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South Korea, EU to seek package solution on free trade deal

Yonhap | Monday September 1, 2008

South Korea, Eu to Seek Package Solution on Free Trade Deal

SEOUL, Sept 1 Asia Pulse — Chief negotiators from South Korea and the European Union have agreed to seek a package solution on controversial issues such as auto trade after failing to narrow their gap in three-day free trade talks, officials said Friday.

South Korean Deputy Trade Minister Lee Hye-min and his European counterpart, Ignacio Garcia Bercero, participated along with other officials in the inter-session meeting held here from Wednesday to Friday.

Both sides agreed to hold a slew of working-level meetings on the sticky issues in mid-September, with high-level talks to be held in October, officials said.

Seoul and Brussels have held seven rounds of negotiations since the conclusion of a free trade agreement (FTA) between Seoul and Washington last year, as South Korea tries to gain greater footing in the 27-nation economic bloc that is its second-largest trading partner after China.

During the meeting, South Korea called for the EU to drop tariffs on Korean cars within three years after the bilateral free trade deal takes effect, mirroring the Seoul-Washington FTA, officials said.

The EU, however, turned down Korea’s demand, saying that the EU tariff on Korean cars is higher than that of the United States. The EU imposes a 10 percent tariff on Korean cars, with the U.S. levying 2.5 percent.

However, Brussels said it would mull removing all tariffs on over 95 percent of industrial goods within five years after the implementation of a South Korea-EU FTA, they said.

South Korea also urged the EU to ease its country of origin rules, under which a product is considered manufactured by a trading partner only if at least 60 percent of the finished item is made in that country.

But the demand has not been accepted by the EU, officials added.

In addition, the two sides failed to bridge the gap on issues including auto-related technical standards and law and financial sectors, they said.

Bilateral trade amounted to US$89.8 billion in 2007. In addition, the EU is the largest foreign investor in South Korea, with outstanding investment reaching $44.8 billion at the end of last year.

 source: Asia Pulse