Published : 2010-03-30 13:30
Updated : 2010-03-30 13:30
Seoul yesterday said it expects its free trade deal with the European Union could enter into force in July amid uncertain prospects about its ratification.
"I think the deal would take effect around July," Vice Finance Minister Hur Kyung-wook said in a radio interview.
The long-awaited accord, which was initialed on Thursday, must gain approval from both the Korean National Assembly and the European Parliament, which consists of 27 member countries, all of which need to sign the deal.
But a rough road is likely for ratification as some countries voice opposition to the deal, citing protests by carmakers who worry about competition from Korean carmakers. An Italian Minister this week threatened to veto the pact unless auto trade issues are addressed.
The trade pact seeks to scrap nearly all import tariffs between Korea and the European Union, Korea`s No. 2 trading partner and the world`s largest market. Korea logs an average $20 billion in trade surplus with the European Union, Hur said.
Hur said the free trade deal would boost Korea`s key exports such as autos and consumer electronics by phasing out high tariffs being applied on those products.
He declined to give a figure on the size of Korean exports` expected rise, but he said the increase will be "considerably large" and similar to the increase to be caused by the Korea-U.S. FTA, which was signed in 2007 and awaits approval from legislatures in both countries.
The government also said yesterday that a Korea-EU FTA would boost bilateral trade of manufactured goods by $4.7 billion annually.
The main beneficiaries of the deal will be automotive, consumer electronics, textiles and petrochemical firms in Korea, the Ministry of Knowledge Economy said. This is far higher than an expected increase of $1.7 billion in Korea-U.S trade if the free trade deal takes effect, the ministry said.
Bilateral trade between Korea and the European Union rose by an annual average of $7.4 billion to $98.4 billion between 2000 and 2008, the ministry said.
"As the EU sealed an FTA with an Asian country for the first time, Korean products will be able to secure a competitive edge as opposed to Chinese and Japanese products in the market," Lee Dong-geun, head of the ministry`s Office of International Trade & Investment, said yesterday.
Currently, the European Union imposes 10 percent tariffs on automobile imports, 14 percent on TVs, 7.9 percent on textiles and up to 6.5 percent on petrochemical products, the ministry said.
Hur said the accord will also "substantially increase benefits to Korean consumers," as they will be able to gain access to cheaper products from Europe such as wine, pork and luxury cars.
Korea is also expected to see a rise in imports of machinery and chemical products as a result of the free trade deal, the government said.
The deal could hurt the local livestock sector with inflows of cheap pork, so to minimize losses, Korea seeks to lower tariffs on livestock products gradually over 10 years while also taking safeguard actions against imports of livestock items should "problems occur," Hur said.