This is the way some agreements should end
Inter Press Service | 21 September 2007
TRADE-EU: This Is the Way Some Agreements Should End
By David Cronin
BRUSSELS, Sep 21 (IPS) — Elaborate funeral rituals were performed in central Brussels over the past week to show how a planned free trade accord between the European Union and the Korean government should, in the view of anti-poverty campaigners, be buried.
While officials from the EU and South Korea ensconced themselves in the five-star Sheraton hotel, protesters outside undertook traditional marches of the kind used to mourn the recently deceased.
The EU’s executive, the European Commission, has predicted that the free trade accord (FTA) it wishes to conclude with Korea by the end of this year will bring an immense windfall for business. A study that the Commission requested from the consultancy Copenhagen Economics forecasts that the Union’s exports to Korea would rise by 48 percent and Korea’s exports to the EU by 36 percent once the deal is implemented.
Yet those with less faith in free trade point out that any such increase in commercial transactions could be at expense of jobs, labour standards and public revenue.
"The death of the FTA would symbolise birth for people, farmers and workers as it would give them strength," said Cheehyung Kim from the Korean Alliance Against the Korea-EU FTA.
"The main objective of the FTA is to eliminate tariffs," he told IPS. "Tariffs are essential not only to protect farmers and workers but also public services like transport, education, gas, electricity and water. By eliminating these tariffs, you are putting farmers and workers in competition with each other in terms of who offers the lowest wage and lowest price, while eliminating financial resources for public services."
The Commission has identified Korea — along with India and Brazil — as one of the key markets that it wishes to prise open for European firms. Korea is currently the Union’s second largest trading partner after China. With EU business in Korea worth 40 billion dollars at the end of last year, the Union is also the largest foreign investor in the so-called Asian tiger.
EU officials have made plain that they want the trade accord to be at least as far-reaching as the one reached between Korea and the U.S. in April. The Commission has said that it is willing to completely eliminate tariffs on Korean imports, provided that Seoul reciprocates with similar market openings for EU products.
The Copenhagen Economics study predicted that the largest beneficiaries from increased EU exports to Korea would be companies dealing with business services, machinery and processed foods.
The question of what trade taxes should apply to agricultural goods is likely to prove tricky in the negotiations. The EU is eager to expand on its agricultural exports to Korea, now worth over 1 billion euros (1.4 billion) per year, especially through rising sales of meat and wine.
However, there is much concern in Korea about the impact this would have on traditional farming. Korea has managed to keep its pork sector largely intact despite the rapid industrialisation the country has undergone since the 1960s.
But Korean negotiator Kim Han-soo this week conceded that it will not be able to shield that sector indefinitely. "Blocking imports of pork is tantamount to opposing the FTA," he said.
Despite its bourgeoning economy, Korea’s richest and poorest citizens have become increasingly polarised over the past decade.
Earlier this year, the Organisation for Economic Cooperation and Development (OECD), a group of 30 wealthy nations, published a study about the levels of inequality in industrialised countries. The OECD examined the income gap between the highest and lowest 10 percent of wage earners in 20 countries for which it could gather data. Only the U.S. and Hungary were found to have a wider gap between rich and poor than South Korea.
The OECD highlighted, too, how Korea spent less than five percent of ordinary tax revenues on social protection, compared to an average of 43 percent in industrialised states.
The EU’s thinking on business with Korea is guided by a 2006 strategy document called Global Europe. In it, the Commission laid out an objective of removing virtually all obstacles that European firms encounter when trying to do business abroad.
"The Global Europe doctrine outlines the very aggressive interests of the EU," said Alexandra Strickner from the Institute for Agriculture and Trade Policy (AITP) in Austria. "It clearly formulates that the main intention is to increase the competitiveness of European industry, and any kind of internal regulation in Europe will need to be a function of that goal. There is a huge democratic deficit in Europe. The Global Europe strategy hasn’t undergone any public discussion in Europe."
Meanwhile, the humanitarian organisation Médecins Sans Frontières (MSF) has expressed unease about efforts by the EU to have stringent rules on intellectual property inserted into the planned agreement with Korea.
New proposals put forward by the Commission would make Korean drug regulators legally obliged to respect the so-called data exclusivity enjoyed by pharmaceutical firms for long periods. Data exclusivity covers the length of time which information used to make a medicine under patent cannot be used by manufacturers of generic drugs.
Alexandra Heumber, an MSF campaigner in Brussels, said that including such provisions in free trade accords could make the price of medicines prohibitive for the poor.
"Data exclusivity undermines access to affordable medicines," she told IPS.
Huember argued that it is vital that members of the European Parliament (MEPs) are aware of the Commission’s latest moves. The assembly is currently seeking assurances from EU governments and the Commission that they will not support the inclusion of measures that could restrict access to affordable medicines in any of the free trade agreements under negotiation. MEPs are set to hold a debate on patented medicines in October.
"I hope that the European Parliament will take this seriously," Heumber added. "Until now, the Commission has not been playing a good role."
