FTA With EU to Raise Bilateral Trade $4.7 Bln a Year

The Knowledge Economy Ministry said yesterday that the free trade deal with the European Union will increase bilateral trade 4.7 billion U.S. dollars per year.

The ministry made the projection at a free trade forum with representatives from major Korean industries. The domestic sectors of digital appliances, textile and petrochemicals will export more to the EU, while imports of machinery and precision chemicals will rise.

While the deal will likely raise exports of Korean cars to the EU, the increase over the short term will not be big because Korean carmakers are expected to produce more vehicles in the EU.

The health and cosmetics industries are expected to be negatively affected by the accord. According to the Health, Welfare and Family Affairs Ministry, Korea will gradually lift tariffs on 666 items worth 2.6 billion U.S. dollars imported from the EU in those sectors.

Among them, tariffs on 568 items will be abolished immediately after the agreement’s effectuation, while those on the remainder will be lifted within three to seven years.

The Knowledge Economy Ministry also plans to provide consulting and loans to domestic businesses that are negatively affected by the free trade deal. Companies eligible for assistance are those who see their sales drop 85 percent or more because of increased EU imports.

The ministry will also give 117.5 billion won (101 million U.S. dollars) for small and medium companies that change to other sectors.