SEOUL — South Korea’s trade minister forecast Sunday that Seoul could agree on a free trade pact with the European Union by the end of the year despite a dispute over tariff concessions in the auto trade.
Speaking ahead of a fourth round of talks scheduled in Seoul on Oct. 15, Trade Minister Kim Jong-Hoon said both sides had to compromise. “Both sides will be able to make a breakthrough in the negotiations over car trade,” he told Yonhap News Agency.
“We want to speed up talks over the issue … both sides should have to give and take in the negotiations.”
A deal with the EU would be the biggest ever for South Korea, surpassing an agreement signed in June with the United States which awaits ratification by legislatures in both countries.
The two sides held a third round of trade talks in Brussels two weeks ago, but failed to narrow their differences, notably on the auto question.
Kim said that aside from those tariffs, they had made progress in settling disputes over services and trade.
“The EU also hopes for a deal by the year’s end … and negotiations on tariffs are expected to accelerate down the road,” he said. Autos are a key issue for Seoul, which sold 74,000 cars worth US$9.1 billion in Europe last year, while buying only 15,000 vehicles.
The European Union wants South Korea to ease regulations on European cars by applying international standards. South Korea’s tariff rate on cars is eight percent compared to 10 percent for the European bloc.
The Union has offered to eliminate or phase out all its import tariffs on South Korean goods within seven years, and remove tariffs on 80 percent of them within three years.
Seoul has offered to remove tariffs on most EU goods within seven years.
Kim described imports of pork and dairy goods as the most sensitive issues for South Korea.
“At present, local pig farmers do not supply enough pork products to meet demand … it will be good to split the local market into two parts, say, for domestic pork and for imported pork,” he said. South Korea also wants the proposed FTA to cover goods made at a South Korean-built industrial estate in the North Korean city of Kaesong, he said.
The European Union is South Korea’s second largest trading partner after China, with bilateral trade reaching US$78.56 billion in 2006. The European Union is also the largest foreign investor in South Korea, with investments worth US$40.4 billion as of the end of 2006.