De Gucht: FTA with Seoul “important step” towards EU recovery
By Lénaïc Vaudin d’Imécourt | Friday 29 June 2012
Figures released by the European Commission one year after the implementation of the free trade agreement (FTA) with South Korea are proof of progress towards European recovery from the 2008 financial crisis, according to Trade Commissioner Karel De Gucht.
With European companies saving €350 million in duties after only nine months of the trade agreement’s entry into force, and a €6.7 billion or 35% increase in EU exports to the Asian state during the same period, the agreement “is already proving its worth as an important step on Europe’s path to economic recovery,” De Gucht said. However, he remained extremely cautious on how these figures should be interpreted as “we are still early in this agreement’s life” and “we do not have all the information yet”. The figures currently available cover only nine months’ worth of trade in goods and no statistics are available yet on services.
The trade benefits of the agreement can only be assessed with certainty after five or ten years, DG Trade explained. “One year after the application of the agreement, it is only possible to get a very first picture of the impact,” it stated.
The EU-South Korea FTA is the “most advanced and ambitious free trade agreement Europe has yet achieved,” according the EU’s trade chief. It entered into force on 1 July 2011 and its aim is to eliminate all tariffs for industrial and agricultural goods in a progressive, step-by-step approach. The EU executive estimates that by July 2016, “98.7% of import duties of EU and South Korea in trade value for both industrial and agricultural goods will be eliminated,” and by July 2031, 99.9% of bilateral trade will be duty-free.
With trade liberalisation already in force today, exports of products where tariffs were eliminated (wine, textiles or clothing) increased by €2.7 billion, or 46%, which represents a €1.7 billion increase compared to products where there was no change to the tariff (certain agricultural products). The Commission also noted a 36% increase, worth €3 billion, for products that were only partially liberalised, such as cars.
“I do not believe that trade, even with such an efficient partner as Korea, presents a serious problem for the [car] sector,” De Gucht said, responding to recent criticisms by European car makers that the EU has not used the proper safeguards to protect the interests of EU-based manufacturers. They have been complaining about a sudden increase in imports of South Korean cars into Europe following the implementation of the FTA.
EU car imports from Seoul have only increased by 17% during the nine months to March, which represents less than 50,000 cars, Commission figures show. “A drop in the ocean,” according to De Gucht. During those nine months, the EU had imported 327,651 units, representing a 19.8% share of total EU car imports. He also argued that 90% of Hyundai cars and 60% of Kia cars sold in the EU are either produced in Europe or come from third countries other than South Korea.
The Commission’s 17% figure is contested by the European Automobile Manufacturers’ Association (ACEA), which talks about a 40% increase in imports of cars from Korea to the EU between 1 July 2011 and 31 May 2012. n