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Korean FTAs in Effect

The Effectuation of the Korea–EU FTA

The Korea–EU Free Trade Agreement (FTA) went into effect on July 01, 2011.

Consisting of 27 member states (as of 2011), the EU is the world’s largest single economy and is one of our main trade and investment partners. The FTA with the EU will maximize our national interest. The Agreement will bring economic effects as strong as those of the Korea–US FTA and will provide a significant opportunity for us to emerge as a “global FTA hub” to connect Europe, East Asia and the United States.

1. Significance of the Agreement
  • The first FTA with the EU that has ever cut with an Asian country (Korea can secure a competitive edge by advancing into the EU market ahead of our major competitors (Japan and China.))

  • Providing various economic opportunities (the EU comprises 28 member states including the advanced and emerging economies, combining various markets in one block.)

  • Providing various economic opportunities (the EU comprises 28 member states including the advanced and emerging economies, combining various markets in one block.)

  • Enhancing our status in the international community (providing a significant opportunity for us to emerge as a “global FTA hub” to connect Europe, East Asia and the United States)

  • Creating an environment to promote the FTA with the United States (The estimated overall effect of the Korea–EU FTA is predicted to facilitate negotiations with the United States.)

  • Enhancing consumer benefits (upgrading the quality of life of the people by lowering the prices of necessities and services and giving wider choices. Financial, legal, accounting and other high-quality professional services are to be available at lower prices through open markets.)

  • Offering new vitality into the Korean economy (The Korea–EU FTA is expected to significantly enhance the growth potential of our economy through increased foreign investments from the EU and third countries as well as activated trades between the two and to contribute to job creation).
2. Importance of the EU Market
  • EU, the European Union, comprises 28 member countries including Italy, the United Kingdom, Spain, Poland, Romania, the Netherlands, Belgium, Greece, Portugal, Czech Republic, Hungary, Sweden, Austria, Bulgaria, Denmark, Finland, Slovakia, Ireland, Lithuania, Latvia, Slovenia, Luxembourg, Estonia, Cyprus, Malta and Croatia. It is a process of integrating Europe in terms of political sense beyond economic alliance. The institute elected its first “President” in November 2009 (the official title is “European Council President”) (a total population of 500 million and a total area of 4.32 million km²).

  • The EU is the world’s largest economy, with its GDP amounting to USD 16.2822 trillion as of 2010, holding one-third of the world’s entire GDP.

  • As of 2010, Korea’s total trade amount to USD 891.6 billion. Its total trade with the EU reaches up to USD 92.2 billion (2nd place), and exports to EU hits USD 53.5 billion, which are, respectively, larger than those with the United States (a total trade of USD 90.2 billion and exports of USD 49.8 billion). Korea’s trade surplus against the EU is USD 14.8 billion, which makes the EU emerge as our largest surplus region. In terms of FDI, the EU, as the largest investor country to Korea, invested USD 56.44 billion in Korea as of the end of 2009, which is larger than the investment from the United States (USD 41.81 billion).

  • FTA with an advanced economy is expected to bring us macroeconomic effects similar to those from the FTA with the United States including GDP increase by expanding exports, increasing investment and helping the advancement of the economic system.

  • Moreover, in the case of the manufacturing industry, the Agreement is predicted to create a significant economic effect as the market size of the EU for our main export items including automobiles, textiles and electronics surpasses that of the United States and its tariff rate (4.2%) is also higher than that of the United States (3.7%). In addition, its tariff on automobiles, our main export item, reaches up to 10% (United States: 2.5%; Korea: 8%).

The information above is provided only as a reference for users and we are not legally liable for the errors in the content or the consequences of use of the information.
Please use the information above for reference purposes only and confirm the final information with relevant domestic law or administrative agencies.

The information above is provided by the Korea International Trade Association.

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