ο The terms “EC Party,” “European Community,” “Commission of the European Communities” and “Treaty establishing the European Community” are to be modified into “EU Party,” “European Union,” “European Commission” and “Treaty on the Functioning of the European Union” respectively.

ο The three-year-cut is completed within 36 months (i.e. full three years) and the five-year-cut is completed within 60 months (i.e. full five years). (According to the previously agreed tariff reduction formula, the three-year-cut is made through three equal annual cuts, thus completed within 24 months. The five-year-cut is made through five equal annual cuts, thus completed within 48 months.)

ο In case of automobiles with large and medium sized engines which are subject to the three-year-cut, it is agreed to apply the non-linear frontloading tariff cuts (30%-30%-20%-20%).

Korea and the EU agreed to hold a chief negotiators’ meeting in early March in Paris to prepare for the formal signing of the Korea-EU FTA.

(Source: Korean Ministry of Foreign Affairs and Trade)

Korea – European Union Free Trade Agreement (FTA) negotiations have reached conclusion as of July 13th, 2009. However, although agreement has been reached it has not been initialed and the procedure for actually signing of the FTA will still take several months.

The Swedish Minister for Trade Ewa Björling of Sweden, currently holding the EU Presidency, and the Korean Minister for Trade Kim Jong-Hoon welcomed that there is a final compromise package on all outstanding issues of the EU-Korea negotiations on the future Free Trade Agreement. They stressed that this agreement would bring important benefits to the economies of both the EU and Korea, creating new opportunities for exports and growth at a time of economic contraction, and that the Free Trade Agreement would send a strong signal against protectionism globally. They look forward to rapidly advancing work so as to allow early initialling of the Free Trade Agreement between the European Commission and Korea.

According to EU chief negotiator, Mr. Ignacio Garcia Bercero the Korea – EU FTA is the most ambitious free trade agreement ever done by the European Union. In total 97 percent of all trade between Korea and EU will be fully liberalized in less than 5 years. Furthermore, a comprehensive agreement has also been achieved in services sector, where EU companies are globally very competitive. Part of this “KORUS+” result was achieved only during the final negotiation round in Seoul. One important characteristics of the provisional agreement is that it includes strong disciples against non-tariff barriers (NTBs). Besides strong horizontal commitments on these disciples, special measures have been placed on automotive, pharmaceutical, electronics sectors aiming at rapid and effective enforcement. The deal is expected to radically open up the markets once it is fully implemented.

According to the Korea International Trade Association, the deal is expected to remove duties on 96 percent of Korea’s imports and 99 percent on the EU’s imports over three years. Korea is the EU’s eighth-largest trading partner as of last year, and the EU is Korea’s largest supplier of foreign direct investment. “The Korea-EU free trade agreement deal is expected to generate a greater economic influence on Korea than the Korea-U.S. FTA,” said Lee Jong-gyu, a head researcher at the Samsung Economic Research Institute according to Korea Times.

Ratification Process

The signing and ratification process of the Korea – EU FTA will be a complicated path. The process following the announcement of successful conclusion of the negotiations is as follows: In the EU first the agreement proceeds to a language and legal check. After this has been checked by the EU Member States, the agreement can be initialed. This is followed by official translations to all 23 EU languages, after which the Council of Ministers can formally agree to the proposed FTA. Then the EC or representative from Council of Ministers can finally sign the document and submit it to be accented by the European Parliament. The approval of the European Parliament means that the FTA is provisionally ratified in the European Union and there will be a provisional entry into a force. However, those parts of the agreement, which belong under Member State competence, will demand ratification by all 27 EU Member States (processes will vary depending of the Member State). Only after the approval by all 27 Member States the FTA is legally fully ratified.

In Korea the process is easier, as after translation only the approval of the National Assembly is needed for ratification. Given the complicated ratification procedure, it is very difficult to predict the possible time of entry into force of the Korea – EU FTA agreement, possibly during 2010.

(Source: EUCCK)

Korean Trade Minister Kim Jong-hoon and his EU counterpart Catherine Ashton met in London last week to narrow differences on the issues, which include provisions on a so-called duty drawback scheme and rules of origin, but failed to wrap up the agreement.

“We expect both sides to meet again next month to iron out differences on duty drawbacks and other remaining issues,” Lee Hey-min, deputy minister for trade, told reporters. The exact date and venue for another minister-level meeting is not yet decided, Lee said.

Lee made it clear that Korea would maintain its position on duty drawbacks, which would allow import tariffs to be returned to companies that use imported materials to make products for export. “If the scheme is rejected, it severely undermines the effect of tariff reductions,” he said.

Brussels opposes the provision, saying it would favor Korean exporters. The EU does not allow duty drawbacks under its existing free trade accords with Mexico and Chile.

Both sides announced late last month that they had reached a tentative free trade accord and had said they would seek to finalize the deal at last week’s meeting in London.

Lee also said that both sides managed to iron out differences concerning a provision dealing with the origin of a product’s materials, but stopped short of giving details on the issue.

Earlier, both sides reportedly agreed that a product is considered manufactured by a trading partner only if at least 45 percent of the finished item is made there.

(Source: JoongAng Ilbo, Yonhap)

See full Korea Times article:

http://www.koreatimes.co.kr/www/news/biz/2009/03/123_41773.html

The government will make efforts to sign a free trade agreement (FTA) with the European Union (EU) by March to be put into effect from 2010, the Ministry of Foreign Affairs and Trade said. The plan is part of the ministry’s ”multi-track” FTA policy to help revive the nation’s economy.

See full Korea Times article:

http://www.koreatimes.co.kr/www/news/nation/2009/01/113_37109.html

The EU and Korea have today concluded the 7th round of negotiations for an EU-Korea FTA. The four-day negotiations (12-15 May) covered a wide range of negotiating issues, including non-tariff barriers and rules of origin. EU and Korea will continue contacts at various levels, including meeting between the Trade Commissioner, Peter Mandelson and the Korean Trade Minister, Kim Jong-hoon. The timing of the next round of negotiations has not been confirmed yet. However, both sides agreed to schedule it once they are ready to conclude.

EU lead negotiator Ignacio Garcia Bercero said: “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”.The two sides made further progress on ‘behind the border’ issues such as standards and certification requirements in a number of sectors. Korea has also signaled its readiness to examine enhanced protection for geographical indications (GIs).
 
Korea used this round to raise the question of the EU’s rules of origin - the rules governing the import of products into the EU produced in more than one country. Both sides have achieved a better understanding of each other’s positions, and the EU intends to present a compromise proposal to Korea.
 
The difficult questions of tariffs for industrial goods, including those on passenger cars, and the automotive NTBs have been discussed among the two chief negotiators. The gap in the respective positions remains. However, both sides recognise the need to come to a common understanding.
 
Background
 
EU-Korea FTA negotiations were launched on 6 May 2007. During the last round of negotiations in January 2008 the EU and Korea agreed on important issues such as sustainable development, antitrust and merger aspects of competition policy, transparency of domestic regulation and bilateral dispute settlement mechanisms.
 
The EU is committed to securing a comprehensive, highly ambitious and balanced agreement, in line with what the Commission set out in its Global Europe trade strategy.The EU is Korea’s second largest export destination after China, and Korea is the EU’s fourth largest non-European trade partner. The EU remains the largest foreign investor in Korea ahead of the US, Japan and China. EU-Korea trade exceeded € 64 billion in 2007.
 
(Source: European Commission)

The European Commission has concluded the sixth round of negotiations with South Korea on the EU-Korea free trade agreement. 180 negotiators, under the leadership of senior officials from both sides held detailed talks from 28 January to 1 February 2008. The negotiations maintained the good momentum maintained since the launch of these negotiations in May 2007.

Negotiations in many areas are now well advanced, in some cases coming close to agreement, or giving important direction. This includes economically important areas like services and establishment, and intellectual property rights where the European Commission sees welcome progress though important questions remain to be resolved to ensure an ambitious and economically meaningful outcome for both sides.

EU and Korean negotiators have also agreed on some important building blocks for such an ambitious and comprehensive future FTA: Sustainable development (labour and environmental aspects of trade), competition (antitrust and merger), trade defence instruments, transparency of domestic regulation, and the mechanisms for bilateral dispute settlement and mediation.

The negotiations aim at a comprehensive, ambitious, and balanced agreement, in line with what the EU Commission has set-out in the Global Europe trade strategy: 1) Creating new opportunities for business, increasing competitiveness in the EU and in Korea, and stimulating growth and job creation. 2) Charting new territory in areas not yet covered by the WTO, making the FTA a stepping stone for the multilateral, and addressing the challenges of a rapidly changing global economy.

A work programme has been set to carry the work forward and to help also concluding those areas which can be solved by technical negotiations. The next round of discussions will take place in the Spring.

(Source: European Commission)