(Yonhap Interview) Korean consumers to benefit from Korea-EU FTA: Europe biz leader

By Lee Youkyung
SEOUL, July 21 (Yonhap) -- South Korean consumers will bask in their country's
free trade agreement (FTA) with the European Union (EU) as it is likely to allow
them to choose cheaper imports, a European business leader in Seoul says.
South Korea's small and medium-sized companies, which have been protected by
non-tariff barriers, may be hurt unless they do not make efforts to become more
competitive, said Hans-Bernhard Merforth, vice president of the European Union
Chamber of Commerce in Korea (EUCCK), in an interview with Yonhap News Agency on
Monday.
Last week, South Korea and the EU said they had concluded their over
two-year-long free trade talks, agreeing to phase out tariffs on 96 percent of EU
goods and 99 percent of South Korean goods within three years once the pact takes
effect.
Both sides have yet to announce the signing of a formal deal, which the
legislatures of the two sides will have to ratify before it goes into effect.
"Once the deal becomes effective, Korean consumers will enjoy more choices of
cheap-priced, quality agricultural goods from Europe," he said.
"Losers in Korea would probably be -- if they don't adjust -- Korean small- and
medium-sized companies," he said. "And the service industry ... will have to
encounter more competition."
"As far as customs duties are concerned, it is a very radical and very strong
deal," Merforth said.
Two-way trade between South Korea and the EU in 2008 amounted to US$98.4 billion,
with Seoul posting an $18.4 billion surplus.
He emphasized that market opening for the trading partners is not limited to
manufacturers, but that the pact will also contribute to job creation in South
Korea's service sector.
"If, for instance, a very large international EU law firm sets up (offices) here,
it will increase competition, but you can bet that they will employ Korean
lawyers," Merforth said. "That means growth of high-quality employment in Korea."
The free trade negotiations with South Korea's second-largest trading partner
faced criticism from Europe's ailing auto industry, which fears that an influx of
cheap South Korean automobiles will dampen domestic sales in Europe.
Merforth said such concern came mostly from companies with a strong domestic
market and few overseas production facilities. But the free trade deal should not
be considered a source of competition from Asian rivals, he said, because it only
accelerates inevitable competition.
"Even if no FTA had been concluded, Koreans would have ramped up production
within the EU," he said, referring to South Korean auto plants in Slovakia and
the Czech Republic. An "FTA only speeds up competition."
The businessman said the European side wants to ratify the free trade deal "as
soon as possible," and the EUCCK will step up efforts to remove speed bumps.
But with 27 member states having to go over technical and legal terms, as well as
the council of ministers having to go through other procedures for the deal to
finally go to the European parliament, it is going to be a complicated political
process.
"But the fact that this result has been presented to the national government and
council of ministers ... before it was initialed hopefully precludes nasty
surprises on the side of the EU parliament," Merforth said.
ylee@yna.co.kr
(END)