South Korean Lawmakers Ratify Free-Trade Agreement With EUBomi Lim
South Korean lawmakers passed a free-trade agreement with the European Union, clearing the last hurdle for the world’s second-biggest trade deal to come into effect in July.
The National Assembly endorsed the accord today in Seoul in a 163-1 vote, with 5 abstentions. The deal is eclipsed only by the $1 trillion, 1994 North American Free Trade Agreement between the U.S., Canada and Mexico.
The EU-Korea agreement will expand their 70 billion-euro ($105 billion) trade relationship by making 99 percent of commerce duty-free within five years. The vote comes as South Korea prepares to ratify another trade pact with the U.S.
“This is a landmark agreement and a benchmark for what we want to achieve with other key trading partners,” EU Trade Commissioner Karel De Gucht said in an e-mailed statement in Brussels after today’s vote. “This free-trade agreement will create growth, jobs, consumer benefits and boost exports, competitiveness and investment in both the Korean and the EU economies.”
The agreement with the EU will help South Korean textile, electronics and automakers, including Seoul-based Hyundai Motor Co., to increase exports, which account for about half of the country’s gross domestic product. Exports helped the economy expand 6.2 percent last year, the most since 2002.
South Korea’s GDP may increase by 3.08 percent, or 24 trillion won ($22 billion), in the “long term” because of the deal, according to a 2009 study by the state-run Korea Institute for International Economic Policy.
European companies that may benefit include pharmaceutical producers such as London-based GlaxoSmithKline Plc, chemical makers including BASF SE, based in Ludwigshafen, Germany, and consumer-electronics manufacturers like Amsterdam-based Royal Philips Electronics NV. Farm exporters, shipping businesses and the financial- and legal-services industries also stand to gain.
The EU and Korea signed the accord in October and the European Parliament passed it in February. The deal will eliminate Korean import duties worth 1.6 billion euros annually and European levies of 1.1 billion euros, according to the EU.
U.S. Commerce Secretary Gary Locke visited South Korea last week, calling for speedy ratification of the trade deal between the two countries. He said failure to pass the pact would hand rivals to U.S. companies an advantage in the Asian nation.
The U.S. and South Korea agreed in December to change provisions in the pact, which had been stalled by legislators since it was signed in 2007 over U.S. demands for improved access for its cars and beef.
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