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Tentative Free Trade Deal for S. Korea and Europe

New York Times | March 24, 2009

Tentative Free Trade Deal for S. Korea and Europe


HONG KONG - South Korea and the European Union on Tuesday reached a tentative agreement to scrap tariffs on goods traded between them, a deal that, if ratified, would send a strong signal on free trade at a time of rising protectionist tendencies.

Several controversial details have to be ironed out before trade ministers can sign off on the agreement at a Group of 20 meeting in London on April 2, European and South Korean officials cautioned.

But the preliminary agreement on talks that began nearly two years ago is a significant example of trade liberalization at a time of what many observers fear are rising nationalist and protectionist tendencies.

Despite calls for global trade to be liberalized as the world struggles with the worst economic downturn in decades, many countries have raised import duties or passed stimulus measures with subsidies to aid domestic industries.

The World Bank, in a report last week, said that since world leaders gathered in Washington for an economic summit in November, 17 members of the G-20 had adopted 47 measures aimed at restricting trade.

By contrast, the Europe-South Korea deal would eliminate most tariffs within five years, facilitating bilateral trade that totaled nearly $100 billion in 2008.

In addition to sending an important anti-protectionist example, the agreement would be a major boon to the South Korean economy, which, like many others in Asia, is heavily reliant on exports and has suffered badly from the collapse in international trade as the global economy began to grind to a halt last year.

The European Union is South Korea’s largest trading partner after China, while South Korea is the European Union fourth-largest non-European trading partner.

Ignacio Garcia Bercero, the chief European negotiator, said at a press conference in Seoul that he was “convinced that this is an agreement that not only will bring tangible economic benefits for all sectors of our economies, but also it will be a very timely signal of our commitment to open markets in a very difficult economic situation,” Reuters reported.

A free trade agreement between the United States and South Korea, reached in 2007, has not been ratified, and a successful deal with Europe could raise the pressure on lawmakers in Washington to sign off on the agreement.

 source: NY Times