South Korea and the EU formally signed a free trade agreement in Brussels on October 6th and both sides agreed they will aim to ratify the agreement by July 2011. The deal, which has been negotiated starting in May 2007, will lower tariffs, boost trade and investment, and create jobs for both Korea and the 27 EU countries.
The agreement was signed by Korea's Minister for Trade Kim Jong-hoon and European Commissioner for Trade Karel De Gucht and others. President Lee Myung-bak took part in the ceremony after he met with Prime Minister Yves Leterme of Belgium at the Egmont Palace and said the two sides should work hard to meet the ratification deadline.
In an exclusive interview Minister Kim speaks about the implications of this agreement and also the various other FTA's that are being negotiated with other countries.
>>When officially signing the Korea-EU FTA on October 6, 2010 in Brussels, Korea and the EU agreed upon the date of provisional application of July 1, 2011 for the Korea-EU FTA.
The respective domestic procedures in Korea and the EU, namely an approval from the Korean National Assembly and an approval from the European Parliament, should be completed for the Korea-EU FTA to be provisionally applied on the agreed date.
I do not forsee any big difficulties in proceeding domestic procedures in either Korea or the EU. I think, however, that during the process of internal processes both in Korea and in Europe it is very important for both sides to put their best efforts to offer the stake-holders an explanation on the benefits the Korea-EU FTA will bring to the overall economies of these parts of the world in a balanced manner beyond its impact on certain industries or sectors.
>>The Korea-EU FTA is a comprehensive and high-quality trade agreement between Korea and the world's largest economy. Trade opportunities in the EU market for Korean companies in all different sectors are expected to be enhanced as the Korea-EU FTA is implemented.
Once the Korea-EU FTA enters into force, Korean consumers will also have better access to leading brand European goods with good quality at affordable prices and will enjoy a wider range of choice.
-In particular, the elimination of tariffs on major imported European goods, such as cosmetics, garments, wine and whiskey, will bring a huge welfare increase. A recent study by the KIEP(Korea Institute for International Economic Policy), a leading research institute in Korea, suggests that the welfare increase will amount to as much as 3.84% of the GDP (equivalent to $32 billion) in the long run.
The Korea-EU FTA, by enabling Korean domestic manufacturers to import the EU's high-tech parts and materials at a lower price, is also expected to contribute to stabilizing prices of goods and reinforcing competitiveness of the Korean products in the world market.
-In case of parts and materials, the current tariffs center around 8% and are to be eliminated within 3 years under the Korea-EU FTA. It is to be noted that these benefits will be attainable in a relatively short amount of time.
>>The implementation of the KORUS FTA has been delayed for more than three years, due to various factors, including the stagnant American economy and political schedules such as the forthcoming mid-term election.
During the Summit meeting held between the two countries last June, President Obama told President Lee that it was time that the USTR worked closely with its counterpart to make sure that we set a path before the G20 Summit in November and that President Obama intended to present the Agreement to the U.S. Congress for approval in the following few months.
Based on the strong commitment shared by the two leaders, both governments are making concerted efforts to move the Agreement forward.
-There are various voices in both countries regarding the Agreement, including those urging for renegotiations. However, since the KORUS FTA reflects the balance of interests between the two countries, I believe that reopening the texts is not an option.
Given the economic and strategic benefits the KORUS FTA could bring to both countries, it is my strong hope that the Agreement will be implemented in the near future.
>>Although the multilateral trading system continues to play a pivotal role in international trade, the DDA negotiations do not seem to be making much progress. Under these circumstances, FTAs are increasingly becoming a major instrument of trade liberalization and economic reform in the world of global trade and economy.
-To respond to the rapid proliferation of regionalism throughout the world, Korea has been actively pursuing an ambitious FTA policy.
Due to the comprehensive and high-level trade liberalization eliminating tariff and non-tariff barriers through FTAs, Korea has expanded trade with its FTA partners, ensuring increased mutual market access and providing exporters with a competitive edge.
More importantly, Korea's FTAs provide opportunities to enhance economic efficiency through external competition, thereby increasing competitiveness of domestic industries. There are always sectors vulnerable to foreign competition, notably agricultural sector. Through FTA negotiations that involve a painful structural adjustments in its economy while taking care of sensitivities in those vulnerable sectors, Korea has so far been successful in upgrading its economic systems. Through this process, transparency in Korea's economic system and predictability of the nation's regulatory regime has been enhanced.
>>Since the first conclusion of the Korea-Chile FTA in 2003, Korea has actively engaged in FTAs with more than 60 countries as follows:
5 FTAs in effect
- The Korea-Chile FTA entered into force in April 2004.
- The Korea-Singapore FTA entered into force in March 2006.
- The Korea-EFTA FTA entered into force in September 2006.
- The Korea-ASEAN FTA entered into force in June 2007(Goods), in May 2009(Services) and in September 2009(Investment) separately.
- The Korea-India CEPA(Comprehensive Economic Partnership Agreement) entered into force in January 2010.
3 FTAs concluded
- The Korea-US FTA was signed on June 20, 2007 and is currently under ratification procedures.
- The Korea-EU FTA was signed on October 6, 2010 and is currently under ratification procedures.
- The Korea-Peru FTA was concluded the negotiations on 30 August, 2010.
7 FTAs under negotiations
- The Korea-Australia FTA negotiations were launched in May 2009 and the 5th round of negotiations was held in May 2010.
- The Korea-Colombia FTA negotiations were launched in December 2009 and the 4th round of negotiations was held in October 2010.
- The Korea-Turkey FTA negotiations were launched in March 2010 and 2nd round of negotiations was held in July 2010.
- The Korea-New Zealand FTA negotiations were launched in June 2009 and the 4th round of negotiations was held in May 2010.
- The Korea-GCC FTA negotiations were launched in July 2008 and the 3rd round of negotiations was held in July 2009.
- The Korea-Canada FTA negotiations were launched in July 2005 and the 13th round of negotiations was held in March 2008.
- The Korea-Mexico FTA negotiations were launched in December 2007 and the 2nd round of negotiations was held in June 2008.
Other FTAs under consideration
- Korea-Japan FTA: The 1st Director-General-Level Consultation on the Korea-Japan FTA was held in September 2010.
- Korea-China FTA: The 1st meeting on the exchange of views concerning sensitivities regarding a possible Korea-China FTA was held in September 2010.
- Korea-China-Japan FTA: The 2nd meeting of the Joint Study Committee on an FTA among China, Japan and Korea was held in September 2010.
- Korea-Israel FTA: Korea and Israel finished the joint feasibility study on the Korea-Israel FTA in August 2010.
- Korea-MERCOSUR FTA: Korea and MERCOSUR signed the "MOU for the establishment of Joint Consultative Group to Promote Trade and Investment between Korea and the MERCOSUR" for discussing the follow up action regarding the results of the joint study on the feasibility of a Korea-MERCOSUR Trade Agreement.
- Korea-Vietnam FTA: The 2nd Joint Working Group meeting on a possible Korea-Vietnam FTA was held in October 2010.