Bridges Weekly Trade News Digest • Volume 13 • Number 26 • 15th July 2009

EU, South Korea Conclude FTA Talks

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Officials from South Korea and the European Union said on Monday that they had concluded free trade talks and that they expect to finalise the deal before the end of 2009. The pact - which analysts say could be worth up to US$ 100 billion - would be Seoul’s largest bilateral trade agreement to date and would mark Brussels’ first such deal with a major Asian economy.

“The finalisation of the agreement will follow during the Swedish presidency,” said Swedish Prime Minister Fredrik Reinfeldt, whose country holds the rotating presidency of the EU for the remainder of the year, Reuters reported. But some internal hurdles remain, Reinfeldt added.

“When you finalise this kind of agreement with the European Union, we need to also finalise it with our different member countries,” Reinfeldt said after meeting with officials in Seoul on Monday, according to a report in The New York Times. “There might still be some outstanding questions, and we need to follow up on them before we could say that it’s absolutely all clear and all ready to sign.”

The two sides have been working toward a trade deal since 2007, but the negotiations hit a few stumbling blocks along the way. Particularly controversial topics included the discussions on auto imports and rules of origin (See Bridges Weekly, 3 June 2009, http://ictsd.net/i/news/bridgesweekly/47839/). Officials predicted breakthroughs in the talks both in 2008 and earlier this year, but, until Monday, the conclusion of the talks remained elusive.

South Korea, in an effort to boost its export-orientated economy, has pursued a number of free trade deals in recent years, including bilateral agreements with the US, Chile, India, Singapore, the European Free Trade Association and a partial agreement with the Association of Southeast Asian Nations.

If the deal with the EU goes through, it could put significant pressure on the US to ratify its own free trade deal with Seoul. Negotiations for such an agreement were concluded in April 2007, but the US Senate has failed to ratify it, largely out of some lawmakers’ concerns over the impact it might have on the US auto industry (see Bridges Weekly, 4 April 2007, http://ictsd.net/i/news/bridgesweekly/7581/).

US automakers are certainly paying close attention to the EU-South Korea deal. In an interview with Reuters on Monday, Ford Motor Company’s Chief Financial Officer, Lewis Booth, said the agreement could be bad news for Western automakers.

“Right in the middle of the worst economic crisis for 50 or 70 years, some parts of the European [Commission] are advocating a free trade agreement with Korea that is very, very one sided in favour of Korea,” Booth said.

ICTSD reporting; “Seoul says European trade deal is near,” THE NEW YORK TIMES, 13 July 2009; “EU plans to sign $100 bln S. Korea trade pact in ‘09,” REUTERS, 13 July 2009; “EU-South Korea trade pact marks trouble, Ford says,” REUTERS, 10 July 2009.

adetisures that have been put in place since the onset of the global economic crisis last year. That report will inform the work and discussions of the trade ministers who will meet from November 30 to December 2 in Geneva at the organisation’s seventh full ministerial conference.

Additional information

To download a copy of the July protectionism report, please click here: http://ictsd.net/downloads/2009/07/tpr-report.pdf

To read the full text of Lamy’s address to the Trade Policy Review Board on 13 July, please see: http://www.wto.org/english/news_e/news09_e/tpr_13jul09_e.htm

ICTSD reporting.