(2nd LD) S. Korea, EU to announce free trade deal in early April: officials

(ATTN: ADDS quote on inter-Korean industrial park, details in paras 10-13)
SEOUL, March 16 (Yonhap) -- South Korea and the European Union have virtually
wrapped up their negotiations to forge a free trade agreement and are set to
formally announce the deal early next month, officials said Monday.
South Korea, Asia's fourth-largest economy, and the EU, the world's
single-largest economic bloc, started the talks in May 2007, but differences over
industrial tariffs and other sensitive issues have hampered progress.
The two sides will hold an eighth round of negotiations on March 23-24 in Seoul in
what will be their final round of talks and officially announce the deal at a
summit of the Group of 20 nations on April 2 in London, South Korean officials
said.
"With both sides publicly declaring the deal at the G-20 summit in London, they
will show that protectionist measures can't resolve the current economic crisis,"
said an official with the South Korean government.
According to multiple officials, South Korea and the EU agreed to eliminate or
phase out tariffs on 96 percent of EU goods and 99 percent of South Korean goods
within three years.
Eventually, Seoul and Brussels agreed to abolish tariffs on all industrial goods
within five years after the deal comes into force, they said.
As for auto trade, one of the most sensitive issues, the two sides agreed to
eliminate tariffs on cars with engine displacement of over 2.5 liters within
three years. For cars with engine displacement of less than 2.5 liters, they
agreed to abolish tariffs within five years, officials said.
Currently, South Korea imposes an eight percent import duty on European cars,
while the EU imposes a 10-percent duty on South Korean cars.
In another sensitive issue, the two sides have neared an agreement on allowing
goods made at an inter-Korean industrial complex in North Korea to receive
duty-free status in the European market.
A joint committee could be set up to look into the deal on products from the
Kaesong Industrial Complex, located just north of the heavily armed inter-Korean
border. If signed, the agreement will be similar to one reached between South
Korea and the United States when they signed a free trade deal in early 2007.
South Korea and the EU have "agreed to frame the agreement on Kaesong-made goods
under the South Korea-U.S. Free Trade Agreement because Britain and France,
members of the U.N. Security Council, could not acknowledge it immediately amid
rising tensions over North Korea's planned missile launch," the official said.
The North closed off the inter-Korean border for a second time last Thursday amid
rising fears over its planned test-launch of what it claims is a satellite but
what many believe will in fact be a ballistic missile.
Earlier in the day, North Korea partially reopened the overland border crossing
to the Kaesong complex, home to 98 garment and other small-size South Korean
firms that hire some 38,000 North Koreans.
South Korea said however that it won't allow the EU to use the "made in EU" tag
on its products, officials said.
Officials at the EU's representative office in Seoul weren't immediately
available for comment.
The EU was South Korea's second largest trading partner after China last year,
with two-way trade reaching more than US$90 billion.
If the EU trade deal takes effective, it will help South Korea boost its exports
by $11 billion and gross domestic product by 3.08 percent in the long term,
according to a forecast by the Korea Institute for International Economic Policy.

South Korea reached the free trade deal with the U.S. in March 2007, shortly
before it launched the talks with the EU, but the deal has remained stalled in
both legislatures.
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