The EU and South Korea have formally initiated negotiations on a bilateral pact that could give a €20 billion boost to their trade relations, one month after the Asian country signed a similar deal with Europe’s largest trade rival, the US.
Meeting in Seoul on 6 May, EU Trade Commissioner Peter Mandelson and South Korean Trade Minister Kim Hyun-chong formally announced the launch of negotiations on a wide-ranging pact that is expected to increase two-way trade and investment between the two regions by around 40%, according to a study commissioned by the EU.
South Korea has been pushing for a free-trade agreement with the EU as part of its ‘multi-track’ FTA policy, which aims to conclude free-trade agreements with 15 countries by the end of the year.
But the idea only really gathered momentum in Europe once Seoul began FTA negotiations last year with Washington and after World Trade Organization talks for a global trade pact were suspended in July 2006 (see our LinksDossier on the WTO Doha Round).
Korea is the EU’s eighth trading partner – ahead of India or Brazil – and trade between the two stood at roughly €53 billion in 2006. Furthermore, the EU is South Korea’s largest foreign investor, with around €3.5 billion of trade in 2006.
In the talks, the EU is expected to press the Korean government for better access to its car market as well as to its pharmaceuticals, chemicals, machinery and cosmetics industries.
“I take pride in every European car that I see on the streets of Seoul but I would like to see a great many more,” said Mandelson, although he added that for the EU, concluding the Doha Round remains the number one priority.
This first round of talks is to last until 11 May and both parties said that they expect to wrap up the deal within a year.