S. Korea, Europe seek FTA conclusion in 2008
Korea Times | 06-15-2008
S. Korea, Europe Seek FTA Conclusion in 2008
By Lee Hyo-sik
Staff Reporter
Europe wants to conclude a free trade agreement (FTA) with South Korea by the year’s end to further boost bilateral economic ties, European Commissioner Joaquin Almunia said in an interview with The Korea Times.
He came to the southern resort island of Jeju to attend the 8th ASEM Finance Ministers’ Meeting to discuss a range of economic issues with finance ministers and other delegates in the region.
Almunia said the Korea-EU FTA will create a win-win situation for both Europe and South Korea. The EU is currently engaged in negotiations for the free trade agreement with Korea and since the launch of these negotiations in spring 2007, progress has been made. There is now agreement on a broad range of issues and we consider that it would be desirable to conclude such negotiations before the end of the year,'' he noted.
Sakong Il, left, chairman of the Presidential Council on National Competitiveness, greets Christine Lagarde, French minister for economy, industry and employment, during the ASEM International Conference, the first official event of the 8th ASEM Finance Ministers' Meeting, at Shilla Hotel in Jeju, Sunday. / Yonhap
Almunia said the trade pact will strengthen the already close economic relations between the two, adding it will eliminate unnecessary barriers to trade, boost growth and allow consumers to buy cheaper and better goods, improving welfare on both sides.
Korea and Europe have reached a consensus on some major issues like sustainable development, antitrust and merger aspects of competition policy, transparency of domestic regulation and bilateral dispute settlement mechanisms. But they are still apart on other matters, including industrial tariffs liberalization and standards and certification in businesses.
The EU is South Korea's second largest export destination after China and Korea is the EU's fourth largest non-European trading partner. The EU is also the largest foreign investor in Korea ahead of the United States, Japan and China. EU-Korea trade exceeded 64 billion euros in 2007.
The commissioner said the key issue ASEM finance ministers will discuss is the policy responses of Asia and Europe to the global financial turmoil.Even though both Europe and Asia are affected by the global financial turmoil and by the high commodity and oil prices, they are more resilient than a decade ago to these types of shocks because of structural reforms and sound macroeconomic policies implemented in recent years,’’ he said.
In particular, the euro zone has an additional advantage, the common currency, the euro, has provided stability and helped shield European citizens from some of the immediate effects of the turmoil, Almunia said.
Since Asia and Europe are in a better shape than the U.S., this time they can provide a significant contribution to restore economic and financial stability and sound economic growth. Europe has to continue its structural reform policies, while Asia needs to rebalance its growth by making it more sustainable and more domestic-oriented to help reduce global imbalances,'' he stressed.
Although there has been some improvement in the global financial turmoil, the improved market sentiment does not truly reflect an improvement in market fundamentals, Almunia cautioned.The key to restoring normality in the functioning of the financial markets is rebuilding investor confidence. But, we should not underestimate the scale of the task. For the immediate future, the most important step is to remove the uncertainty related to the size and location of credit losses,’’ he noted.
The commissioner suggested that to restore investor confidence, the ASEM members find a way to improve transparency and accountability in the functioning of the financial system and maintain vigilance in monitoring and managing the crisis.
Touching on the economic integration of Northeast Asia and lessons from economic integration in Europe, Almunia said both politics and economics differ in Europe and Asia.
The period during which the European Union was built is very different from the current one in which East Asia is trying to boost its economic and political links. We must be careful when we compare the two integration processes and the conclusions and lessons we can draw from them,'' he noted.
The commissioner then said the preliminary challenge is to determine whether there is the economic rationale for regional integration in East Asia.I think such a rationale exists. Regional trade liberalisation in Asia has already led to more regional economic and financial integration, just as it did in Europe in the 1950s, 60s and 70s. But to achieve a single market and some form of macroeconomic and financial coordination, the political leadership in East Asian countries needs to agree to abandon some of the national prerogatives,’’ Almunia said.
He said even though the European economic integration model can offer some insights, Asia will have to find its specific model of integration to become successful in the time-consuming and difficult process, Almunia stressed.
As for the global warming and the market-oriented approach to meet the challenge of climate change, the commissioner said ASEM member countries need to move fast to tackle climate change and to be successful, close global co-operation is a must, adding developed countries, including Korea, have to take the lead.
``Although advanced countries should take the lead in tackling climate change, emerging economies, in particular Asian emerging economies, must play theirs as their economies grow fast,’’ Almunia stressed.
He said market-based instruments, which have been extensively discussed during the 8th ASEM Finance Ministers’ Meeting, are at the core of any cost-effective policy mix to deliver deep cuts in emissions.
