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?

 

 

 

 

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

the European Sting Milestones

Featured Stings

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

Gender Equality as a platform to improve Medicine

Egypt urged to free prominent couple jailed arbitrarily since last June: UN rights office

UN refugee agency presses States to aid 49 refugees stranded on Mediterranean

EU budget: Commission proposes €1.26 billion to reinforce the European Solidarity Corps

The IMF sees Brexit’s ‘substantial impact’ while the world’s economy holds its breath

New Zealand will have a new ‘well-being budget,’ says Jacinda Ardern

Islamophobia is driving more US Muslims to become politically engaged, suggests report

Virtual Doctor: a core part of modern healthcare?

Why this is the year we must take action on mental health

Brexit may finally not really happen; The Brits have second thoughts

CO2 emissions on the rise for first time in four years, UN agency warns

Tax crimes: MEPs want EU financial police force and financial intelligence unit

Europe bows to Turkey’s rulers, sends Syrian refugees back to chaos

Tobacco-free Public Space in Africa’s Most Populous Country

Trump to subject the Fed, challenge the ECB and make Wall St. bankers even richer

Meet the Junior Enterprise network at JEWC 2014!

Tusk fights back while charismatic Boris goes against everybody in Brussels pushing the UK to leave the EU now or never

Respect for fundamental rights and freedoms key for peaceful polls in DRC – UN mission chief

The role of junior entrepreneurs as a bridge between academia and business world

Our idea of what makes a company successful needs to change. And it starts with making waste expensive

EP Group leaders on Brexit: “the agreement is not open to renegotiation”

These countries are driving global demand for coal

International Day of Cooperatives sets stage for long-standing production and consumption

Eurozone: Subdued inflation can lead to more recession

South Sudanese refugees need $2.7 billion, as safe return remains elusive

Draghi to lay his print on long term ECB policies prior to exiting next year

2014 budget: The EU may prove unable to agree on own resources

Russia and the West use the same tactics to dismember Ukraine

Giving humanitarian help to migrants should not be a crime, according to the EP

Does upgrading our minds mean losing the spark of genius?

JADE Handover Ceremony at the European Parliement

China is now heavily endorsing its big investment flow in the Central Eastern European (CEE) countries

These are the world’s healthiest nations

With a premature death every five seconds, air pollution is violation of human rights, says UN expert

FROM THE FIELD: Keeping Morocco’s indigenous culture and conservation in balance

This Indian school accepts plastic waste instead of fees

The fatal consequences of troika’s blind austerity policy

Trump to run America to the tune of his business affairs

With millions of girls ‘at risk’ today of genital mutilation, UN chief calls for zero tolerance

UN Forum examines three pillars of 2030 Global Goals

Parliament in favour of lifting visa requirements for Kosovars

Why we need a moderate approach to moderating online content

A young person’s perspective on the Paris and Beirut attacks and aftermath

Why business can no longer turn a blind eye to poor vision

Cyber attacks are shutting down countries, cities and companies. Here’s how to stop them

EU lawmakers vote to reintroduce visas for Americans over “reciprocity principle”

How migrants who send money home have become a global economic force

Permanent structured cooperation (PESCO) on the table of NATO Defense Ministers amid US concerns

The EU heads of State and Government about the result of the European Elections 2019

A shortened EU Summit admits failures, makes risky promises

MWC 2016 LIVE: Stripe gives payments leg-up to startups in emerging markets

How banks should prepare for robots going rogue

EU: Huge surplus in the trade of services with the rest of the world

New rules on drivers’ working conditions and fair competition in road transport

The Fourth Industrial Revolution needs a social revolution, too. Here’s how we can make this happen

On Kristallnacht anniversary, UN chief urges renewed fight against ‘crime’ of anti-Semitism

WhatsApp to face scrutiny from EU regulators task force over data sharing with Facebook

At Arab League Summit, Guterres reaffirms strong link between UN and people of Arab world

5 reasons to be more cheerful about the future of the oceans

Macron defends the idea of European sovereignty

More Stings?

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