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Modernization of EU-Korea FTA Required to Secure Future Trade
On July 1 this year the EU-Korea Free Trade Agreement (“FTA”) celebrated its seventh anniversary. As a result of the various provisions of this FTA, which was ‘state-of-the-art’ at the time of its provisional application, trade in goods in 2017 has grown to EUR 100 billion (which is a remarkable growth of 47% compared to 2010) and EU FDI in Korea grew by 140% from 2010 to EUR 5.5 billion in 2017.
Both the EU and Korea are considered champions of free trade, being looked at as role models by many nations. The FTA is a prime illustration of the EU’s and Korea’s commitment to free trade to the benefit of its combined 550 million consumers. It is exactly this commitment that has moved both parties to negotiate trade agreements with other trading partners; with Korea effectuating its 15th Free Trade Agreement (with Colombia) in 2016 and the EU recently concluding its trade negotiations with Japan and Singapore.
Since the conclusion of the final text of the FTA, there have been various developments (technological as well as economical) that have had a certain impact on the way trade is being conducted and with the commencement of the fourth industrial revolution many further developments are to be expected. This means that while the text of the FTA was indeed ‘state-of-the-art’ at the time it was agreed upon, this is not necessarily the case anymore. Certain aspects (such as the direct shipment requirement, the exclusion of truck tractors and the introduction of an approved exporter system) of the FTA are in fact presenting hurdles to trade, contrary to the purpose of the FTA.
The aforementioned obsolesce of certain parts of the FTA, combined with the expansion of free trade by both the EU and Korea means that in order to safeguard EU-Korea trade there is a need for modernization of the FTA. While it would be a fundamental benefit for modernizations to be discussed and implemented on a continuous basis, the current situation has placed a certain urgency on such modernization.
In addition to necessity for further growth of EU-Korea trade, the modernization of the FTA will serve as a sign to the world at large that both strategic partners are aware of global developments and committed to update their trade agreements to incorporate these (rather than simply keep obsolete elements of trade agreements in place, simply due to the fact that these elements were appropriate years ago).
Based on the above we are convinced this is the right moment to modernize the FTA and would highly appreciate respective initiatives towards this direction. This is why ECCK has encouraged the European Commissioner for Trade Cecilia Malmstrom and Korean Trade Minister Hyun-chong Kim to secure a positive outcome by letter of June 7.
Modernization of EU-Korea FTA Required to Secure Future Trade