By Ryu Jin
Staff Reporter
South Korea and the European Union (EU) on Sunday formally announced the launch of negotiations for a ``comprehensive and high-level’’ free trade agreement (FTA), which their trade ministers hoped would be mutually beneficial to both economies.
Once the deal is signed, the Korea-EU FTA will create the world’s biggest trading bloc.
Trade Minister Kim Hyun-chong and EU Trade Commissioner Peter Mandelson issued a joint declaration to get the negotiations under way. The first round of talks will begin on Monday for a five-day run in Seoul.
``I and Mr. Mandelson agreed on the launch,’’ Kim told reporters in a joint press conference with his EU counterpart. ``We also agreed to conclude the negotiations as quickly as possible.’’
He added that the FTA would serve as a catalyst for South Korea to emerge as an ``FTA hub’’ linking Europe, East Asia and America.
Mandelson said he hopes that the proposed FTA would have the highest possible degree of trade liberalization, especially in the areas of services and investment, while being compatible with multilateral rules and principles as well as basic international norms.
``For the EU, the FTA with South Korea is marking its turn to a stronger focus on Asia,’’ he said. ``For South Korea, the talks represent a further global step to reach out to a global trading system, not simply relying on regional sales.’’
The negotiations come less than a month after South Korea struck an FTA with the United States, the Asian country’s third-largest trading partner.
South Korea’s negotiation team will be led by Deputy Trade Minister Kim Han-soo, while the EU delegation will be headed by Ignacio Garcia Bercero of the European Commission. They are expected to hold four to five rounds of talks this year shuttling between Seoul and Brussels.
``While the two parties share the goal of wrapping up negotiations `as soon as possible,’ I would rather like to conclude a deal within one year,’’ Kim said in a press briefing last Friday.
South Korean officials expect the upcoming talks not to be so difficult as the tedious 10-month negotiations with the United States, which often produced violent protests.
``The economic effect (of the South Korea-EU FTA) might be similar to that of the South Korea-U.S. FTA,’’ Kim, the chief Seoul negotiator, said. ``But I don’t think there will be such fierce objections as those driven by so-called anti-Americanism.’’
Composed of 27 countries with a total population of about 487 million, the EU is an important trading partner for South Korea. Two-way annual trade amounts to around $79 billion, putting the EU on equal footing with the United States as South Korea’s biggest trading partner after China.
South Korea wants to export more automobiles, electronic products, textiles and garments, while the EU is expected to aim at lowering South Korea’s trade barriers on mechanical parts, chemical products, cars, pharmaceuticals and cosmetics, according to trade experts.
Officials hoped that the deal with the EU, the world’s biggest market in terms of gross domestic product (GDP), would be much more beneficial to South Korean firms since the average tariff rate of the EU is higher than those of other advanced countries. The EU levies a 10 percent tariff rate on cars, much higher than the 2.5 percent in the U.S.
Negotiators from both sides expected the upcoming talks would exclude such sensitive areas as the audio-visual sector, broadcasting services and other cultural services, and investment guarantee problem, represented by the investor-to-state dispute (ISD) settlement.
Experts predict that the country will have tangible benefits from the free trade deal with the EU. The Korea Institute for International Economic Policy (KIEP), a state-funded think tank, forecast that the nation’s gross domestic product (GDP) might increase 2 percent to 3 percent once the Korea-EU FTA is concluded. The institute also said that the FTA could create 300,000 to 600,000 jobs.