STILL STUCK ON AUTO TRADE, EU- KOREA FTA TALKS TO CONTINUE INTO NEXT YEAR
Disagreements about automobile trade continued to stall negotiations on a free trade agreement (FTA) between the EU and South Korea during a round of talks from 19-23 November.
Negotiators made some progress on services, intellectual property rights, investment issues, and even on agriculture - famously sensitive in both the EU and Korea. However, they failed to make headway on issues such as rules of origin, automotive tariffs and auto-related technical standards.
Brussels wants the deal with Korea to match the FTA that Seoul signed with the US last April (see BRIDGES Weekly, 17 October 2007). Seoul maintains that circumstances are completely different, especially in the automobile sector. Korea annually imports 4000 cars from the US while exporting 700,000. From the EU, it imports 15,000 cars every year, with a comparatively paltry 74,000 sent in the opposite direction.
EU negotiators have offered to eliminate their 10 percent tariff on autos within seven years. Korea has proposed removing its 8 percent tariff in three years. However, nothing has been agreed. Korea is still looking for concessions on other major export items, like steel, on which the EU has refused to lower its tariffs.
Auto-related technical standards are another sticking point. Specifically, Brussels wants Korea to accept international standards as equivalent to domestic ones, arguing that Seoul’s current technical requirements impede European exporters. Korea offered to apply international technical safety standards to European exporters who annually sell fewer than 6500 units in Korean markets. Brussels rejected the offer, however, because many of its producers are already above that threshold, reports dpa.
Agricultural products were also considered during last week’s negotiations. The EU agreed to Korea’s request to slate rice, pepper and garlic as ’sensitive’ items for lenient tariff treatment. However, the EU demanded that Seoul make concessions on wine and pork comparable to those in the US-Korea FTA.
Both sides had originally hoped to conclude the talks, which started in May, before the end of the year. However, Korean chief negotiator Kim Han-Soo said last week that even May 2008 would represent "a very early conclusion." The next round of negotiations is scheduled for 21-25 January 2008 in Seoul.
ICTSD reporting; "Seoul’s talks with EU for free trade stumbled on cars," DPA, 23 November 2007; "EU says Korea could scupper trade talks over cars," REUTERS, 23 November 2007; "Korea, EU clash Over Technical Standards on Cars at FTA Talks," KOREA TIMES, 21 November 2007; "Korea, EU Tackle Tariff Reductions in Free Trade," ARIRANG NEWS, 23 November 2007; "Korea-EU FTA Talks Run into Stumbling Block," DONGA, 24 November 2007; "Korea, EU conclude 5th round of free trade talks," KOREA.NET, 23 November 2007.