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South Korea-EU free trade talks got off to fast start, both sides say

Yonhap News, Korea

South Korea-EU free trade talks got off to fast start, both sides say

11 May 2007

SEOUL, May 11 (Yonhap) — South Korea and the European Union made good progress this week in their first round of negotiations to forge a major free trade pact, chief negotiators from both sides said on Friday, but they conceded sensitive issues were barely touched.

"To sum up the first round of negotiations, this week’s talks were highly successful," Deputy Trade Minister Kim Han-soo told reporters after the end of the first round. "However, it’s not appropriate to presume that the remaining rounds will face as few challenges as the first round."

Kim added that the two sides agreed to seal a proposed free trade pact "as soon as possible," without giving an exact indication of when the two sides might strike a deal. "We will vow to make every effort to successfully seal an agreement."

His EU counterpart, Ignacio Garcia Bercero, said that this week’s talks were carried out in a "constructive and efficient manner," citing some areas such as rules of origin, services and sustainable development as sensitive issues for future negotiations.

"Both sides figured out what issues will (need to be) worked out in future talks," Bercero said.

Negotiators have been meeting in Seoul since Monday to tear down tariffs and other trade barriers between South Korea, Asia’s third-largest economy, and the EU, the world’s largest trading bloc.

Earlier, Kim told reporters that they have exchanged a "basic stance" in two of the most difficult areas, the environment and labor.

"We also reached an understanding that both sides agree not to use the issues of the environment and labor as a tool of trade restrictions," Kim said, adding that "mutual trust was laid between the two sides to move the negotiations forward."
No particular deadline is set for the South Korea-EU free trade talks, but Kim said previously he hoped to conclude a deal "within a year."
Both sides have agreed in principle to remove tariffs on 95 percent of bilateral trade, Kim said earlier. South Korea’s average tariff is 11.2 percent, far higher than the EU’s 4.2 percent, according to Kim’s ministry.

Still, the first round was aimed at setting parameters for an agreement and identifying sensitive issues, officials said. The next round of negotiations is set for the week of July 16 in Brussels.

Despite the anticipated difficulties ahead, a senior South Korean negotiator said both sides may be able to strike a deal by the end of this year.

"As you know, the pace of negotiations is faster than the U.S. free trade talks," the negotiator said on the condition of anonymity. "However, there is consensus in our negotiating team that talks are likely to conclude by the end of this year."
A third round of talks is scheduled for September in Brussels, but no time frame has yet been set for a fourth round to be held in South Korea, according to the South Korean government.

South Korea wants the EU to soften its anti-dumping rules and countervailing duties, while recognizing the need to exclude so-called sensitive agricultural products from the FTA.

Negotiators said that their EU counterparts expressed understanding on this issue. They said Seoul wants to hold onto tariffs for certain products, but if it does have to import them, it wants to subject the goods to a tariff-rate quota system, where the government controls trade. Both sides agreed that the FTA talks should be separated from trade restrictions caused by mad cow outbreaks and import quarantine issues.

Brussels, meanwhile, wants Seoul to ease regulations on imported cars and toughen measures to protect intellectual property rights.

European countries also expressed interest in regulatory rules governing labels for agricultural goods, including alcoholic beverages like wine and champagne.

The EU is South Korea’s second-largest trading partner after China. Two-way trade between South Korea and the EU totaled US$79.4 billion last year, and Brussels is the largest foreign investor in Seoul, with $5 billion invested in 2005 alone.

Free trade talks with the EU came a month after South Korea wrapped up negotiations for a landmark free trade agreement (FTA) with the U.S. after 10 months of grueling negotiations. The FTA still has to be passed by the legislative bodies of both countries. Many economists here said a deal with the U.S. would give an edge to Korean negotiators in EU free trade talks.

On Thursday, South Korea Trade Minister Kim Hyun-chong said that the EU had invited South Korea to begin free trade talks in February, after originally rejecting Seoul’s proposal in 2004.

"In 2004, when we proposed to hold FTA talks with the EU, the EU side refused to do so, with the reply of ’Do you really know (the meaning of) the initial "F" in FTA?’" the trade minister said in a speech in Seoul, suggesting that his country had been shunned by the EU because of its reluctance to open its economy at that time.

Unlike the negotiations with the U.S., dogged by large-scale demonstrations, this week’s talks with the EU drew few protests.

A small group of activists from the splinter Democratic Labor Party, including Rep. Shim Sang-jeong, gathered in front of the talks’ venue on Friday, calling for their government to stop the talks and arguing a deal would only benefit big companies.