Seoul: EU pressures S Korea in FTA talks

Korean negotiators, led by Deputy Trade Minister Kim Han-soo, and EU negotiators led by Ignacio Garcia Bercero, director of trade relations at the European Commission, began their second round of FTA talks in Brussels on Monday (July 16).

Kim said on Tuesday that both sides are struggling over differences on tariffs and nontariff barriers, such as safety regulations on automobiles, in their second day of five days of negotiations in Brussels. Korea and the EU are holding their second round of talks after concluding round one in Seoul in May.

Both sides aim to advance their talks on an ambitious deal that would be Korea's largest trade accord and a pact that would boost bilateral trade to US$79 billion, or as much as 40 per cent a year, according to the EU's executive body

EU negotiators have asked Seoul to phase out its 8 per cent tariff on autos within three years, while Seoul has proposed a seven-year period, said an unidentified official quoted by Yonhap News agency.

Last year, Korea sold about 740,000 cars with a total value of $9.1 billion in Europe. But in Korea, European carmakers sold only about 15,000 units, which all together totaled about $1.6 billion, according to Korean government figures. The EU's average tariff on car imports is 10 per cent.

After wrapping up the first day of talks on Monday, Kim told reporters that Seoul may rework its tariff rate offers after Brussels expressed disappointment in the initial proposal.

"We told EU negotiators that we could improve our tariff offer before the third round of negotiations in September," Kim said. "If not, the EU would have to push back its tariff proposal." The chief negotiator said Korea has "enough room" to improve its tariff offer as the initial proposal was "significantly conservative".

The two sides are aiming to advance talks in four areas: manufacturing, services and investment, regulation-related issues, sustainable development and dispute settlement regulations, Seoul's Ministry of Foreign Affairs and Trade said.

But after the first day of the talks, Bercero said the EU is "somewhat disappointed", reflecting the challenges that lay ahead for Korea and the world's largest economic bloc.

"I think we will have a number of difficulties, but I hope we will tackle those issues in a constructive manner," Bercero was reported as saying.

The EU has offered to eliminate or phase out all of its import tariffs on Korean goods within seven years once the deal takes effect, but Korea has so far offered to do so for about 80 per cent of tariffs on European goods within five years.

Korea's average tariff rate is 11.2 per cent, higher than the EU's 4.2 per cent.

"The EU has set the bar high by offering 100 per cent tariff-free market access for Korean exporters to the EU market, if Korea makes a similarly ambitious offer," the EU's executive body said in a statement. "The EU has never before taken such an ambitious position in a bilateral free trade negotiation," the statement said.

As a counteroffer, however, Seoul proposed easing non-tariff barriers in such areas as financial services and investment, the official said.

Some experts predict the manufacturing sector would pose an obstacle for Seoul and Brussels because of the high competitiveness of European companies in automobiles, chemicals, machinery, and electronics.

- By Yoo Soh-jung

The Korea Herald, Asia News Network

Publication Date: 18-07-2007