Bridges Weekly Trade News Digest • Volume 12 • Number 18 • 21st May 2008

EU, South Korea aim to finalise trade agreement this year

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The seventh round of free trade negotiations between the European Union and South Korea ended on 15 May with negotiators aiming for a free trade agreement within the year, despite ongoing disagreements over rules of origin and industrial goods tariffs.

In a number of sectors such as pharmaceuticals and electronics, the two sides made progress on various ‘behind the border’ issues like standards and certification requirements. In addition, Seoul indicated its willingness to consider the EU’s request for enhanced protection of geographical indications for products such as Champagne and Parma ham.

Discussion on the EU rules of origin allowed the parties to more fully comprehend each others’ positions. Seoul wants Brussels to reduce the percentage of a product that must be made in Korea before it can qualify for lower tariffs under the FTA. In response, Brussels intends to present a compromise proposal to Korea.

The contentious topic of tariffs for industrial goods, such as those on passenger cars, and automotive non-tariff barriers were discussed by the two chief negotiators.

Despite the persistent disagreements, Europe’s chief negotiator, Ignacio Garcia Bercero, stated that "both sides are convinced that on the basis of the progress made during this round that it is feasible and desirable to conclude the EU-Korea FTA negotiations during the course of 2008. Both sides agree to accelerate the process so as to reach agreement as early as possible."

Officials have said that the next round will be scheduled only when it is felt that an agreement may be reached. Meanwhile, the EU and South Korea will continue dialogue on other levels. A meeting between the EU Trade Commissioner and chief negotiator Peter Mandelson and the Korean Trade Minister, Kim Jong-hoon is expected soon.

South Korea has negotiated a number of free trade deals as part of its strategy to strengthen its export-orientated economy. Such agreements include FTAs with the US, Chile, Singapore, the European Free Trade Association and a partial agreement with the Association of Southeast Asian Nations. An FTA with the EU would be South Korea’s largest so far. For the EU, the FTA with Korea would be the EU’s first trade deal with an Asian nation.

ICTSD reporting; "EU and Korea complete 7th Round of FTA negotiations," BRUSSELS, 15 May 2008; "EU, South Korea aiming for trade deal this year," REUTERS, 15 May 2008; "EU: Ready to Conclude Free Trade Pact With S Korea This Year," DOW JONES NEWSWIRES, 15 May 2008; "S. Korea-EU FTA predicted to boost S. Korean exports by 5 pct," PEOPLE’S DAILY ONLINE, 16 May 2008.