S. Korea, EU to hold ministerial meeting over free trade deal

By Park Sang-soo
SEOUL, June 17 (Yonhap) -- Trade ministers from South Korea and the European
Union (EU) will meet in Paris next week to address unresolved issues related to a
bilateral free trade agreement, the Ministry of Foreign Affairs and Trade said
Wednesday.
In March, the two sides reached a "provisional" agreement on free trade, but left
the most sensitive issues -- including duty drawbacks and rules of origin -- to
their trade ministers.
South Korean Trade Minister Kim Jong-hoon and his EU counterpart Catherine Ashton
are trying to wrap up the free trade deal but have been hindered by disagreements
over the issue of duty drawbacks, under which South Korea is allowed to return
import tariffs to local companies that import raw materials from overseas to make
goods for exports.
The trade ministers met in Seoul in late May to try to narrow differences, but
failed to find common ground.
"The ministers will discuss the remaining issues, including duty drawbacks," Ahn
Ho-young, Seoul's deputy minister for trade, told reporters. "Both sides will try
to narrow differences on unresolved issues at next Friday's meeting.
The issue of duty drawbacks has emerged as one of the few remaining obstacles to
the proposed free trade agreement.
South Korea insists that it maintain its position, saying that if the scheme is
rejected it would severely undermine the effect of tariff reductions.
Brussels opposes the provision, saying it would unfairly 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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