EU-Korea FTA prospects good: envoy
Korea Herald | 2007.02.05
EU-Korea FTA prospects good: envoy
By Yoav Cerralbo
Following is the second in a two-part interview with EU Ambassador Brian McDonald. - Ed.
Korea and the European Union could start official negotiations for a free trade agreement in March provided a mandate is approved by the Council of Ministers in Brussels, said EU Ambassador Brian McDonald.
Everything will be on the table, he added.
"Everything is important; the whole point of an FTA is that you’re supposed to go zero across the board on at least 90-95 percent of your trade. In other words, eliminate substantially all restrictions," he said during an interview with The Korea Herald.
Although there is always some adjustment cost, FTAs are ultimately beneficial to both sides.
"In other words, if you look at the trade figures before and after these trade agreements are negotiated, you’ll find that there is generally a very substantial increase in trade that takes place," the ambassador noted. Korea and the EU share a very dynamic business relationship with large investments on both sides and large amounts of goods traded.
The European Union is Korea’s fourth most important trading partner. Trade between both reached $71 billion in 2005, representing around 13 percent of Korea’s total merchandise trade.
In particular, the EU in 2005 surpassed the United States to become the largest destination for Korean goods after China. The EU is also consistently the fourth-largest supplier of imported products to Korea.
The 2005 trade surplus goes to Korea, reaching $16.3 billion, while data from January to November 2006 showed a $17.3 billon surplus for Korea.
The EU has FTAs with Mexico and Chile, plus a whole string of arrangements which are not strictly FTAs but preferential trade agreements.
For these FTA negotiations to work, McDonald explained that both sides need to liberalize across the board and then look at the areas that pose problems or limitations.
"The EU exports a lot in the services, we would hope to get some advantages in this area as well as others," he said.
Even though it’s in the early stages, the ambassador does foresee that there may be some sensitive areas that will need intensive talks to hammer out a solution.
"Pharmaceutical pricing is a problem for us," he said. "Clearly automobiles are one. I imagine that textiles might be one and there might be some sensitive issues in the agriculture sector."
He added that it’s difficult to predict the areas of difficulty or conversely what will not be difficult because the talks are still in their infancy.
McDonald explained that these negotiations will be different than Korea’s talks with the United States, but when the Korea-U.S. agreement is concluded, the EU will better understand the possible solutions for their FTA with Korea.
One thing is for certain, the ambassador said, the Korea-EU FTA talks are "a different negotiation, it’s got different interests involved, different export interests in either side; hence, the negotiations will be different.
"We have already had several preparatory informal sessions and we find that the prospect for arriving at a constructive solution is good ... we are hopeful we can finish the negotiation relatively in a short period of time," McDonald said.
He added that there will be problems like in any negotiations but that they can be worked out if there is goodwill and a determination to succeed.
"The current patterns of trade may not change all that much in terms of proportions and different shares of market but we hope overall that our trading relationship will be a positive one for both of us."
The ambassador is optimistic that a Korea-EU FTA will be very beneficial for both sides, something that President Roh Moo-hyun explained during his nationally televised New Year’s speech: "Whether to seal free trade agreements or not is no longer an ideological issue. It is a matter of survival."
While discussing the Doha agreement, McDonald commented that the global trade agreement is the future and doesn’t need to be reinvented.
"There’s a huge amount of effort that’s gone into it already. It’s something that we really need to conclude.
"There has been some movement in the last few weeks or so and there have been contacts between the European Commission and President Bush and we think that it’s probably easier for the United States’ side to move forward now that the elections are over. We are hopeful that is the case," McDonald said.
Multilateral processes of this kind are "essential" to the world trade system and are not contradictory with bilateral processes, he said. Both can go forward at the same time.
"Very often these bilateral agreements are a sort of a dress rehearsal for what happens at the multilateral level because once you’ve made the bilateral agreement then it’s easier to make the multilateral deal but one is not dependent on the other and they are both essential," he said.
McDonald explained that even though the EU is conducting bilateral agreements with many countries, it is also very keen to conclude multilateral agreements.
"We can’t do FTAs with everybody so what happens to all those countries that are not covered with FTAs or bilateral agreements? We have a large number of them but that is not true for everybody else. So it’s very important to conclude the Doha round."
