Brussels, 29/06/2011 (Agence Europe) - The most ambitious free-trade agreement ever negotiated bilaterally by the EU enters into force on Friday 1st July. Under this agreement, signed in October 2010 and then ratified by the European Parliament and South Korea, the EU and South Korea will from then on scrap 98.7% of customs duties over a five-year period, which they have been imposing in each of their respective trade areas. At the end of the transition periods, import tariffs will be scrapped on all industrial products and the majority of agricultural products, except for rice.
According to one study, bilateral trade between the EU and South Korea reached €66.6 billion in 2010 and is expected to double over the next 20 years. The agreement with Seoul should provide new trade outlets for EU goods and services, estimated to be worth €19 billion over a 20 year period. It is also expected to guarantee European exporters annual savings of customs duties worth €1.6 billion a year (€850 million in the first year). For the EU, the most important gains to be made will be made by SMEs in the automobile sector, electronics for the mass market and textiles.
In the automobile sector, the agreement includes the scrapping of the 8% duty on European cars exported to South Korea. This is equal to a €2,000 saving in duties on every vehicle that is worth €25,000 and exported to this market. European carmakers will also benefit from the scrapping of non-tariff barriers and the protection of a safeguard clause if they are threatened by any sudden and damaging increase from South Korean imports.
In the services sector, the agreement will give European providers greater access to the South Korean market, particularly in the domain of telecommunication services, the environment, maritime transport, as well as financial and legal services.
In addition to agricultural products, industrial products and services, the agreement also covers public procurement, intellectual property, labour regulation and environmental issues.
Ultimately, the agreement put in place will be monitored by a follow-up committee to prevent any kind of disguised protectionism in the form of new technical obstacles through new South Korean technical regulations, particularly with regard to cars and standards on CO2 emissions.
The entry into force of the agreement is still provisional because at an EU level, each member state still has to ratify the text, in keeping with its own laws and procedures. (E.H./transl.fl)