Key points of agreement in S. Korea-EU FTA

BRUSSELS, Oct. 15 (Yonhap) -- The following are the major points of agreement
contained within the free trade agreement (FTA) reached by South Korea and the
European Union (EU) on Thursday.

1. Both sides agree to eliminate or phase out tariffs on 96 percent of EU goods and
99 percent of South Korean goods within three years after the accord takes effect.
They also agree to abolish tariffs on most industrial goods within five years after
the deal takes effect.

2. Both sides agree to keep tariffs on such sensitive products as rice and other
agricultural goods and to maintain safeguard measures.
South Korea will be allowed to maintain current tariffs on oranges, powdered milk
and ginseng. The country will also be permitted to retain safeguard measures
against some agricultural products such as beef and sugar, and a tariff rate
quota on such goods as cheese.
Rice and related products are excluded from the tariff concessions list. The EU
will eliminate all agricultural products except rice and 38 other items within
five years.

3. Both sides agree to eliminate tariffs on cars with an engine displacement of over
1.5 liters within three years. They also agree to lift tariffs on smaller cars with
an engine displacement of less than 1.5 liters after five years.
South Korea currently imposes an 8 percent import duty on European cars, while
the EU imposes a 10 percent duty on autos from South Korea.
On automobile safety standards, the two sides agree to accept both UN ECE-set
safety regulations and some South Korean safety regulations.
On the issue of rules of origin, both sides have agreed to set the level of
allowable foreign contents at 45 percent. In case of auto parts, the level is set
at 50 percent, however.

4. Both sides agree to allow a product to satisfy either "the value-added criterion"
or "the change in tariff heading method (CTH) criterion" to determine its rules of
origin, one of the most important components of any free trade agreement. If a
product does not satisfy the above criteria, then it is deemed to have originated
from a third country and thus does not fall within the guidelines of the free trade
accord.

5. The accord permits duty drawbacks, which allow refunds for tariffs levied on
parts used by manufacturers to make products for export such as automobiles.
The deal includes a provision, however, that caps refundable tariffs should there
be "dramatic changes in sourcing patterns" within five years of the accord taking
effect.
Under the accord, the so-called duty drawback safeguard measure is allowed to be
implemented when there is a "dramatic increase in exports of a certain product"
and "imports of intermediate goods used for a product to be exported exceed
sharply exports of the product."

6. Both sides agree to establish a "Committee on Outward Processing Zones on the
Korean Peninsula" one year after the accord takes effect. Under certain conditions
the committe will designate outward processing zones on the peninsula, such as
products made in the inter-Korean industrial complex in the North Korean border city
of Kaesong, which are expected to be treated as South Korean-made goods.

7. Both sides agree to establish a trade dispute settlement body. They also agree to
hold consultations prior to inquiries or probes regarding trade disputes, and
suspend inquiries or probes if the dispute is settled.

8. Both sides agree to exclude investor protection-related measures from the accord,
such as investor-to-state disputes (ISD), as each EU member country has the right to
deal with investor protection cases on their own terms.

9. South Korea will not open such public services as education and medical care. But
it will push to open accounting, law and broadcasting services in a phased manner.

10. Both sides agree to introduce a temporary safeguard measure which controls
sudden and massive capital outflows in case of a financial crisis. South Korea's
state-run financial institutions, such as the Korea Development Bank and the
Industrial Bank of Korea, are not on the list of organizations affected by the
agreement.

11. South Korea will maintain regulations that bar foreign investors from owning
more than 49 percent of the country's major telecommunications firms that provide
core networks and services.

12. Both sides agree on the protection of geographical indications (GIs) such as
names or signs used on certain products which correspond to a specific geographical
location or place of origin. Under the accord, a total of 64 South Korean GIs are
protected, compared to 162 for the EU.

13. The two sides agree to extend their copyright protection period from 50 to 70
years after the author's death, but the agreement will go into effect two years
after the implementation of the accord.
sam@yna.co.kr
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