S. Korea, EU to hold minister-level free trade talks

SEOUL, May 22 (Yonhap) -- Trade ministers from South Korea and the European Union (EU) will meet in Seoul over the weekend to address unresolved issues related to a bilateral free trade agreement, the Ministry of Foreign Affairs and Trade said Friday.

In March, the two sides reached a "provisional" agreement on free trade, but left
the most sensitive issues -- including a duty drawback and rules of origin -- to
their trade ministers.
South Korean Trade Minister Kim Jong-hoon and his EU counterpart Catherine Ashton
met in London in April to try to narrow differences, but failed to find common
ground.
"The ministers will discuss the remaining issues," a ministry official said. "But
both sides are unlikely to conclude the deal at this week's meeting."
A duty drawback, which would allow South Korea to return import tariffs to
companies that import raw materials from overseas to make goods for exports, has
emerged as one of the few remaining obstacles to the proposed free trade
agreement.
South Korea insists that it maintain its position on duty drawback, saying that
if the scheme is rejected, it would severely undermine the effect of tariff
reductions.
Brussels opposes the provision, saying it would favor South Korean exporters. The
EU does not allow duty drawbacks under its existing free trade accords with
Mexico and Chile.
The EU was South Korea's second-largest trading partner after China last year,
with two-way trade reaching more than US$98 billion.
If the pact is finalized, it will boost South Korea's exports by $11 billion and
gross domestic product by 3.08 percent, according to a forecast by the Korea
Institute for International Economic Policy.
South Korea, Asia's fourth-largest economy, 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.