S Korea, EU Agree on Free Trade Deal Announcement

The official announcement of the free trade deal will be made at a summit of the Group of 20 nations on April 2 in London, South Korean officials said.

South Korea and the EU, since the launch of their free trade negotiations in May 2007, have gone through difficulties reaching a deal due to different stances over sensitive issues, such as industrial tariffs, auto trade, and products from the Kaesong Industrial Complex.

According to South Korean officials, South Korea and the EU agreed on elimination of tariffs on 96 percent of EU industrial goods and 99 percent of South Korean goods within three years, which will eventually be expanded to all industrial goods within five years.

The two parties, in order to tackle the auto industry issue, also compromised at eliminating tariffs on cars either within three years or five years, according to the engine displacement size.

Currently, South Korea imposes an 8 percent import duty on European cars, while the import duty of the EU on South Korean automobiles stands at 10 percent.

As for another sensitive issue, the two sides agreed to acknowledge goods made at the Kaesong Industrial Complex, an inter-Korean industrial complex in DPRK, as duty-free items in the European market.

However, South Korean officials said that South Korea will not allow the "made in EU" label on imports from the region, rejecting the EU's request.

The EU trade representatives in Seoul have not yet made any comments on the free trade deal.

If the bilateral trade deal comes into force, an export increase of 11 billion U.S. dollars and a gross domestic product increase of 3.08 percent are expected for South Korea, according to a forecast by the Korea Institute for International Economic Policy.