Explanatory Memorandum to COM(2010)137 - Conclusion of the Free Trade Agreement with Korea - Main contents
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This page contains a limited version of this dossier in the EU Monitor.
| dossier | COM(2010)137 - Conclusion of the Free Trade Agreement with Korea. |
|---|---|
| source | COM(2010)137  |
| date | 09-04-2010 |
The attached proposals constitute the legal instruments for conclusion of a Free Trade Agreement (FTA) between the European Union and its Member States, of the one part, and the Republic of Korea (Korea), of the other part:
- Proposal for a Council Decision concluding the FTA.
The EU-Korea FTA was negotiated in accordance with the objectives set out in the Commission's Communication 'Global Europe: competing in the world' i, which reviewed the contribution of EU trade policy to the European growth and jobs strategy. The Communication confirmed the EU's commitment to the World Trade Organisation (WTO) as the single most effective means of expanding and managing trade for the benefit of all. It stressed that the Doha Development Agenda (DDA) remains the EU's first priority. The Communication also argued that the EU should build on the platform created by the WTO to generate new opportunities for growth by opening markets further to trade and investment. The Communication set out a series of linked trade policy initiatives complementing efforts to resume negotiations in the WTO. As part of these initiatives, it proposed to negotiate carefully chosen comprehensive Free Trade Agreements (FTA).
Further to adoption of the negotiating directives by Council on 23 April 2007, the negotiations with Korea were launched in Seoul on 6 May 2007. The objective set out by the Commission in the Explanatory Memorandum accompanying the recommendation from the Commission to the Council authorising the Commission to negotiate a free trade agreement with the Republic of Korea on behalf of the European Community and its Member States was to complete the negotiations no later than two years after their effective start. The initialling of the FTA by the Trade Commissioner and the Korean Trade Minister in Brussels on 15 October 2009 marked the conclusion of negotiations after less than 2.5 years of talks.
The EU Member States were informed orally and in writing on the process of negotiations with Korea via the Council's Trade Policy Committee (ex-Article 133 Committee). The European Parliament has also been regularly informed on developments via its Committee on International Trade (INTA).
In preparation for the negotiations the Commission has drafted an impact assessment which analyses the possible impact of an FTA with South Korea. A more detailed Trade Sustainability Impact Assessment (SIA) examining the Agreement's potential economic, social and environmental effects has been conducted in parallel with the negotiations. Additional studies providing the qualitative and quantitative analysis of the FTA have also been prepared.
On 13 December 2007 the European Parliament adopted a resolution on trade and economic relations with Korea, which provided a valuable contribution to the negotiations.
2. NATURE AND SCOPE OF THE AGREEMENT
As stipulated in the negotiating directives adopted by the Council, the FTA negotiations with Korea aimed at ensuring a comprehensive and balanced agreement fully consistent with WTO rules and obligations. The agreement was to provide for the progressive and reciprocal liberalisation of trade in goods and services as well as rules on trade-related issues.
The EU-Korea FTA fulfils these objectives and is the first FTA for which negotiations have been completed under the Global Europe strategy. It includes all the measures necessary to establish a Free Trade Area compatible with the provisions of Article XXIV of the General Agreement on Tariffs and Trade (GATT 1994). Both parties agreed to frontload the liberalisation commitments and will eliminate 98.7% of duties in trade value for both industry and agriculture within 5 years. The remaining portion of tariffs will be eliminated almost fully over longer transitional periods, with exception of a limited number of agricultural products such as rice or garlic.
In addition, sectoral annexes on electronics, motor vehicles and parts and pharmaceuticals and medical devices and chemicals have been negotiated to tackle non-tariff barriers. The FTA contains separate chapters covering Trade Remedies, Technical Barriers to Trade, Sanitary and Phytosanitary Measures, Customs and Trade Facilitation.
The Agreement includes also a chapter on Services, Establishment and E-Commerce and the related schedules of commitments, which go significantly beyond both parties' commitments under the General Agreement on Trade in Services (GATS) and are in conformity with Article V GATS. There is also a chapter on Current Payments and Capital Movements.
As far as rules are concerned, the FTA provides for far reaching commitments in area of Competition including state aid, Intellectual Property including enforcement and Public Procurement. Enhanced and binding horizontal provisions on regulatory transparency in areas relevant for mutual trade and investment have been also incorporated into the agreement.
The Agreement incorporates Protocols concerning Rules of Origin and Administrative Assistance on Customs matters, which contains provisions defining the origin of the products that is needed to determine the duties applicable to these products when traded, on the proofs of origin and on arrangements for cooperation between customs authorities.
The FTA includes as well a dedicated protocol on cultural cooperation, which sets a framework to engage in policy dialogue and cooperate in facilitating exchanges regarding cultural activities. This framework entails an institutional set-up for the implementation that is independent from the FTA, notably through the establishment of a separate committee and a specific dispute settlement mechanism.
Finally, Trade and Sustainable Development chapter covering both social and environmental dimensions has been negotiated. This chapter includes co-operation provisions and establishes novel monitoring mechanism involving civil society through a Civil Society Forum.
The institutional provisions foresee establishment of a Trade Committee to supervise the implementation of the FTA and consider ways to further enhance trade relations between the Parties. An efficient dispute settlement mechanism is included. The Trade Committee shall be composed of representatives of the European Union and of Korea. The Trade Committee shall report to the Joint Committee established under the updated Framework Agreement on its activities and those of its specialised committees, working groups and other bodies. The updated Framework Agreement along with the FTA signal an important upgrade of the EU-Korea relationship. As requested by the Council, the two agreements are legally and institutionally linked.
The Commission is of the view that the EU-Korea FTA is, to the largest extent feasible, in accordance with the negotiating directives approved by the Council and the recommendations of the European Parliament in its resolution of 13 December 2007.
3. PROCEDURES
Pending the entry into force of the FTA, the Agreement foresees the provisional application of the Agreement.
The Commission has judged the results of the negotiations to be satisfactory and requests the Council:
- to conclude the FTA on behalf of the Union.
The European Parliament will be called upon to give its consent to the conclusion of the FTA.
The Member States are also parties to the Agreement, which therefore needs to be ratified by them according to their internal procedures.