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S Korea-EU FTA to generate more benefits than US FTA, reports say

Yonhap 2006/06/11

S. Korea-EU FTA to generate more benefits than U.S. FTA, reports say

SEOUL, June 11 (Yonhap) — A free trade agreement (FTA) between South Korea and the European Union will bring greater benefits to Asia’s fourth-largest economy than a similar trade pact with the United States, reports showed Sunday.

One report, compiled by the Korea Trade-Investment Promotion Agency (KOTRA), said exports of automobiles, electronic goods and computer-related products to European countries will sharply increase in particular if a Korea-EU FTA is concluded.

"The impact of an FTA with the EU will be greater than expected...and may be greater than an FTA with the U.S.," the report said.

Another report from the Korea Institute for International Economic Policy (KIEP) estimated an FTA with the EU will boost South Korea’s gross domestic product by 24 trillion won (US$25.2 billion) in the long run, and increase the number of job offerings by 597,000.

Exports will also increase $11 billion, and imports rise $8.2 billion, thus bringing in a $2.8 billion trade surplus, the report projected.

The reports came at a time when Seoul and Washington are engaged in talks over a similar trade pact.

The two countries wrapped up their first round of negotiations on a trade pact in Washington on Friday, and the next is slated for Seoul on July 10-14, followed by sessions in early September, mid-to-late October and early December.

The two sides aims at reaching an agreement before the U.S. trade promotion authority expires in July next year. The authority requires the U.S. Congress to vote up or down on the FTA without amendments.

The KOTRA said imports from the EU’s 25-member countries reached US$4.03 trillion last year, 2.4 times that of the U.S., and South Korea’s shipments to the EU amounted to $43.7 billion last year, becoming the country’s second-largest overseas market after China.

Also, the portion of exports to the EU against the total was 15.4 percent last year, up from 12.8 percent in 2003, according to the report.

South Korea, which has completed FTAs with Chile and Singapore, has been pushing to sign similar agreements with Japan, Canada and the regional bloc of Southeast Asian Nations in order to open its economy wider.

It has also launched joint research on whether to sign such an agreement with such countries as India and Mexico.

 source: Yonhap