S. Korea, EU begin last round of free trade negotiations

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SEOUL, March 23 (Yonhap) -- Negotiators from South Korea and the European Union
started talks Monday to iron out differences on sticky issues in their free trade
negotiations, officials said.

During a two-day meeting in Seoul, South Korean chief negotiator Lee Hye-min and
his EU counterpart Ignacio Garcia Bercero will seek to narrow differences on
rules of origin, duty drawback and other issues.
The negotiations, the eighth of their kind, are to be the final round. Trade
ministers from both sides are expected to finalize the free trade accord early
next month.
"Both sides will seek to wrap up negotiations this week," Lee said before
launching the negotiations. "The free trade agreement, if finalized, will benefit
both sides."
South Korea, Asia's fourth-largest economy, and the EU, the world's
single-largest economic bloc, began the talks in May 2007 but differences over
industrial tariffs and auto trade initially hampered progress. Significant
progress has been made on those issues and others since the seventh round of
negotiations in May last year.
During a high-level meeting earlier this month, Seoul and Brussels agreed to
eliminate or phase out tariffs on 96 percent of EU goods and 99 percent of South
Korean goods within three years. They have also agreed to abolish tariffs on all
industrial goods within five years after the deal takes effect, according to
officials.
One of the most sensitive issues has been auto trade. After much wrangling, the
two sides agreed to eliminate tariffs on cars with an engine displacement of over
2.5 liters within three years. Those for smaller cars will be lifted after five
years.
South Korea currently imposes an eight percent import duty on European cars,
while the EU imposes a 10 percent duty on autos from South Korea.
The two sides have also 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 sensitive issue.
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 pact is finalized, it will boost South Korea's 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 a free trade deal with the United States in March 2007,
shortly before it launched talks with the EU, but the deal has remained stalled
in both legislatures.
sam@yna.co.kr
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