions.[9]

Italian and some French automakers believe this agreement would significantly harm them by allowing South Korean automakers to compete against them in the EU. Adolfo Urso, a junior Italian minister for external trade, said that the Italian government may veto the agreement based on the European automakers concerns, which it initially did in September 2010. Trade analysts like Hosuk Lee-Makiyama of ECIPE have rejected the lobbying of the car industry as "myths": while EU exports to Korea are estimated to increase by 400%, most Asian car brands manufacture their cars in the EU and Korean cars account for insignificant share of imports to the EU to threaten even the most inefficient car producers in Europe.[11] Italy dropped its objections in return for the provisional application of the agreement being postponed from 1 January 2011 to 1 July 2011.[12]

The agreement eliminates tariffs on 98% of import duties and trade barriers in manufactured goods, agricultural products and services over a period of five years.[13] It includes a guarantee that South Korean regulation on car emissions will not be disadvantageous to European car manufacturers, and includes a clause to guard European car manufacturers.[14][15][16]

South Korea has had significant opposition to previous free trade agreements most especially with the United States. This EU agreement is larger than the United States agreement. However, Hur Kyung-wook, Vice Finance Minister for South Korea, has said that he believes the agreement will go into effect in July 2010.[17] On 22 March 2011, the citizen group called Lawyers for Democratic Society (민주사회를 위한 변호사모임) announced that there were 160 cases of mistranslated errors in the Korean version of the document.[18]

The text of the agreement was initialled between South Korea and the EU on 15 October 2009.[19] It was signed on 6 October 2010, at the EU-Korea Summit in Brussels.[16][19] The European Parliament ratified the agreement on 17 February 2011.[16]South Korea's legislature ratified the agreement on 4 May 2011.[20][21]

EffectsEdit

In 2016, five years after the European Union–South Korea Free Trade Agreement has been provisionally put in place, the European Commission announced that EU exports to South Korea increased by 55%; European companies saved €2.8 billion in scrapped or discounted customs duties; and bilateral trade in goods between the EU and South Korea grew annually, reaching a record level of over €90 billion in 2015.[22]

In the United Kingdom, Lord Price CVO, Minister of State for Trade Policy, Department for International Trade (DIT), said that the EU-Korea FTA had boosted UK exports to Korea by 111% from 2010/11 to 2014/15 [23]

ReferencesEdit

  1. ^ Freedman, Jennifer M.; Jonathan Stearns (14 October 2009). "EU, Korea to Sign Trade Deal That May Be 'Wakeup Call' for U.S." Bloomberg. Retrieved 15 October 2009.
  2. ^ Official Journal of the European Union 28.06.2011 L168/1, Council of the European Union
  3. ^ "Annual Report on the Implementation of the EU-Korea Free Trade Agreement" (PDF). Brussels. 30 June 2016. Archived (PDF) from the original on 10 July 2017. Retrieved 24 March 2018.
  4. ^ EU-SOUTH KOREA FREE TRADE AGREEMENT: A QUICK READING GUIDE OCTOBER 2010 Archived 3 September 2011 at the Wayback Machine, European Commission
  5. ^ "Agreement between the European Community and the Republic of Korea on co-operation and mutual administrative assistance in customs matters". European Commission. May 1997. Retrieved 13 January 2009.
  6. ^ a b c d "European Commission – South Korea Briefing". European Commission. Retrieved 11 January 2009.
  7. ^ "FRAMEWORK AGREEMENT for Trade and Cooperation between the European Community and its Member States, on the one hand, and the Republic of Korea, on the other hand" (PDF). European Commission. 30 March 2001. Archived from the original (PDF) on 7 July 2007. Retrieved 13 January 2009.
  8. ^ "ECIPE".[permanent dead link]
  9. ^ a b "S. Korea Strives to Ink FTA With EU at Early Date". The Korea Times. 7 January 2009. Retrieved 11 January 2009.
  10. ^ a b "Trade ministry plans to ink EU FTA in 1st quarter". Joong Ang Daily. 1 January 2009. Retrieved 11 January 2009.
  11. ^ "Stepping into Asia's Growth Markets: Dispelling Myths about the EU-Korea Free Trade Agreement". ECIPE.[permanent dead link]
  12. ^ Lee, Ho-Jin (12 October 2010). "The EU-Korea FTA: A Boost to Economic Recovery and a Challenge to the U.S." Brookings Institution. Archived from the original on 24 March 2018. Retrieved 24 March 2018.
  13. ^ "EU-South Korea free trade agreement passes final hurdle in Parliament". European Parliament. 17 February 2011. Archived from the original on 11 June 2017. Retrieved 24 March 2018.
  14. ^ Hruska, Matej (8 September 2010). "Italy threatens to veto South Korea trade deal". EUObserver. EUobserver.com ASBL. Archived from the original on 11 September 2015. Retrieved 4 March 2018.
  15. ^ Hix, Simon; Jun, Hae-Won (7 February 2017). "Can 'Global Britain' forge a better trade deal with South Korea? This is why it's unlikely". London School of Economics. Archived from the original on 1 January 2018. Retrieved 24 March 2018.
  16. ^ a b c Pollet-Fort, Anne (2011). Hwee, Yeo Lay (ed.). "The EU-Korea FTA and its Implications for the Future EU-Singapore FTA" (PDF). EU Center in Singapore: 13–14. Retrieved 24 March 2018. Cite journal requires |journal= (help)
  17. ^ Hyun-joo, Jin (17 October 2009). "Seoul sees FTA with EU take effect in July". Korea Herald. Retrieved 21 October 2009.
  18. ^ Jung (정), Eun-ju (은주) (22 March 2011). "'or'가 그리고?…'한-EU FTA' 160개 오역". The Hankyeoreh (in Korean). Retrieved 17 April 2011.
  19. ^ a b "EU and South Korea sign free trade deal". European Commission. 6 October 2010. Archived from the original on 3 September 2014. Retrieved 24 March 2018.
  20. ^ "South Korea in final approval of EU trade deal". BBC News. BBC. 5 May 2011. Archived from the original on 22 March 2015. Retrieved 24 March 2018.
  21. ^ "South Korea ratifies EU free trade deal". The San Diego Tribune. Tribune Publishing Company. Associated Press. 5 May 2011. Archived from the original on 24 March 2018.
  22. ^ "European Commission - PRESS RELEASES - Press release - Trade boosted by five years of EU-Korea Free Trade Agreement". europa.eu. Retrieved 2 July 2016.
  23. ^ [1]

External linksEdit