Trade diplomats from EU member states backed a planned trade deal with South Korea today (10 July). A diplomat involved in the discussion said that there was “broad support” for the European Commission to initial the deal in the early autumn. An EU official said that no country had raised any specific issue of concern, although several had requested more time to study the details of the proposal.
The draft deal presented today by David O'Sullivan, the Commission's director-general for trade, is the result of two years of negotiations with South Korea. According to a Commission spokesperson, it represented “the final compromise package”. He said that there would be “no more negotiations” with South Korea.
Italy and several new member states have reservations about provisions that will primarily affect the automotive industry. The most controversial of these is the principle of duty drawback, which allows Korean manufacturers to use a certain share of parts from third countries and to reclaim the import duties on these parts when the final product is exported to Europe.
European carmakers are staunchly opposed to the idea and say that it represents a troubling precedent. They warn that manufacturers will be encouraged to take their factories out of Europe to places such as Korea.
The Commission spokesperson said that the deal included a safeguard clause that would be triggered if the foreign content of South Korean exports to Europe rose significantly.
The next steps are a legal review of the planned deal and discussions on implementation provisions, a diplomat said. The Commission does not need any formal backing from member states before it can initial the agreement. It is expected that it will enter into force in late 2010 at the earliest, after ratification by South Korea and by all member states.
