What can we expect from the EU-South Korea FTA?
1 January 2010

The EU-South Korea Free Trade Agreement was signed on 15 October 2009. This is the most comprehensive free trade agreement ever negotiated by the EU. The FTA will remove €1.6 billion of customs duties each year. The Machinery & Appliances sector will represent 25% of total savings. The removal of customs duties will be done over a transitional period so that domestic producers can gradually adapt.

As a result, customers will benefit from cheaper products, and exporters from a strengthened competiveness. Besides import duties that will be eliminated on nearly all products and a far-reaching liberalisation of trade in services, the FTA is the first one of its kind to also include some specific sectoral disciplines for non-tariff barriers such as standards and certification. Additionally, an ambitious chapter on Intellectual Property, crucial to the European competitiveness, has been integrated in the agreement. As regards trade remedies, the FTA includes traditional trade defence instruments from the WTO legislation (antidumping, anti-subsidy and global safeguard). The 'Duty Drawback' issue was the concern of some industries, namely the automotive and consumer electronics. Duty drawbacks are the duties paid on parts used for the production of a final product (e.g. a car), which are refunded when the final product is exported. Such schemes have finally been allowed under the EU-Korea FTA.

However, in case there was a significant increase in foreign sourcing (and therefore an impact on the total cost of production for one of the parties), the FTA foresees, after 5 years from entry into force of the agreement, a special clause, which can result in a limitation of the duties on parts that can be refunded to a maximum of 5%.

Now that the European Commission has validated the FTA, it needs to be adopted by both the Council and the European Parliament. Under the newly ratified Lisbon treaty, Trade falls under the Co-decision procedure. Final adoption of the agreement is expected at the end of 2010.

For more information contact:
CECIMO Economic Department
Ms. Christelle Roche
email: This e-mail address is being protected from spambots. You need JavaScript enabled to view it

This article was published for the first time in CECIMO Magazine - Winter 2010.