CYIL 2012

EUROPEAN UNION ȃ KOREA FREE TRADE AGREEMENT As agricultural products are concerned Korea shall liberalise in ten years 75% of trade. A transitional period of fifteen years was set for few meat products, oak mushrooms, some nuts and potato starch; there is an eighteen year period for sesame seeds, sesame oil, green tea and ginger; a twenty year period applies for only two products, Fuji apples and Asian pears. Duties for some highly sensitive items, such as milk and dairy products, natural honey, oranges, malt, supplementary feeds and dextrins, are eliminated only within tariff rate quotas. This practically means that for affected commodities the quota is set and imports within it enter Korea at a preferential rate, whereas for the imports exceeding the respective level the higher tariff rate is applied. The quota however increases through the set transitional period, which is ten to sixteen years according to the relevant item, and at the end, the quotas and tariff rates shall be eliminated to zero for the majority of the products. On the EU side the majority of agriculture products shall be fully liberalised immediately after the Agreement enters into force or within a transitional period of three or five years. For certain fruits and vegetables as specified in the Common Customs Tariff provided for in Commission Regulation (EC) No 1031/2008 of 19 September 2008 (and subsequent acts) and the EU’s WTO Schedule CXL, the Agreement defines an entry price scheme. 24 The issue of tariff elimination is very closely connected with rules of origin, which are defined in the Protocol concerning the definition of “originating products” and methods of administrative cooperation. The Protocol sets the conditions the product has to fulfil to get the preferential treatment under the FTA, i.e. whether it is considered to be of European or Korean origin. The Protocol is based on standard EU rules of origin; however some differences were introduced, such as moderate increase in the permissible foreign content from 40% to 45% for cars. Another new element, which was very high on the Korean list of offensive interests and stayed opened till the “final game”, is the incorporation of the possibility of duty drawback, under which the duties paid on parts used for production of a final product are refunded when the final product is exported. 3.2 Removal of non-tariff measures Non-tariff-barriers (NTBs) and technical barriers to trade (TBTs) are currently the main obstacles to export to Korea and this is the case of the whole international trade, especially as far as the Asian markets are concerned. Burdensome technical regulations, standards, conformity assessment procedures and other requirements create additional costs for exporting companies, which can be much higher than customs duties. In this regard the tackling of these obstacles in the FTA with Korea is one of its key achievements. The Agreement incorporates the fundamental GATT 1994 rules on issues such as national treatment, fees and charges on imports and exports, customs valuation, disciplines on state trading as well as the prohibition of import and export restrictions. 24 Text of FTA EU Korea, Annex 2-A, Appendix 2-A-2,,.

269