Business

EU-South Korea trade deal backed by European Parliament

  • 17 February 2011
  • From the section Business

The European Parliament has ratified a free-trade pact between the EU and South Korea - clearing the way for the deal to come into effect from July.

The agreement is expected to double the value of trade in goods between the EU and South Korea to about 100bn euros (£84bn; $135bn).

Most trade tariffs between the two partners will be removed.

However, 128 MEPs opposed the plans, with concerns it would be damaging to industries within Europe.

The parliament also approved separate legislation that allows EU industry and governments to request a re-imposition of duties if surging imports hurt EU producers.

This clause was seen as key to getting backing for the trade deal.

"This is a landmark agreement and a benchmark for what we want to achieve with other key trading partners," said EU trade commissioner Karel De Gucht.

South Korea, which is the the world's 15th largest economy, has also signed a free-trade pact with the US.

Telecommunications, environmental, legal, financial and shipping companies are said to be set for the greatest benefits, with Korea making "substantial commitments" to liberalise these sectors.

Opposition to the treaty has come especially from European carmakers who have argued the agreement benefits South Korea by allowing Korean manufacturers to reclaim duties paid on cheap imports from neighbouring countries - so-called duty drawback.

However, as part of the negotiations, South Korea eased domestic rules on emissions for cars - which benefits large cars mainly imported from the EU.