Having pushed through a strong safeguard clause to protect European industry and received guarantees from Seoul that the new Korean legislation on car CO2 emission limits would not be detrimental to European car makers, the Parliament on gave its consent to the most ambitious trade agreement the EU has ever negotiated.
Thursday result, with 465 votes for, 128 against and 19 abstentions, follows two and a half years of negotiations and closes the EU procedure for ratification of the agreement, which will come into effect in July 2011.
With the safeguard clause built in, this deal is very good news for European industry. We have opened our markets to cheaper products that will benefit consumers and Korea has opened its markets to our exporters, who will benefit from significant extra demand', said Robert Sturdy (ECR, UK), the MEP steering the legislation through Parliament.
The long-awaited agreement aims to eliminate about 98% of import duties and other trade barriers in manufactured goods, agricultural products and services over the next five years. It is expected to create new trade in goods and services worth €19.1 billion for the EU and save EU exporters €1.6 billion a year. It also covers trade-related activities such as government procurement, intellectual property rights, labor standards and environmental issues.
Under the agreement, not only will the 8% tariff on EU cars exported to Korea be removed, but EU car makers will be able to sell their products - produced according to EU specifications - without being subject to additional testing. The FTA also establishes a working group/monitoring committee to avoid hidden protectionism through new technical barriers to trade in the future (e.g. through new South Korean technical regulations such as on CO2 emission standards).
South Korean textile and clothing tariffs currently stand as high as 10.06 %, and the agreement envisages the immediate elimination of much of the €60 million in duty levied annually on EU exporters. Moreover, the intellectual property chapter within the FTA will provide vital protection for EU trade marks, which will be applicable to both registered and unregistered designs.
By eradicating all duplicative requirements in the form of costly testing and certification procedures, the FTA also removes barriers to trade in consumer electronics and household appliances such as television sets, computers, microwave ovens, mobile phones and telecoms equipment. Furthermore, the recognition of European IT standards by South Korea as part of this FTA should finally enable European electronics producers to access the South Korean market on a level playing field.
In a second vote, the EU Parliament approved the safeguard clause by 495 votes to 16 with 75 abstentions. This will allow the EU to suspend further reductions in customs duties or increase them to previous levels, if lower rates lead to an excessive increase in imports from South Korea, causing or threatening to cause serious injury to EU producers.