By Jane Han
Staff Reporter
South Korea is expected to enjoy higher export benefits from a free trade deal with the EU than through the recently signed pact with the United States, said a leading private think tank on Sunday.
Because the EU’s average tariff is set at 4.2 percent, higher than the 3.7 percent of the U.S., according to the LG Economic Research Institute, Korea’s leading exports, including automobiles and flat panel displays, have been faced with higher tax hurdles.
The new analysis implies a stronger need to focus on the negotiation of the Korea-EU free trade agreement (FTA) to maximize gains.
The institute pointed out that the EU, South Korea’s second largest trading partner after China, has been slamming a 10 percent tax on automobiles, up to 14 percent on flat panel display products, 14 percent on audio and video equipment, and 12 percent on textile goods, along with other non-tariff barriers.
``About 30 percent of EU imports consist of automobiles (19 percent), flat panel displays (7 percent) and audio and video equipment (4 percent), so a tariff lift on these items will help these industries offer more competitive pricing,’’ said the research group.
The think tank also noted that the EU is a more flexible partner on the negotiating table compared to the U.S.
``Although both sides agreed to remove tariffs on 95 percent of bilateral trade, they may call for various requests on non-tariff restrictions, so the Korean government and businesses should be ready to react appropriately,’’ said the institute.
To maximize the economic benefits of the FTA, South Korean negotiators should focus on lowering tariffs on selected goods pressed with 10 to 20 percent duties, including TV sets, audio and video equipment and T-shirts, the research body added.
``Regulations on handling electrical and electronics waste material, environmental standards and other rules related to technology should not be overlooked either,’’ the institute said.
The EU, consisting of 27 member states, and South Korea wrapped up their first round of free trade talks on May 11. The two countries had a two-way trade last year totaling $79.4 billion.
Negotiators haven’t set a deadline for the deal yet, but both sides agreed to work toward sealing a pact within the year.