Is South Korea set to lose from its FTA with the EU?

Kim Jong-Hoon, Member of the South Korean National Assembly, José Manuel Barroso, President of the EC and Kim Chang-beom, Head of the Mission of South Korea to the EU (in the foreground, from left to right), participated in the public lecture to commemorate 50 years of EU/South Korea diplomatic relations. (EC Audiovisual Services).

Kim Jong-Hoon, Member of the South Korean National Assembly, José Manuel Barroso, President of the EC and Kim Chang-beom, Head of the Mission of South Korea to the EU (in the foreground, from left to right), participated in the public lecture to commemorate 50 years of EU/South Korea diplomatic relations. (EC Audiovisual Services).

The recent announcement (issued at the highest level by three presidents; Barack Obama, Herman Van Rompuy, Manuel Barroso), that the European Union and the United States were ready to start negotiations, aiming at the conclusion of a far-reaching Free Trade Agreement (FTA), sounded the alarm to other EU’s major trading partners and more so in South Korea. Seoul and Brussels have signed such a new generation FTA, which came in force on 1 July 2011. South Korea is the only Asian country the EU has concluded an FTA.

South Korea’s economy is the EU’s sixth most important trading partner outside Europe (behind the US, China, Japan, India and Brazil) and tenth overall. The EU is among South Korea’s top four largest export destinations together with China, Japan and USA.

When the EU-US initiative was announced a number of South Korean economists and researchers estimated that a possible conclusion of an AFT between the two world largest trading partners will harm their trade relations with South Korea and China. On top of that only a few days earlier, the South Korea statistical service published the 2012 foreign trade data from the country’s customs, showing that the FTA already in force between this major Asian economy and the European Union, has led to the first bilateral trade surplus in favour of the EU after 15 years.

Whatever the reasons for this negative turn in South Korea’s trade with the EU, it reminded everybody the criticism the FTA has provoked at the time of its conclusion. A number of analysts had strongly criticised it. However, if one analyses the causes of the South Korean trade balance deficit with the EU in 2012, it seems that the FTA has not much to do with it. The basic reason for this development was the fact that due to the crisis in Europe, South Korean exports to a number of EU countries of major items like ships and telecommunications devices and equipment dropped by 30%. At the same time, it must not be underestimated the fact that major Korean firms like the automotive companies KIA and Hyundai along with the electronics giant Samsung increased their production base in the EU.

The EU-South Korea FTA

In any case, this bilateral FTA has greatly helped EU exports to South Korea. The European Commission has published an account on the results of the first 9 months of the application of this FTA. The basic findings are quoted here below:

“…in the first 9 months of implementation EU exports to South Korea increased by €6.7 billion or 35% compared to the same period since 2007. EU exports to other countries also grew during this timeframe (by 25%) but the level of increase of exports to Korea (35%) indicates that the early tariff eliminations are already having some effect.

Exports of products where the tariff was eliminated on 1 July 2011 (such as wine, some chemical products, textiles and clothing, iron and steel products, machinery and appliances, representing 34% of EU exports to South Korea) increased by €2.7 billion or 46%.

For products that were only partially liberalised on 1 July 2011 (such as cars and agricultural products, representing 44% of EU’s exports to Korea), the increase is €3 billion or 36%.

For products where there was no change to the tariff (such as some agricultural products, representing 18% of EU exports) the increase is €1 billion or 23%.

This means that exports of the products affected by Korea’s tariff liberalisation in the agreement grew €1.7 billion more than they would have done otherwise.

Exports of some specific products have grown faster than the average, for example:

*Exports of pork are up by almost 120%, which translates into new trade of almost € 200 million.

* Leather bags and luggage exports increased by over 90%, worth € 150 million of extra trade.

*EU’s Machinery used for manufacturing of semiconductors proved to be very successful and it imports to Korea went up by 75% and represented € 650 million in additional exports.

*EU cars exports increased by over 70% a percentage which translates into € 670 million in new car sales in Korea”.

It is obvious that the FTA between the EU and the South Korea has greatly helped the EU products to penetrate further in this country’s markets. The problem is, however, in what way this FTA will be affected by a possible one between the EU and the US. Incidentally, Korea will not be the only country to have an interest on that.  The question is, if the EU-US negotiators will pay attention to the observations of the other nations?

 

 

 

 

the sting Milestone

Featured Stings

Can we feed everyone without unleashing disaster? Read on

These campaigners want to give a quarter of the UK back to nature

How to build a more resilient and inclusive global system

Stopping antimicrobial resistance would cost just USD 2 per person a year

Climate change is speeding up. Our response needs to be even faster

Multilateralism more vital than ever, as World War centenary looms: Security Council

Africa must ‘value youth’ in the drive towards lasting peace, young envoy tells Security Council

Efforts to save the planet must start with the Antarctic

Brexit: The Conservative Party drives the UK and Europe to a perilous road

‘Growing alarm’ over Fall Armyworm advance, with cash crops ‘under attack’ across Asia

At epicentre of Indonesia disaster, Guterres praises resilience of Sulawesi people

Trade defence report: restoring the level playing field for European producers

Why businesses are nothing without strong human rights

Activist Greta Thunberg gets preview of UNHQ ahead of climate summit

Youth policy in Europe not delivering for young people

We need to talk about big data and genomics. Here’s why – and how

A bad marriage can be as unhealthy as smoking and drinking

What makes us happy? AI scanned 700,000 journal entries to find out

One in three fish caught never gets eaten

World simply ‘not on track’ to slow climate change this year: UN weather agency

Green Deal: measures to step up the fight against global deforestation

Fair minimum wages: Commission launches second-stage consultation of social partners

Saudi Arabia, China, among 14 nations under UN human rights spotlight: what you need to know

A new European banking space is born this year

This wristband tells you what food to buy based on your DNA

Commission calls on Leaders to pave the way for an agreement on a modern, balanced and fair EU budget for the future

Palestinian Bedouin community faces demolition after Israeli court ruling, warns UN rights office

7 ways business can be agents for peace

Can climate change wait for the US to rejoin the Paris agreement?

When it comes to envirotech adoption, NGOs can lead us out of the woods

Protect women’s rights ‘before, during and after conflict’ UN chief tells high-level Security Council debate

The technologies – and thoughtful collaborations – that can build resilience in the food system after COVID-19

Parliament endorses landmark EU-Japan free trade agreement

Mexico cannot move forward ‘without addressing the shadows of the past’, says UN rights chief

Change is happening – and young people are leading the way forward

Ship Recycling is the Commission’s Titanic

Measles ‘misinformation campaigns’ through social media, fuel rising toll

Parliament votes reform for better European Co2 market but critics want it sooner than later

Korea should improve the quality of employment for older workers

MEPs call on Russia to stop illegitimate prosecution of Lithuanian judges

Coronavírus SUS – Brazil’s official app for clear communication

If innovators can solve India’s problems, they can save the world. Here’s why

Tech companies could achieve much more by serving the common good. Here’s 3 steps they should take

3 ways to fix the way we fund humanitarian relief

Why Africa must be ready to take the quantum leap

New seat projections for the next European Parliament

This US city put an algorithm in charge of its school bus routes and saved $5 million

Inaction on obesity stands in the way of sustainable development

Presidents of pan-European youth organisations call upon the European Council to preserve the Schengen principles

European Youth Forum @ European Business Summit 2015: Why interns should matter to business

These EU countries have the most government debt

Here are five tips to make your message clear in a crowded world

How oysters are cleaning New York’s polluted harbor

UN commemorates International Day of Solidarity with the Palestinian People

Financial abuse of elderly ‘rampant, but invisible’, says UN expert

Five cities short-listed to become the European Youth Capital 2017

India’s Largest Entrepreneurship Event is Back! (23-24th August 2016)

Rural Bangladesh has already embraced renewable energy. Here’s what the rest of the world can learn

Women outliving men ‘everywhere’, new UN health agency statistics report shows

These technologies are playing a major role at the Cricket World Cup

It’s time we harnessed Big Data for good

New EU rules cut red tape for citizens living or working in another Member State as of tomorrow

Why education and accountability are important for developing countries?

Coronavirus is creating retirement insecurity. These 10 steps can diffuse the timebomb of an ageing population

More Stings?

Advertising

Speak your Mind Here

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s