Korea, EU open 4th round of free trade talks
Korea.net | 15 October 2007
Korea, EU open 4th round of free trade talks
Korea and the European Union launched their fourth round of free trade negotiations in Seoul on Monday (Oct. 15) with both sides expected to focus on resolving disputes including one over tariffs, one of the thorniest issues in the talks.
Fresh from reaching a trade accord with the United States in April this year, Seoul held three rounds of negotiations with Brussels on a free trade agreement that could provide Asia’s third-largest economy with a commercial bridge to Europe.
But negotiations hit a snag because of disputes over tariff concessions, particularly on cars, casting doubts over whether the goal of reaching a deal by the year’s end can be reached.
Kim Han-soo, South Korea’s chief negotiator for the talks, said Friday (Oct. 12) that striking a free trade deal with the 27-nation economic bloc would not be easy.
"It is possible (for Seoul and Brussels) to forge a deal by the end of the year... but it is a difficult task," he said, implying tough negotiations ahead. He said narrowing differences on tariffs would be the key to accelerating the negotiations.
In a bid to give new impetus to the negotiations, Korea said last week it may sweeten its tariff offer to the EU.
Since the first round of negotiations in May this year, the EU has offered to eliminate or phase out all its import tariffs on Korean goods within seven years, and remove tariffs on 80 percent of the goods within three years after a deal comes into force.
Seoul says it would remove all tariffs on industrial goods within three years with some exceptions, and eliminate tariffs on roughly 68 percent of EU goods as measured in value in three years, compared with 63 percent in a previous offer.
But the EU expressed disappointment with Korea’s offer, saying it falls short of the accord signed with the United States in June. The EU is demanding that Korea match reductions on beef and car-import tariffs that it granted the U.S. in June.
In particular, Brussels wants Seoul to cut regulations for European carmakers by applying international standards instead of different domestic rules.
"The EU is pressing us to adopt its own standards... but it is very difficult to accept their demand because we had already agreed with the U.S. to accept many of its rules on cars," said an official.
Korea held out for an improvement in Europe’s offer to eliminate a 10 percent tariff on imported autos within seven years.
Korea sold 74,000 autos worth $9.1 billion in Europe last year while buying only 15,000 vehicles worth $1.6 billion.
The country’s tariff rate on cars is 8 percent, compared to 10 percent for the EU.
In its trade deal with the U.S., the world’s largest economy, Seoul agreed to remove an 8 percent import duty on cars. In return, the U.S. agreed to remove a 2.5 percent duty on Korean car imports and a 25 percent duty on truck imports.
"The EU side is still reluctant to make concessions on autos and electronic goods that Korea is most interested in," said another official. "This week’s negotiations are likely to be very tough."
The EU is Korea’s second-largest trading partner after China, with bilateral trade reaching $79 billion in 2006. Some unofficial studies suggest a free trade agreement would boost that figure by as much as 40 percent in the long run.
If implemented, the free trade pact would be the largest for Korea, surpassing the agreement signed in June with the U.S. that is still under legislative review.
The EU is also the largest foreign investor in Korea, with $40.4 billion invested as of the end of 2006.
Currently, Korea has free trade agreements with Chile, Singapore and the European Free Trade Association as well as a partial pact with the Association of Southeast Asian Nations.
Seoul is also seeking similar trade deals with Canada, India and Mexico.
