Discord among delegations in EU trade negotiations
The Hankyoreh, Seoul
Discord among delegations in EU trade negotiations
Foreign and Commerce Ministries need to iron out differences before going forward
19 July 2007
BRUSSELS-With the European Union and South Korea starting their talks on a proposed free trade agreement (FTA) in Brussels, Korean negotiators remain divided over how to open the country’s market to one of the world’s largest economic blocks. The cacophony represents the fact that the government has not put in enough effort to gather consensus before negotiations began and only pushes for the conclusion of the economic deal in a hasty way.
As the talks entered the second day, officials from Korea’s Commerce Industry & Energy Ministry convened an unscheduled press conference. During the gathering, they rebuked the argument from the Ministry of Foreign Affairs and Trade of Korea that Korea’s proposal for tariff removals was too conservative compared with that offered by their European counterparts.
The previous day, the Foreign Ministry had expressed a need to expand the coverage of earlier tariff reductions, saying that by doing so, there would be little negative effect on the nation’s economy with the exception that the imports that had previously come from Japan, as they do now, would now come from Europe. The Commerce Ministry countered that all necessary items had been included on the list in the first place.
The Foreign Ministry also argued that the ratio of products subject to earlier tariff removals, which the EU had in the first place proposed for South Korean products, stood at 80 percent, while the corresponding figure for South Korea remained at 60 percent. The Commerce Ministry, however, said that the figure for the Korean goods reflected the shipbuilding industry, whose tariff barrier had already been lifted. With this under consideration, the figure proposed by European and Korean negotiators turned out to be 57 percent and 56 percent, respectively, the ministry said.
The discrepancy between the two Korean government agencies’ perspectives stems from their overall difference in opinion on domestic manufacturing sectors. An official from the Commerce Ministry said, “It is a misunderstanding to think that we have already reached a free trade agreement with the U.S., so the deal with the EU could be easily cut. Unlike the deal with the U.S., South Korea and the EU have overlapping industries in traditional manufacturing sectors.” The Korea-U.S. trade deal was signed on June 30.
South Korea has posted a trade surplus with the EU for the past three years, which amounted to an annual average of US$16 billion every year.
A Commerce Ministry official said, “There is no tariff in the shipbuilding sector in the EU and tariffs on around 90 percent of electric and electronics goods have already been lifted there. So, the FTA with the EU, if signed, is not likely to grant Korean manufacturers any more space for an increase in exports to the EU. Conversely, if the trade barrier on European goods is removed, it could do quite a lot of damage to the Korean domestic manufacturing industry.”
There is really no way to see complete unity in the opinions of the foreign and commerce ministries, since the former is more focused on concluding the economic deal, while the latter pays more attention to protecting local industries from an influx of overseas products.
Nevertheless, this kind of discord in the midst of negotiations could hurt the Korean government’s negotiating power. Also, the two ministries should have made a greater effort to iron out their differences ahead of the start of FTA negotiations in which the nation has such a high stake, obervers say. Deputy Trade Minister Kim Han-soo, a top negotiator on this deal, said, “The Commerce Ministry didn’t mention the danger of opening the local manufacturing sector at a fast pace until June.” In response, the Commerce Ministry countered that it knew of the danger before the start of the talks but stopped short of answering the question as to whether it raised the risk to the president and chief economic policymakers before the negotiations kicked off.
