South Korea belongs to one of the wealthiest countries in Asia, and is the EU’s fourth largest trading partner. Whereas EU services exports to South Korea amounted to € 7.2 billion, in 2007, services imports from South Korea amounted to € 3.9 billion Euro, in 2007. The country’s GDP in services accounts for 57, 6%. South Korea was named “a priority FTA partner” in the Global Europe trade policy strategy, in 2006.
So far, the 2001 Framework Agreement for Trade and Cooperation has provided the basis for the EU’s relationship with South Korea.
After discrepancies on the delicate issue of the Korean duty drawback policy related to trade in goods, the European Union’s 133 committee approved the text of the agreement on 10 July 2009. ESF reacted positively to that move, and called EU Member States to move the process faster. The FTA has finally been initialled by Trade Commisisoner Catherine Ashton and her Korean Counterpart on 15 October 2009. ESF welcomed that new decisive step and encouraged the Member States to allow a quick signature of the agreement and the European Parliament Members to swiftly ratifiy it, so as to speed up the implementation of its provisions. The European Union and South Korea had been engaged in negotiations on a free trade agreement, since May 2007.
Since the entry into force of the Lisbon Treaty, the Euroepan Parliament must give its consent to the conclusion of nearly all trade agreement negotiated by the Euroepan Commisison and approved by the European Council (article 218 of the Treaty of the European Union).
ESF is accordingly putting forward its position to the key members of the International Trade Committee (INTA) of the European Parliament, including to the Rapporteur for the deal (see ESF letter to MEP Robert Sturdy (ECR- UK). Similar letters have beensent to all INTA members. ESF is notably highliting the important benefits that the FTA will generate for the European services sectors : the net surplus for the EU could reach € 6.4 Billions in 2015, if we table on an annual increase of 15%, compared to the current 10%. The benefit of the implementation of the FTA would then be € +1.5 Billion after 5 years of implementation. (see Chart).
ESF participated on 10-11 May 2010 to the 11th World Korean Forum, that was partly hosted in the European Parliament and took this opportunity to reiterate its strong support for a swift ratification of the EU-Korea FTA.
ESF Director made a testimony at the European Parliament Hearing on EU-Korea FTA
The International Trade Committee (INTA) of the European Parliament held a hearing on the Free Trade Agreement between the European Union and South Korea, on Wednesday, 23 June 2010 (see Programme and Poster). The Director of the European Services Forum, Mr. Pascal Kerneis, was one of the speaker at the hearing. In his presentation, he presented the importance of trade in services and investment with Korea, the progress made in the FTA and the potential gains for the European services sectors. He strongly reitereated the support of the European service industries for the ratification of the agreement and its early provisional implementation.
Excerpts of the EU-Korea FTA related to trade in services:
For consulting the full text on line, please consult the following link
For further information on the EU-Korea Free Trade Agreement consult
10th Anniversary of EU- Korea FTA: trade grows twice as fast under trade agreement
The ten-year anniversary of the EU-Republic of Korea Trade Agreement comes with an impressive growth in bilateral trade of more than 50%, reaching over €110 billion.
Executive Vice-President and Trade Commissioner Valdis Dombrovskis said: “We have a lot to celebrate on the 10th anniversary of the EU-Republic of Korea trade deal, which has led a big boost in our bilateral trade – in fact, trade has doubled. This shows that trade deals are very much worth negotiating and implementing, and they are vital to our recovery: every €1 billion of exports supports 13,000 jobs in the EU. The deal also shows that the EU is walking the talk on workers’ rights, as the agreement has successfully contributed to the Republic of Korea’s ratification of key international labour conventions.”
Trade in goods grew by 46% from 2010 to 2020, almost twice as fast as EU trade with countries that do not have a trade agreement with the EU. The growth of bilateral trade in goods and investment has resulted in increased demand for specialised cross-border services. Trade in services recorded significant growth of 86% in 2019 compared to 2010, reaching €20 billion.
EU services exports increased by +91% since 2011, while South Korea exports to the EU increased by +83% since 2011. However, services represent only 18.6% of the total trade between EU & South Korea, one of the lowest level among OECD countries (22.4% of EU exports to South Korea = Services) (see more statistics on the importance of trade in services in EU-Korea relationship here)
The EU remains the biggest source of foreign direct investment (FDI) in the Republic of Korea, representing 37% of the country’s total FDI stock. The EU’s investment in the Republic of Korea grew by 39% since 2010, reaching €44 billion in 2019. In turn, investments from the Republic of Korea in the EU grew an impressive 151% over the same period and reached €29 billion in 2019. The Netherlands was the largest investor in the Republic of Korea, accounting for 33% of the EU’s total FDI stock, followed by Germany (23%), France (9%) and Hungary (8%). Equally, the Netherlands was the top destination for the Republic of Korea’s FDI in the EU (23% of total stock), ahead of Germany (21%), Hungary (10%), Czech Republic (10%), and Slovakia (10%).
>> Importance of Trade in Services between the EU & South Korea (2023)
>> More here.