EU ambitions threaten to derail free trade deal with Korea

1 May 2008

Both Korea and the EU are aggressively pursuing free trade areas as part of their trade policy strategies, and there are strong incentives on both sides to conclude an agreement. However the EU's approach to rules of origin and its desire for a wide-ranging and highly liberalizing agreement threatens to jeopardise negotiations.

Korea and the EU are not principal suppliers to each other, so while an agreement is predicted to be economically favourable to both sides, the effects are not expected to be very large. Korea has the higher barriers and is expected to make the bigger economic gains.

There are sensitive sectors on both sides, notably automobiles for the EU and services and processed foods for Korea. Each side also has important agricultural constituencies to protect and Korea's key role in the East Asian production system suggests that rules of origin could be an area of particular difficulty in the negotiations.

The slow progress in the negotiations to date suggests that caution predominates and that, despite the potential benefits, agreement might be impossible to find. Click here to read An EU-Korea Free Trade Area: Playing Catch-Up or Taking the Lead?

For more information please contact:
Sean Armstrong
Press Officer
Chatham House
Direct: +44 (0) 20 7957 5739
Mobile: +44 (0) 78 4985 3757
Email: Sean Armstrong

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