EU’s response and preparation for the EU-Korea FTA Xavier Coget Head of Trade section EU Delegation to the Republic of Korea June 2011

1. What is in this FTA?

Swift tariff elimination for goods 70% of the duties (tariff lines) will be eliminated at day one Almost all remaining duties (98.7% of the tariff lines) will be eliminated gradually over the remaining 5 years For Korea a few sensitive items, mainly agricultural products, will benefit from longer transition periods and rice will not be liberalised EU average applied tariffs are 6.5% and Korean average applied tariffs are 12.2% Goods must respect rules of origin to benefit the preferential tariffs!

Korean exports to the EU Tariff elimination for Korean exports Korean exports to the EU auto parts wireless Device refrigerators mid and large cars microwave ovens synthetic resin small cars TV sets cameras 4

Tariff elimination for EU exports EU exports to Korea auto parts measuring instruments wine mid and large cars pharmaceuticals cosmetics small cars skin care - plywood - pork 5

Pharmaceuticals & medical devices Elimination of certain non-tariff barriers Consumer Electronics Mutual Recognition of Electromagnetic Compatibility & Electric safety Certificates Automotive Equivalence of Key EU and Korean Standards Recognition of each other’s Certificates Transparency and consultation of industry in decisions regarding reimbursement prices Pharmaceuticals & medical devices 6

Service liberalisation Shipping market access, transparency time Telecoms Financial services Legal services 7

Strengthened rules Compe-tition rules Protection of IPR e.g. anti-cartel 8

Other elements Efficient dispute settlement rules Protocol on cultural co-operation General safeguard clause Efficient institutions 9

2. Expected impact

EU and Korea 2 relatively complementary economies main EU exports to Korea main Korean exports to EU 36% Service 10% Cars Machines 31% 23% Ships 5% Agri-goods 26% Electronics 8% Cars 11

Potential impact Double the trade on the long term 12

Economic growth, job creation, consumer benefits, competition, investment Income GDP Fair Competition 13

Summary Most important FTA negotiated by EU or Korea. Bilateral trade and growth will be boosted One study estimates that the FTA will increase bilateral trade by more than € Bn 30 On the short term: Most competitive sectors of each side will immediately boost their exports while weaker ones will face tougher competition (adjustment cost) Costs for consumers and users will decrease, boosting competitiveness of the 2 economies On the longer term: Increase of investment Economies of scale / more efficient resource allocation Opportunities for strategic partnerships Emulation, innovation, technology transfer

3. EU’s response and preparation

Adoption of FTA implementing legislation in the EU Council Decision approving the provisional application of the FTA Amendment of the TARIC database (EU custom duties database) to implement the liberalisation schedule EU Safeguard Regulation (internal EU rules on how to operate the bilateral FTA safeguard) Commission Regulation/Decision with specific rules to implement the Rules of Origin derogations Protection of Korean Geographical Indications Several other EU legislation are implementing commitments in the service sector of IPR

Communication and pedagogic efforts towards businesses and governments Organization of / participation to several information seminars for businesses and EU Governments Publication of several pedagogic materials (text of the FTA, summary, reading guide, Powerpoint presentations) Specific targeted pedagogic and communication efforts by EU Member States administrations (e.g. National customs for the approved exporters’ status and rules of origin) Press activity and celebration events end June / early July

Institutional set-up / relations with the Korean Government Reinforcement of EU officials operating trade relation with Korea Intensification of contacts and cooperation with Korean Government / monitoring of Korea’s FTA implementation New institutional set-up for FTA implementation (13 EU-Korea Committees and Working Groups will meet at least once a year to operate the FTA) More contacts with EU industry through the usual channels