Yonhap 12 July 2007
EU FTA to focus on manufacturing sector: official
By Lee Joon-seung
SEOUL, July 12 (Yonhap) — The ongoing free trade pact talks with the European Union (EU) will be centered on the extent of liberalization of the manufacturing sector, a senior government official said Thursday.
In a meeting with representatives from business groups including the Federation of Korean Industries, Vice Commerce and Industry Minister Oh Young-ho said European companies are highly competitive in areas like autos, chemicals, machinery and electronics.
"Unlike the free trade accord struck with the United States on April 2, where agriculture had been a sticking point, the market opening for manufactured goods may become a source of contention with the EU," the official said.
In preliminary free trade agreement (FTA) talks, Seoul and Brussels were in broad agreement to exclude sensitive farm goods from any future pact.
South Korea launched free trade talks with the EU in May, and aims to complete negotiations by the end of this year. The second round of talks will be held from July 16 to 20 in Brussels.
In the first round of negotiations in Seoul, the two sides agreed to eliminate or phase out tariffs on 95 percent of bilateral trade items. South Korea’s average tariff is 11.2 percent, far higher than the EU’s 4.2 percent.
Oh stressed that while local companies may face stiff competition from cheap goods from the EU if an FTA is signed, an open trade policy promised expanded opportunities.
He said there is potential for greater economic and technical cooperation that can enhance the competitiveness of local businesses. The policymaker added that businesses should use the EU FTA to spur research and development and to make more value-added products.
Business groups, meanwhile, asked the government to make an effort to dismantle non-tariff barriers that have affected exports to Europe in the past. These include environmental restrictions, trade dispute settlement rules and product certification processes.
The EU is South Korea’s second-largest trading partner after China. Two-way trade between South Korea and the EU totaled US$79.4 billion last year. The EU is the largest foreign investor in South Korea, with $5 billion invested in 2005 alone.
At present, South Korea has FTAs with Chile, Singapore and the European Free Trade Association, which is made up of Switzerland, Norway, Ireland and Lichtenstein. A partial FTA covering manufactured goods was reached June 1 with the Association of Southeast Asian Nations.