Transcript Assessment of the EU Korea FTA

Assessment of the
EU - Rep. of Korea FTA
Dr Stephen Woolcock
LSE, CEPS, Maastricht Uni. and Institut
der deutschen Wirtschaft
Presentation for the European
Parliament Hearing; 23rd June 2010
An EU lead on trade
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Forward movement when DDA
remains stalled
Comprehensive agreement
Extensive liberalisation of goods and
services
Breaks new ground on rules
Compatibility with WTO
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Consistent with broadly accepted
interpretation of GATT Art XXIV and GATS
Art V
Rules also compatible with WTO principles
Some areas WTO-plus (e.g IPR esp. GIs)
FTAs can reduce incentive for multilateral
negotiations
Welfare effects
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research suggests
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< 1% of GDP for Korea
< 0.1% of GDP for EU
order of magnitude
Korea gains more because it’s a
smaller economy with higher
protection
Trade effects (EU export
growth)
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more EU sectors gain from trade than lose
significant share of gains for services
machinery, pharmaceuticals, chemicals and
agri-foods also stand to gain
overall export gains for EU of around Euro
33bn
benefits depend on effective reduction and
containment of Korean NTBs/regulatory
barriers
Trade affects Korean export
growth
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overall export gains Euro 23 bn
studies show concentration in automotive
exports
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but Korean FDI in EU contributing to a
significant reduction in Korean exports
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to a lesser extent in textiles and electronics
not accounted for in the quantitative studies
duty drawback equivalent to an export
subsidy for Korea auto sector of around 11.5%
Provisions on NTBs and rules
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TBT provisions break new ground
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Intellectual property rights
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WTO plus; cooperation in enforcement and subsidies
Procurement:
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effective enforcement of international conventions; but
TRIPs plus on GI with registers for wines and spirits and
agri-foods
Competition:
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sector arrangements; equivalence; Korean acceptance of
int. standards; moderators
GPA plus on coverage
Dispute settlement
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faster remedies than available under the WTO
Sustainable development
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provisions on labour standards breaks
new ground for EU FTAs
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promote the application of core labour
standards
Korea has not yet ratified key core labour
standards
cooperation in promotion of multilateral
environment agreements
Timing issues
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potential gains from early application
short term gains for sectors including
automotive
first mover advantages, especially for the
service sector / mechanical engineering
general competitive gains on market access
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KORUS not ratified
Korea not yet concluded agreements with China,
Japan and ASEAN
early application would provide EU with a lead
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set precedent for other agreements
Summary
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balance seems favourable to the EU
all trade agreements entail adjustment costs
these are modest compared to other
adjustment pressures
could be eased through provision of
adjustment assistance
export growth for EU will depend on
effective implementation of provisions on
NTBs and rules