Korea-EU FTA to take effect July 1

By Kim Da-ye

The free trade agreement between Korea and the European Union (EU) is set to take effect as scheduled on July 1 as both sides have finalized all the necessary procedures.

The trade deal will open the door for Korea to the world’s largest economic zone that consists of 27 countries with a population of over 500 million and produced $16.4 trillion worth of goods and services in 2009 — more than the $14.3 trillion of the U.S.

The Korea-EU free trade agreement (FTA) is supposed to take effect fully in two years when each member of the EU ratifies it, but 99 percent of the pact will become valid this Friday.

The deal will remove tariffs on various products step by step with the EU scheduled to get rid of customs on all industrial products in five years.

According to government officials, 99 percent of Korean-made industrial products exported to the EU will see tariffs removed in three years while Korea will eliminate customs duties on 96 percent of European goods over the same period.

The Korea Institute for International Economic Policy announced last year that the Korea-EU FTA could boost the gross domestic product by up to 5.6 percent and create some 253,000 jobs in the long run thanks to more exports.

Korea’s major exports to the EU have had relatively high tariffs imposed on them — 10 percent on vehicles and 14 percent on televisions — and abolishing them will boost the products’ competiveness there.

For Korean consumers, European-made clothes will have the 13 percent tariff cut to zero immediately after the FTA takes effect.

Luxury German vehicles including those of BMW and Mercedes Benz will also become more accessible with the 8 percent tariff being completely removed by 2016.

Furthermore, the 25 percent tariff on frozen pork belly, which draws massive demand from Korean meat lovers, will also diminish by 2.5 percentage points each year over the next decade while the 36 percent customs duty on cheese will be removed over 15 years. Keumyang International was one of the first Korean importers to take action by reducing the prices of its European wines by 11 percent on average.