(BRUSSELS) – Europe agreed a vast free trade deal with South Korea on Thursday, hailing it as the first in a chain of bilateral pacts with Asian nations that will bind the continents together.
The European Union’s first trade pact with an Asian country was approved at a one-day EU summit in Brussels after Italy dropped its objections over fears about the impact on its vital auto industry.
Belgian Foreign Minister Steven Vanackere, whose country holds the European Union’s rotating presidency, called the deal the “most ambitious agreement ever” for the 27-nation bloc.
“This is the first of a generation of bilateral trade agreements that will bind Europe and Asia together in an ever closer economic bond,” Vanackere told reporters after foreign ministers agreed the deal.
“It is a very big step in opening markets in Asia for our companies,” he said.
The deal will be formally signed at an EU-South Korea summit in Brussels on October 6, but it must also be ratified by the European parliament.
Rome unblocked the agreement after securing a six-month delay in its implementation to July 1, 2011, the minister added.
Italy sought the delay in order to prepare its auto industry for the tariff changes.
Rome feared that its auto sector — with a particular concern for Fiat’s range of small cars threatened by the lowering of tariffs on rival Hyundai models — would suffer badly under the deal.
A “safeguard” clause will protect the small car industry from “sudden surges of imports in sensitive sectors, including small cars,” according to European Council conclusions.
The deal requires the 27-nation EU and South Korea to eliminate 98.7 percent of duties for both industry and agriculture within five years and to eliminate remaining tariffs almost fully over longer periods.
The European parliament’s second largest group, the Socialist bloc, warned that it would ensure that safeguards are enshrined in the pact.
“We need to make sure that our manufacturers will compete on an equal footing with the South Koreans. We cannot leave room for dumping situations,” said Socialist lawmaker Bernd Lange.
ACEA, the European auto industry group, also called for “further improvements” to the deal to ensure a “fairer and more balanced deal.”
Two-way trade last year between the EU and South Korea was worth some 79 billion dollars (some 60 billion euros).
Faced with a deadlock in world trade negotations, Europe and the United States have been actively pursuing bilateral deals.
The EU is negotiating a trade pact with India, hoping to strike a deal by December and another deal is the works with Mercosur, a South American trade bloc that includes Brazil and Argentina.
Vanackere insisted that the EU was still committed to completing the Doha round of global trade negotiations, which remain mired in disagreements over tariff cuts and reductions to farm subsidies.
The foreign minister said the South Korea deal was “in no way contrary to our willingness, our ambition to relaunch the multilateral process.”
The South Korea pact was forced onto the EU summit agenda after Italy used its veto power to stall the agreement over concerns that it would damage its auto industry, dominated by car giant Fiat.
Italian Prime Minister Silvio Berlusconi is struggling on the domestic political front and Rome had warned that it could veto the deal.
The Italian prime minister was not present for the announcement, however, as his flight was delayed due to a technical problem.
