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Where does Korea-EU FTA stand?

Korea Herald 2010-06-06

Where does Korea-EU FTA stand?

Many economists, politicians, businesspeople and everyday citizens of Korea and the European Union are anxiously awaiting the entry into force of the two economic actors’ most important free trade agreement.

On the economic front, EU Ambassador Brian McDonald explained that the FTA is estimated to be worth more than 30 billion euros ($36.6 billion) in new trade and will remove virtually all tariffs between the two economies, as well as many non-tariff barriers and will create new market access in services and investments.

As for tariffs, on day one of the agreement will eliminate tariffs levied on more than 70 percent of the goods exchanged and scrap the bulk of the remaining tariffs within three-five years.

Non-tariff barriers will be tackled across all sectors but more practically in the automotive, pharmaceutical and consumer electronics sectors.

In services, the FTA will provide new market access in many sectors such as telecommunications, environmental services, shipping or financial legal services.

The FTA will also offer transparency and predictability on regulatory issues and reinforce the protection of intellectual property.

Efficient dispute settlement rules will be set up to ensure enforceability of commitments.

Yet, the question remains, where are we today?

The answer is found in the agreement’s complexity and length.

The Foreign Ministry’s Deputy Minister and chief negotiator during the Korea-EU FTA talks, Lee Hye-min said that this “agreement is so bulky, it’s more than 1,000 pages, more than any other agreement that the European Union has ever concluded.”

The problem, he noted is in the translation of the text.

The European Union is made up of 23 official languages and this agreement needed to be translated into all these languages for submission to the European Council, something that has been completed.

“The Korean government started the verification of the French version, we cannot verify all the languages,” said Lee. “We found more than 300 differences between the French and English versions and notified the Commission.”

Lee added that the Korean government is patiently awaiting the legal verification of the EU secretariat.

While this might sound like it will take years to have the agreement come into force, Lee and McDonald both said that the agreement will be a done deal provisionally in the later part of this year.

Provisionally? Yes, there is a difference in wording between “provisional” signing and the other term, “formal entry into force,” but, in practical terms, there is no difference.

This provisional application label was seen during the Korea-U.S. FTA and we have seen what has happened to that agreement.

The Korea-EU FTA will be accepted into practice provisionally as soon as the National Assembly and the EU parliament consent to this agreement.

Once that is in place, the ratification of all 27 European Union member states will start and will probably take about 2-3 years to complete.

“There is no difference between the provisional application and the formal entry into force,” Lee said because as listed by McDonald, the details in the agreement will start right away under the provisional part of the deal.

If this is so complex, the next question is why should Koreans care?

The simple answer is that the 500-million person market of the EU absorbs 13 percent of Korea’s exports, making it the nation’s second-largest export destination after China.

By Yoav Cerralbo ([email protected])

 source: Korea Herald