Landmark EU-South Korea trade deal takes effect

A free trade pact between the European Union and South Korea, the first such deal linking Asia and the world's largest economic bloc, came into effect on Friday, bringing with it sweeping changes. The deal will eventually do away with 98.7 percent of duties and is expected to boost trade by tens of billions of euros a year, slash more than two billion euros in tariffs annually and create an estimated 250,000 jobs in South Korea.
The Wall Street Journal quoted EU trade commissioner Karel De Gucht as describing the pact as "the most ambitious trade deal ever concluded by the EU and should become a game-changer for our trade relations with Asia".
On the eve of its implementation, the EU's ambassador in Seoul Tomasz Kozlowski told journalists that the FTA was a "win-win" agreement and would be a model for other deals that the bloc is negotiating in the region. The 27-nation European Union, home to 500 million people, is currently negotiating similar pacts with Japan, Asia's second largest economy, and India. Apart from multiplying the flow of goods and services, the agreement would "boost exchange of ideas, exchange of people and culture, and ultimately will bring Korea and the EU much closer", Kozlowski said. He said some studies forecast the FTA would boost trade by 50 percent in the short term and more than double it over the next two decades.
One study forecast more than 250,000 new jobs in South Korea in the long term as a result of the pact. The deal comes as a blow to US supporters of a free trade pact with Seoul. Although the two sides signed a trade agreement in 2007, the pact has yet to be ratified by their legislatures.
Under the EU-South Korean pact, 70 percent of customs duties will be immediately scrapped, rising to 98.7 percent over the next five years. Tariffs on 96 percent of EU goods and 99 percent of South Korean goods will be eliminated within the next three years. The EU is currently South Korea's second largest trading partner after China, taking almost 20 percent of its exports. EU exports to South Korea are worth 28 billion euros ($40.5 billion), while South Korea's exports to Europe amount to $38.7 billion.