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S. Korean biz bodies hail implementation of EU FTA

Yonhap News, Korea

S. Korean biz bodies hail implementation of EU FTA

30 June 2011

SEOUL, — South Korea’s leading business organizations on Thursday welcomed the scheduled implementation of the free trade pact with the European Union (EU), vowing full support for the deal that promises to promote trade and economic growth.

The free trade agreement (FTA), signed in October last year, is slated to come into effect on Friday, cutting or lowering tariffs on 96 percent of EU goods and 99 percent of South Korean goods within three years after the accord takes effect.

A special FTA committee made up of business bodies such as the Federation of Korean Industries (FKI), the Korea International Trade Association (KITA) and the Korea Employers Federation (KEF) said that the elimination of tariffs will open new opportunities for local companies doing business in the world’s single largest economic bloc.

"The pact allows local companies to enjoy an advantage when trading with EU countries compared to rivals such as China and Japan, which will boost the overall competitiveness of South Korea," the committee said in a joint statement.

This view was echoed by the FKI, the lobby for large conglomerates, that said the edge gained over Asian competitors could create new markets for small and medium enterprises that have lagged behind conglomerates in exporting goods abroad.

KITA added that the EU FTA will open unprecedented opportunities for all local companies. "The EU has a US$4 trillion import market that is much larger than other markets that have been opened by FTAs in the past," it said.

South Korea already has free trade deals with countries like Chile, Singapore and the Association of Southeast Asian Nations.

The association pointed out that market share of South Korean products in EU countries stood at just 1.0 percent in 2010, much lower than 7.1 percent for China and 1.6 percent for Japan.

"The lowering or elimination of tariffs will help local companies sell more products in Europe that can contribute to pushing up the country’s overall trade volume to over $1 trillion for the first time this year," it said.

Others like the KEF, which represents over 1,000 medium-sized businesses in the country, said being the first East Asian country to implement an open trade regime with the EU is expected to be a boon to South Korean companies.

"The agreement will contribute to strengthening the country’s status as the seventh-largest exporter in the world and benefit companies in such fields as auto parts and textiles, it said.

The business organizations, meanwhile, urged the National Assembly to quickly pass the FTA with the United States that was signed in 2007.

"Lawmakers must consider what is best for the country and make the right decision as soon as possible," they said.