EU-South Korea free trade agreement: green light a step away
European Parliament Newsletter
14-17 February 2011 - Strasbourg plenary session
EU-South Korea free trade agreement: green light a step away
The key points
– MEPs are expected to give green light for ratification on Thursday (17 February) of the most ambitious free trade accord the EU so far negotiated.
– The EU’s first FTA with an Asian country includes strong safeguard measures to protect European industry from an eventual surge in South Korean imports.
Following two and a half years of negotiations the EU’s Free Trade Agreement (FTA) with South Korea is nearing the finishing line. Gathering in Strasbourg next week, MEPs are expected to give green light for ratification on Thursday (17 February) of the most ambitious free trade accord the EU so far negotiated. The EU’s first FTA with an Asian country includes, at the insistence of MEPs, strong safeguard measures to protect European industry from an eventual surge in South Korean imports.
The EU’s long-awaited free trade agreement (FTA) with South Korea - its 8th largest trading partner - will eliminate about 98% of import duties and other trade barriers in manufactured goods, agricultural products and services over the next 5 years. The most comprehensive trade deal until now by the EU is expected to double its trade with Korea in 20 years, boosting jobs and growth.
Following carmakers’ fears over imports of cheap cars, the FTA includes safeguard measures. They will allow the EU to suspend further reductions in customs duties or increase them to previous levels, if lower rates lead to an excessive increase in imports from South Korea, causing or threatening to cause "serious injury" to EU producers. The EU also gained guarantees from Seoul that new Korean legislation on automobile CO2 emissions will not have an adverse effect on Europe’s car makers.
Clear signal: EU is open for business
"The EU needs to send a clear signal, now more than ever, that it is open for business. The swift adoption of this agreement will send out a positive signal that we are not reverting to protectionism in response to the economic environment", as Parliament’s rapporteur on the FTA Robert Sturdy (ECR, UK) underlined.
The British Member hopes that the passage of this FTA will enable the EU to complete other crucial trade agreements with emergent economies, such as India. "The EU must not give up on achieving a multilateral deal through the WTO but, in the meantime, we should seek as much bilateral opening of trade as possible" he pointed out.
On safeguard measures he said that "there have been some genuine concerns about this FTA, and there has been a great deal of scaremongering too. However, with the robust safeguard clause that we have included in the deal, we can be assured that our businesses should only enjoy the immeasurable benefits that this FTA will bring, with limited side effects".
Why a safeguard clause?
Minimising the EU industry’s concerns was also Spanish MEP Pablo Zalba Bidegain’s (EPP) target: "Some sectors of the European industry, specially the automotive sector, had shown their concerns with the FTA with South Korea, and the negative impact on the industry", the rapporteur on the safeguard clause explained.
"We wanted to reach three objectives: First, to create a safeguard clause which would be easy to apply. Second, that the safeguard would be the most effective possible to address a possible surge of South Korean imports. And third, that it would make the FTA more attractive to the concerned European industry" said Ms Bidegain.
What goods are covered? "All products from South Korea that may create, because of a surge of imports, an injury or a threat of injury for European Industry. We have put special protection measures for the most sensible sectors: consumer electronics, textile products and specially the European automotive industry", explained Mr Zalba. Korea enjoys a comparative advantage over the EU in these sectors.
Final step in the long talks
Launched in May 2007, and following two and half years of negotiations, the deal was (initialled in October 2009 and) finally signed at the EU-South Korea summit in Brussels on 6 October. Under the Lisbon Treaty, all international trade deals need the Parliament’s consent. Equally, under Lisbon, the safeguard regulation will now be adopted by Parliament through the ordinary legislative procedure (former co-decision).
Provided that MEPs adopt the regulation and grant the consent, the deal will come into force in July 2011.
