EU, South Korea sign major free trade deal

October 6, 2010

, BRUSSELS, Oct 6 – The European Union and South Korea sealed a vast free trade agreement on Wednesday, the first in a series of bilateral pacts which Europe hopes to strike with Asian nations.

The deal was signed at a ceremony in Brussels by South Korean and European trade chiefs under the eyes of President Lee Myung-bak and the EU\’s top two officials, Jose Manuel Barroso and Herman Van Rompuy.

The agreement was signed after EU nations persuaded Italy last month to ditch objections over fears for its big auto industry.

At the time, Belgian Foreign Minister Steven Vanackere, whose country holds the EU\’s rotating presidency, called the deal the "most ambitious agreement ever" for the 27-nation bloc.

Rome secured a six-month delay in the implementation of the FTA to July 1, 2011, in order to prepare its auto industry for the tariff changes.

The agreement requires the 27-nation EU and South Korea to eliminate 98.7 percent of duties for both industry and agriculture within five years and to eliminate remaining tariffs almost fully over longer periods.

EU states insisted on a "safeguard" clause to protect the auto industry from "sudden surges of imports" in sensitive sectors, including small cars.

Rome feared that its auto sector — with a particular concern for Fiat\’s range of small cars threatened by the lowering of tariffs on rival Hyundai models — would suffer badly under the deal.

EU-Korea trade was worth around 54 billion euros (75 billion dollars) in 2009, according to the European Commission. The EU runs a trade deficit of 10.5 billion euros with South Korea.

The signature followed talks between European and Asian leaders at a two-day summit on Monday and Tuesday during which trade figured prominently.

The EU and Malaysia announced the start of free trade talks, while Japan expressed hope it would quickly strike a deal similar to the one South Korea secured with Europe.

Faced with a deadlock in world trade negotations, Europe and the United States have been actively pursuing bilateral deals.

Brussels is also negotiating a pact with India, while another deal is in the works with Mercosur, a South American trade bloc that includes Brazil and Argentina.

South Korea\’s president and European officials did not speak at the signing ceremony but were to hold a press conference later Wednesday.

Latest Articles

Business Podcasts

Live prices

Stock Market

Most Viewed