The EU and South Korea are important trading partners, currently engaged in negotiations for a Free Trade Agreement. South Korea is the EU's eighth largest trade partner and the EU has become South Korea's second largest export destination. EU trade with South Korea exceeded €65 billion in 2008 and has enjoyed an annual average growth rate of 7.5% between 2004 and 2008.
The EU has been the single largest foreign investor in South Korea since 1962, and accounted for almost 45% of all FDI inflows into Korea in 2006. Nevertheless, EU companies have significant problems accessing and operating in the South Korean market due to stringent standards and testing requirements for products and services often creating barriers to trade. Both in its regular bilateral contacts with South Korea and through its ongoing FTA negotiations with Korea, the EU is seeking to improve this situation.
The EU-Korea Free Trade Agreement negotiations
South Korea was designated a priority FTA partner in the Global Europe trade policy strategy of 2006. Global Europe argued that a comprehensive and ambitious FTA with South Korea that aimed at the highest possible degree of trade liberalisation including far-reaching liberalisation of services and investment, was clearly in the interests of both sides. In May 2007, negotiations were launched for an EU-Korea FTA in Seoul. After eight rounds of talks, the negotiations have been completed and the agreement has been initialled on 15 October 2009. Quantitative and qualitative independent studies on the potential of an EU-Korea FTA are available on the internet. A Trade Sustainability Impact Assessment of the EU-Korea FTA has been released in October 2008 and complemented in May 2010 with an economic impact study that gives an updated and extended quantitative assessment of the Agreement based on the actual results of the negotiation.
Other bilateral agreements
The Framework Agreement on Trade and Co-operation between the EU and South-Korea entered into force on 1 April 2001. It aims at fostering growth of two way trade and investment and encourages broad-based co-operation in fields such as transport, energy, science and technology, industry, environment and culture. The Agreement foresees annual Joint Co-operation Committee meetings. In April 2007, the Council of the EU called for an updating of the Framework Agreement as part of a wider strengthening of relations. Negotiations on this began in June 2008.
An Agreement on Co-operation and Mutual Administrative Assistance in Customs Matters has been in force since 1997. Additionally, the EU has established a permanent forum for consultation, sharing experience and views on competition policy, as well as sharing non-confidential information on competition law enforcement with South Korea. The EU and South Korea have recently negotiated a more specific cooperation agreement concerning the application of their competition laws to anti-competitive activities. The agreement is due to be signed in 2009.