South Korea and the EU yesterday declared the formal launch of free trade talks to combine Asia's third-largest economy and the world's largest trading bloc.
The first round of talks opens in Seoul today, EU Trade Commissioner Peter Mandelson and South Korean Minister of State Kim Hyun-chong said in a joint news conference.
The negotiations, if concluded, would create a bilateral free-trade area where two-way trade reached almost US$80 billion last year.
PHOTO: EPA
The 27-member EU remains the biggest foreign investor in South Korea, investing US$4.97 billion last year alone, according to Seoul's foreign ministry.
The EU was South Korea's second-largest trading partner after China last year, with trade reaching US$78.56 billion, according to the ministry.
The EU's 2005 economy totalled US$13.5 trillion, bigger than the US' GDP of US$12.5 trillion, according to the IMF.
The two ministers called "for rapid progress in the FTA [free-trade agreement] negotiations," in a joint statement, as Seoul officials said they hoped to conclude the deal within one year.
An FTA "would open new markets and expand opportunities for Korean and EU businesses while giving valuable momentum to the liberalization of global trade," the statement said.
South Korea is hoping to boost exports of cars, microchips, electronic goods and textiles to the EU.
Seoul officials also say they expect a free trade pact with the EU to help alleviate a trade deficit with Japan, from which South Korean electronics firms now import many of their high-tariff parts and machinery.
Mandelson said yesterday the EU was pushing for an "ambitious and balanced" pact with South Korea, addressing not only liberalizing goods and services but also removing various non-tariff issues for its investors.
He also said for the EU to launch the trade talks with South Korea signified a shift to fast-growing Asia.
"For the EU, it represents a turning towards a stronger focus on Asia," Mandelson told reporters at the media conference.
His South Korean counterpart Kim said his country would eventually serve as "an FTA hub in Northeast Asia" for the world.
"The opening of our market is not a matter of choice but a matter of survival," Kim said in a strongly worded commitment to South Korea's liberalization.
South Korea wrapped up an FTA with the US last month. It has also signed FTAs with Chile and Singapore and one with ASEAN, excluding Thailand, will take effect on June 1.
It is reportedly close to a pact with Canada and in June is set to begin a second feasibility study with China on a potential deal.
Seoul officials have said they expect the EU-South Korean free-trade negotiations to exclude such sensitive areas as rice or film markets.
"As the chief negotiator for South Korea, I would like to conclude a deal with the EU within a year," Deputy Trade Minister Kim Han-soon was quoted by Yonhap as saying on Saturday.
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