South Korean President Lee Myung-Bak
THE EUROPEAN Union (EU) sealed a free trade deal with South Korea today, hailing it as a landmark agreement that will kick start a wave of pacts between the 27-nation bloc and Asian nations.
The pact was signed at a summit with South Korean President Lee Myung-Bak in Brussels during which both sides upgraded their ties to the level of strategic partnership.
“This agreement is by far the most important trade deal ever concluded be the European Union with one country and the first free trade deal with an Asian country,” said European Commission chief Jose Manuel Barroso.
Lee said the deal would serve as a model for stimulating sustainable economic growth and expanding free trade in the face of protectionism.
“In the process of overcoming the global economic crisis, there are fears that protectionism will rear its ugly head once again,” Lee told a news conference alongside Barroso and EU President Herman Van Rompuy.
Van Rompuy said the pact “sends a strong signal that trade liberalisation is a key element for recovery of the world economy.”
The trade deal, which must be ratified by the European and South Korean parliaments, will double bilateral trade and give South Korea access to the world’s largest free trade area with a population of half a billion people.
The pact was signed after EU nations persuaded Italy last month to ditch objections over fears for its big auto industry.
The agreement requires the 27-nation EU and South Korea to eliminate 98.7 per cent of duties for both industry and agriculture within five years and to eliminate remaining tariffs almost fully over longer periods.
Rome secured a six-month delay in the implementation of the FTA to July 1, 2011, in order to prepare its auto industry for the tariff changes.EU states insisted on a “safeguard” clause to protect the auto industry from “sudden surges of imports” in sensitive sectors, including small cars.
Rome feared that its auto sector - with a particular concern for Fiat’s range of small cars threatened by the lowering of tariffs on rival Hyundai models - would suffer badly under the deal.
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