CYIL 2012

EUROPEAN UNION ȃ KOREA FREE TRADE AGREEMENT sourcing in Korea (especially from China), which could influence the export price of Korean products. Finally, the enforcement of taken commitments is ensured by a dispute settlement mechanism based on the standard WTO model, but with a shorter and therefore in some respect stronger deadline for arbitration rulings, 120 days. In some cases even shorter terms may be applied, for instance when dealing with disputes related to motor vehicles and motor parts or the duty drawback issue. Proper operation of the Agreement and the supervision of its implementation and application are ensured by the Trade Committee , which meets once a year and is co-chaired by the Minister for Trade of Korea and the Member of the European Commission responsible for Trade. The FTA also sets six specialised committees and seven working groups for individual issues. 4. Economic impact on the Czech Republic after one year of the FTA implementation The first year of the FTA’s application came to its end in June 2012. Nevertheless, as most of the provisions are implemented continuously, the economic implications cannot yet be fully proved for the time being. Even though the trade recorded positive growth, as shown in Table 1, it is not possible to ascribe all the benefits to the FTA. The FTA eliminated customs duties for a significant amount of exported goods, however the liberalisation process is still on-going as some products are liberalised through certain transitional periods. This is even more valid in the case of non tariff measures and facilitation of market access for services providers, where the FTA provisions shall come into force over a period of several years. According to statistical data, 34 during the first year of the FTA implementation 35 the total trade between the Czech Republic and Korea increased by 42% and reached the amount of 3,7 bln. USD. Export to Korea recorded a growth rate of 46% and reached 0,5 bln. USD whilst import increased by 41% to the amount of 3,2 bln. USD. The growth rate of both export and import was higher than in the previous year, where export recorded a growth rate of 28,6% and import 35%. This means an increase by more than 10 percentage points in both cases and this fact can be seen as a sign of the positive influence of the FTA implementation. Regarding our main export products, the duty rate was already eliminated to zero for the majority of them. This resulted in significant growth of their export, e.g. export of toys and construction sets increased by 154%, export of electron microscopes by 198% and export of vacuum pumps even by 343%. Concerning services, due to the fact that the implementation of commitments is still on-going, it is very difficult to assess the impacts, however preliminary positive effect has been recorded in the IT sector, insurance and services related to agriculture and mining.

34 Source: Czech statistical office and authors’ own calculations. 35 July 2011 – June 2012.

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