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South Korea welcomes approval of trade pact with EU

05 May 2011, 10:26 CET
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(SEOUL) - South Korea Thursday welcomed ratification of a sweeping free trade agreement with the European Union, saying Korean firms will be able to tap deeper into the world's largest market.

Opposition parties had called for a delay in ratifying the deal, insisting on extra safeguards to protect local industries and farmers. But the ruling Grand National Party pushed the bill through parliament late Wednesday.

The deal, due to take effect on July 1, "will allow us to take an advantageous position in the EU, the world's largest market and a major trading partner of ours," a foreign ministry statement said.

"It will also contribute to solidifying the strategic partnership between South Korea and the EU."

Government officials say the deal will create new opportunities and markets for South Korean goods, services and workers, while giving consumers more competitive pricing and better-quality goods and services.

Analysts say it will also help South Korea attract more foreign investment and make business practices and management more transparent.

"The deal will help boost our exports, especially sales of autos, electronic goods and textiles, to the European market," LG Economic Research Institute analyst Kim Hyung-Joo told Yonhap news agency.

The state-run Korea Institute for International Economic Policy has said the pact over the long term would boost South Korea's annual exports by $11 billion, raise gross domestic product by 5.6 percent and create up to 253,000 jobs.

The EU has cited an estimate that it would more than double trade over the next 20 years.

But opposition parties had insisted they would not approve ratification until there had been a full study of the economic impact. The main opposition Democratic Party called for strong safeguards for farmers, small firms and retailers.

"There was plenty of time before the July 1 tentative deadline for protective measures to be discussed in more detail," party leader Sohn Hak-Kyu said Wednesday.

The trade accord is the most ambitious the EU has negotiated, and its first with an Asian nation.

The two sides will axe 98 percent of customs duties within five years, apart from those on a few Korean farm products.

The European Parliament secured measures that will allow the EU to suspend cuts in customs duties if the lower rates invite an "excessive" rise in South Korean imports.

Two-way trade in 2009 was worth 53.5 billion euros ($72.8 billion), with Korean exports -- mainly cars, ships, electronics and semiconductors -- accounting for 32 billion euros.

South Korea has pursued an array of free trade pacts to bolster its export-dominated economy. But a revised free trade pact signed by Seoul and Washington has yet to be ratified by the two countries' legislatures.

The EU-South Korea Free Trade Agreement (FTA)


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