Seoul
24 March 2009
South Korea and the European Union have agreed to what they call a "provisional" agreement to open each others' markets up to freer trade. However, some sticking points remain to be finalized on the sidelines of a global summit next month.
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| S. Korea's chief negotiator Lee Hye-min, right, shakes hands with his EU counterpart Ignacio Garcia Bercero before their meeting in Seoul, S. Korea, 23 Mar 2009 |
South Korean chief negotiator Lee Hye-min says the two sides have agreed in almost all areas. However, the deal must be finalized by their governments' trade ministers on the sidelines of a summit of advanced economies scheduled in London for next month.
The trade deal would drop tariffs on a wide range of products, making them easier to buy and sell between South Korea, the world's fourth largest economy, and the 27-nation European Union - the world's largest trading group. The EU is South Korea's second largest trade partner after China.
Negotiators say signing the deal would send a strong signal in support of open markets, in a time of global economic crisis that may inspire some to consider protectionism.
Despite a broad consensus, the chief dealmakers say there is work to be done.
Until everything is agreed upon, says negotiator Lee, nothing is agreed to.
A number of politically sensitive issues still require fine-tuning by the two sides. Kim Hyung-joo, a researcher at Seoul's LG Economic Research Institute, says one key sticking point is further opening up each other's markets to automobile imports.
With the worldwide economic downturn, says Kim, many automobile companies and their workers are suffering badly. He says there is no guarantee the problem will be resolved even by next month's summit.
Kwak Su-Jong, with South Korea's Samsung Economic Research Institute, say several other issues need attention as well.
He says agricultural issues, such as the import of European pork, are politically sensitive here in South Korea, despite the high consumer demand for pork. He says negotiations are also needed on the labelling of products made in the Kaesong industrial zone in North Korea.
South Korea built and manages the Kaesong zone as a source of cheap labor for the South's manufacturers, and as an opportunity to engage economically with North Korea. Seoul insists products made there be considered as coming from South Korea.
The European Union and the United States have expressed concerns about the lack of transparency in Kaesong regarding labor conditions and pay for the more than 35,000 North Koreans who work there.