S. Korea wants trade accord with EU to take effect around July

SEOUL, Oct. 30 (Yonhap) -- South Korea is expecting a free trade deal with the
European Union (EU) to take effect around July next year, Seoul's top trade
official said Friday.
Last month, both sides initialed their free trade deal, three months after
concluding their negotiations.
"Both sides are seeking to officially sign the accord before March, and let it
take effect around July," South Korean Trade Minister Kim Jong-hoon told in a
radio interview.
Kim earlier said that Seoul wants the accord to go into effect in July at the
earliest after all related procedures, including a parliamentary approval of the
deal.
Overall, the open trade pact is expected to boost bilateral trade between South
Korea and the EU by as much as 20 percent, according to an estimate by the
state-run Korea Institute for International Economic Policy (KIEP).
Under the agreement, Seoul and Brussels will 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 have also agreed to abolish tariffs on most
industrial goods within five years after the deal is ratified.
The two sides agreed to eliminate tariffs on cars with an engine displacement of
over 1.5 liters within three years. Tariffs for smaller cars with an engine
displacement of less than 1.5 liters would be lifted 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.
The accord permits duty drawbacks, which allow refunds for tariffs levied on
parts used by manufacturers to make products such as cars when the final product
is exported.
Concerning the rules of origin, both sides agreed on the level of allowable
foreign contents at 45 percent. In case of auto parts and others, the level is
set at 50 percent.
The EU was South Korea's second-largest trading partner after China last year. In
2008, two-way trade totaled US$98.4 billion with South Korea enjoying a surplus
of $18.4 billion.
The EU was the biggest foreign investor in South Korea last year with its
accumulated investment totaling $44.82 billion.
sam@yna.co.kr
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