Korean FTAs in Effect
The Korea–EFTA Free Trade Agreement (FTA) went into effect on September 01, 2006.
The Korea–EFTA FTA concerns the largest economic scale among the FTAs made by Korea. The Korea-EFTA FTA is the first one concluded with a regional block. Moreover, the Korea–EFTA FTA is expected to serve as an opportunity for Korean companies and their products to advance into the large EU market as the European Free Trade Association (EFTA) has virtually shared the same market with the European economy.
1. Significance of the Agreement
- The first FTA cut with an advanced economic region (among advanced economies and European economic blocks, EFTA is the first one that concluded an FTA with Korea.)
- A catalyst role in the balanced development of our industries (The Korea–EFTA FTA is predicted as able to play a catalyst role in developing our industries under comparative disadvantages based on a clear recognition of the imbalanced development between industries in our economy.)
- Vitalizing investment by improving the environment (amending existing investment agreements by a great deal to improve the investment environment including investor protections)
- Expanding EFTA markets for our products (all products imported from Korea (industrial and marine products) are waived of all tariffs immediately after the Agreement has taken into effect.)
- Creating an environment for promoting FTA with the EU (the estimation of the overall effect of the effectuation of the Korea–EFTA FTA is expected to facilitate negotiations with the EU.)
- Increasing mutual benefits through complementary cooperation between industries (as the two economies have complementary industrial structures of little dependence on intra-industry trade and large shares in inter-industry trade, increased international trade between the two through FTA will promote mutual benefits.)
- Securing tariff preferences for the products from the Kaesong Industrial Complex (in recognition of the significance of the Kaesong Industrial Complex Project and the stable peace in Northeast Asia, schemes not in breach of the obligations under the WTO rules were discussed. It was agreed to especially recognize the products as produced in outward processing.)
- Increasing the awareness of Korean goods in Europe (raising the low awareness of Koreans on Korean products in Europe to have positive impact on the advancement of Korean businesses and their products to Europe)
2. Importance of the EFTA Market
- EFTA was established when seven European countries including the United Kingdom, Denmark, Norway, Sweden, Switzerland, Austria, and Portugal signed an FTA in 1960 as a countermeasure against the European Economic Community (EEC) that was aiming to be a customs union. It is one of the economic alliances that have signed FTAs in the widest range as a part of its active pursuit of economic cooperation with offshore countries since 1990s.
- The coalition of the world’s richest countries, with its total GDP from four member countries amounting to EUR 639.3 billion as of 2009 (EUROSTATE)
- As of 2010, its total trade volume is EUR 526.8 billion, the highest figure among the major economic blocks. It holds the global competitiveness in oil, gas, fisheries, pharmaceuticals, machinery, financial services and shipping.