A landmark free-trade agreement (FTA) between South Korea and the EU took effect yesterday amid expectations of a boost to already booming commerce between the two sides.
The agreement brings together the 27-member EU, the world’s largest economic bloc, and increasingly affluent South Korea, Asia’s fourth-largest economy.
It is the first such accord for the EU with an Asian country. South Korean and EU lawmakers ratified the agreement earlier this year.
“Not only for goods, but services, investment, persons, even ideas will be able to move faster than before in terms of speed, bigger than before in terms of number and volume and better than before in terms of quality,” South Korean Trade Minister Kim Jong-hoon said in a speech.
Tomasz Kozlowski, the EU’s ambassador to South Korea, also heralded the start of the deal, saying yesterday that the day of implementation “will be remembered in history books as the starting point for the first major Eurasian free trade agreement.”
It immediately slashes 70 percent of tariffs, with that set to expand to 98.7 percent within five years, -Kozlowski said on Thursday.
Among items for which import duties have disappeared are South Korean auto parts and cellphones and European auto parts, industrial machinery and wine, he said.
The pact marks a come-from-behind victory of sorts for the EU over the US. The bloc began negotiations for the deal with South Korea in May 2007, a month after Washington and Seoul first concluded their own FTA.
That deal — the biggest trade accord for the US since the North American Free Trade Agreement of 1994 — has yet to take effect, however, remaining unratified by lawmakers amid political wrangling in both countries.
The agreement, originally negotiated by previous governments in the two nations, was long hung up on demands by the administration of US President Barack Obama for more US access to South Korea’s auto market. South Korea reopened the deal under pressure from Washington and negotiators reached a compromise late last year.
Now, however, it has become caught up in a debate in the US Senate along with two other stalled FTAs with Colombia and Panama over proposed financial and job-retraining help to workers hurt by foreign competition.
“The earlier entry into force of the Korea-EU FTA is really significant,” Choi Seok-young, Seoul’s top free trade negotiator, told reporters, citing the lowering of tariffs. “US competitors in the Korean market and EU market would face comparatively disadvantaged positions from today onward.”
The EU ranked as South Korea’s fourth-largest trading partner last year behind China, the ASEAN and Japan, according to South Korean statistics. Trade between South Korea and the EU totaled US$92.2 billion last year, a gain of 17 percent from 2009. The EU is the biggest foreign investor in South Korea.
Trade between South Korea and the US amounted to US$90.2 billion last year. The US is South Korea’s fifth-biggest trading partner.
South Korea has been aggressive in pursuing FTAs and has deals in force with India and the ASEAN, among others.
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