Korea, EU closer to free trade deal: minister

SEOUL, May 11 (Yonhap) -- South Korea and the European Union (EU) are close to
clinching a free trade deal, but it remains uncertain whether both sides will
strike the pact later this month, Seoul's top trade official said Monday.

In March, the two sides said they had reached "provisional" agreement on the
trade pact, but would let their trade ministers resolve remaining issues such as
duty drawback and rules of origin regulations, citing the "political nature" of
those issues.
"The negotiations are in a final stage, and both sides will be able to resolve
the remaining issues," South Korean Trade Minister Kim Jong-hoon said in a
keynote speech at an international forum. But he said it is unclear whether both
sides will reach an agreement on the remaining issues at a South Korea-EU summit
in Seoul on May 23
Duty drawback, which would allow South Korea to return import tariffs to its
companies that import raw materials from overseas to make goods for exports,
appears to be one of few remaining obstacles in a proposed free trade deal
between Seoul and Brussels.
South Korea has repeated that it would maintain its position on duty drawbacks,
saying that if the scheme is rejected, it severely undermines the effect of
tariff reductions.
Brussels opposes the provision, saying it would favor South Korean exporters. The
EU does not allow duty drawbacks under its existing free trade accords with
Mexico and Chile.
The EU was South Korea's second-largest trading partner after China last year,
with two-way trade reaching more than US$98 billion.
If the pact is finalized, it will boost South Korea's exports by $11 billion and
gross domestic product by 3.08 percent, according to a forecast by the Korea
Institute for International Economic Policy.
South Korea, Asia's fourth-largest economy, reached a free trade deal with the
United States in March 2007, shortly before it launched talks with the EU, but
the deal has remained stalled in both legislatures.
sam@yna.co.kr
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