Having pushed through a strong safeguard clause to protect European industry and received guarantees from Seoul that the new Korean legislation on car CO2 emission limits would not be detrimental to European car makers, the EP International Trade Committee recommended on Monday that Parliament give the green light to ratification of the most ambitious trade agreement the EU has ever negotiated.
The European Union’s long-awaited free trade agreement (FTA) with South Korea aims to eliminate about 98% of import duties and other trade barriers in manufactured goods, agricultural products and services over the next five years and to double the EU’s trade with Korea in the medium term, thus boosting jobs and growth. It would also cover trade-related activities such as government procurement, intellectual property rights, labour standards and environmental issues.
On 26 January, the ratification of the FTA moved a step closer after the International Trade Committee backed the final compromise on the safeguard measures that MEPs had agreed with Council in mid-December 2010 (see below EU-South Korea free trade accord: MEPs agree on the safeguard clause). These measures will allow the EU to suspend further reductions in customs duties or increase them to previous levels, if lower rates lead to an excessive increase in imports from South Korea, causing or threatening to cause “serious injury” to EU producers.
However, the committee postponed the vote on the FTA itself to 7 February to allow more time to check new Korean legislation that requires tougher limits on car CO2 emissions and fuel efficiency.
Having weighed up all the implications, a clear majority of the committee members (21:4:0) voted on Monday in favour of ratifying the FTA, which is expected to create new trade in goods and services worth €1.9 billion for the EU and save EU exporters €1.6 billion a year.
“It is clearly a win-win situation for the EU,” declared Robert Sturdy (ECR, UK) who is steering the proposal through the Parliament, ahead of today’s committee vote. “We have negotiated a much better deal. There are a number of issues (e.g. the environmental or CO2 concerns) and I can understand them. However, we set a benchmark by which we can only move forward. The FTA represents a great achievement for the Parliament and the EU” as a whole, he said.
Automobile industry the biggest winner
The main gains are expected in the small and medium-sized car, consumer electronics and textiles industries.
Under the agreement, the 8% tariff on EU cars exported to Korea will be removed, which means that for every car worth €25,000 exported to Korea, €2,000 in duties will be saved. EU car makers will also be able to sell in Korea cars that have been produced in accordance with EU specifications without being subject to additional testing nor having to bear related costs.
Furthermore, the FTA establishes a working group/monitoring committee to avoid hidden protectionism through new technical barriers to trade in the future (e.g. through new South Korean technical regulations such as on CO2 emissions standards).
Both the report on the safeguard clause, by Pablo Zalba Bidegain (EPP, ES), and the report on the FTA itself, by Robert Sturdy (ECR, UK), are expected to be endorsed by the whole Parliament at its plenary session in mid-February in Strasbourg.
The EU-South Korea free trade agreement and the safeguard regulation are both due to come into force in July 2011.