2012年-CEPS欧洲政策研究中心_A_Qualitative_Analysis_of_a_Potential_Free_Trade_Agreement_between_the_European_Union_and_South_Korea_159页_1002kb

Summary of "A Qualitative Analysis of a Potential Free Trade Agreement between the European Union and South Korea"

Core Content

This document presents a qualitative analysis of a potential Free Trade Agreement (FTA) between the European Union (EU) and South Korea, focusing on the economic implications, trade patterns, and policy considerations for both parties. The study was conducted between January and April 2007 by a consortium of the Centre for European Policy Studies (CEPS) and the Korean Institute for International and Economic Policy (KIEP), and was submitted to the DG Trade of the European Commission.

The primary objective of the study is to assess the current state of non-tariff barriers (NTBs) in EU-Korea trade and to provide a basis for negotiations that began in May 2007. It also explores the potential benefits of a deep FTA, including the liberalization of services, investment, and the removal of NTBs, and outlines the implications of these changes on both the EU and South Korea's economies.

Main Views

1. Korea's Economic Profile

• Growth and Development: Korea has transformed from an agricultural to an industrial economy since the 1960s. It is now the 11th largest economy in the world, with a GDP per capita comparable to that of Portugal and other new EU member states.
• Growth Rate: Korea's average growth rate (5.2%) over 2000–2005 is higher than that of its main FTA partners, such as Chile, Mexico, and South Africa.
• Trade Importance: Korea is the 8th most important trade partner for the EU and the 4th for South Korea, indicating its strategic value in global trade.
• Human Capital: Korea has a strong human capital base, which is crucial for its R&D and innovation capacity. This has significant implications for future trade patterns, especially in high-tech sectors.

2. EU-Korea Bilateral Trade Relations

• Current Framework: Trade relations are governed by WTO commitments and the 2001 Trade and Cooperation Agreement, which includes MFN status and aims to reduce NTBs.
• Trade Patterns: Korea is a major exporter of motor vehicles, while the EU has a comparative advantage in services, except utilities, gas, and electricity.
• Sensitive Sectors: Sectors such as automobiles, pharmaceuticals, cosmetics, agricultural products, textiles, and financial services are identified as sensitive due to asymmetric comparative advantages and protectionist measures.
• Non-Tariff Barriers (NTBs): NTBs are more significant than tariffs in sectors like automotive, where they hinder market access and create trade distortions.

3. Policy Strategies for FTA

• EU's FTA Strategy: The EU seeks to enhance competitiveness and growth through FTAs, while maintaining multilateral commitments.
• Korea's FTA Strategy: Korea has pursued FTAs with major economies, including the US and Canada, and is seen as a strategic partner in the region.
• Regulatory Issues: The EU and Korea face challenges related to standards, technical regulations, and transparency, which are critical for trade liberalization.

4. Potential Economic Effects of Deep Integration

• CGE Modelling: Studies using computable general equilibrium (CGE) models suggest that an FTA would bring substantial gains, though not evenly distributed. Korea would likely gain more than the EU.
• Services Liberalization: Services liberalization is expected to be a significant source of benefits for the EU, especially in sectors like finance and telecommunications.
• Investment Liberalization: Investment liberalization is crucial for enhancing trade and economic growth. The EU is already the largest direct investor in Korea.
• IPR Protection: Intellectual property rights (IPRs) are a key concern in Korea, which is a major producer and exporter of counterfeit goods. Strengthening IPRs is vital for investment and trade in high-tech sectors.

5. Policy Recommendations

• Dispute Settlement Mechanism: A strong dispute settlement mechanism is essential, especially one that includes credible retaliation against non-implementation of obligations.
• Rules of Origin: The design of rules of origin and market access modes will determine the level of services liberalization. A restrictive approach may benefit the EU by encouraging new investment and exports.
• Regulatory Cooperation: The EU should push for Korea to adopt international or EU standards to reduce NTBs. Mutual recognition of standards should be included in the FTA.
• Timing of Negotiations: The EU should consider the timing of negotiations carefully, possibly allowing competitors like the US to move first in order to secure better long-term outcomes.

Key Information

• Non-Tariff Barriers (NTBs): These are more significant than tariffs in trade with Korea, especially in the automotive sector.
• Services Liberalization: The EU has a comparative advantage in services, and liberalization is expected to boost trade and economic benefits.
• Investment Liberalization: Investment liberalization should be included to complement trade liberalization, with emphasis on national treatment and asset definitions.
• Intellectual Property Rights (IPRs): IPR protection is crucial for the EU, especially in high-tech and high R&D cost sectors.
• Timing and Strategy: The EU should consider strategic timing, possibly aligning with the US's FTA with Korea, and should not delay negotiations to avoid trade diversion.

Conclusion

A deep FTA with Korea, focusing on the removal of NTBs, services liberalization, and investment liberalization, is essential for maximizing the economic benefits for the EU. The study highlights the importance of a strong dispute settlement mechanism, regulatory cooperation, and a strategic approach to timing in order to ensure the success and sustainability of the EU-Korea FTA.