South Korea, EU Reach Agreement On FTA

Bernama | March 24, 2009

South Korea, EU Reach Agreement On FTA

SEOUL, March 24 (Bernama) — Negotiators of South Korea and the European Union (EU) reached a tentative agreement here on Tuesday over their free trade agreement (FTA), South Korea’s Yonhap News Agency reported.

The two sides launched their eighth round of two-day talks on Monday in hope of reaching a conclusion of their 2-year lasting trade talks.

Since South Korea and the EU began their FTA talks in May 2007, differences over industrial tariffs and auto trade have hampered progress, but the two sides began to narrow down on those issues during the seventh round of negotiations in May last year.

"At the delegate-level, both sides have reached a provisional free trade accord. Whether to conclude the negotiations will be decided at a minister-level meeting on April 2,� Lee Hye-min, Seoul’s chief negotiator for the talks, was quoted as saying to Yonhap after the meeting.

The EU negotiator, Ignacio Garcia Bercero, also commented on Tuesday’s deal as the "most ambitious" the EU ever negotiated with an external partner, but refused to give a further remark as " success is not guaranteed."

The deal will be finalized in London on April 2 during a meeting between South Korean Trade Minister Kim Jong-hoon and his EU counterpart Catherine Ashton, Lee said.

The free trade deal, however, still faces thorny issues such as import duty refunds and rules of origin, Yonhap said.

Although South Korea have strongly requested on returning import tariffs to companies using imported materials for export products, the EU is still standing against it, Yonhap reported.

In addition, despite both sides reportedly compromised on the marginal mark, 45 percent, to acknowledge a product to be virtually made in the partner country, the issue is yet to be confirmed by both sides’ ministers.

During a high-level meeting earlier this month, South Korea and the EU tackled various sensitive issues, such as eliminating or phasing out tariffs on manufactured goods and automobiles, and acknowledging goods from Kaeosong Industrial Complex, an inter- Korean industrial complex in DPRK, as duty-free items.

The EU stood as South Korea’s second-largest trading partner after China last year, with two-way trade reaching over US$90 billion.

If the agreement is finalized, South Korea’s exports are expected to increase by US$11 billion and gross domestic product by 3.08 percent, according to a forecast by the Korea Institute for International Economic Policy.

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source: BERNAMA