Free trade agreement with EU kicks in today

Economy

Published: 30 Jun. 2011, 20:53

Free trade agreement with EU kicks in today

Customers shop for Korean products at Tesco’s store in New Malden, U.K. on Wednesday. Roughly 100 products from 15 Korean food companies are being sold at Tesco stores in London for a month. The event was jointly organized by Tesco, Homeplus and Kotra. [NEWSIS]

Consumers visiting their nearest grocery store today will be the first to notice the effects of the free trade agreement with the European Union that kicks in today.

Retailers are discounting much of their wine stock equivalent to the tariff to give consumers a taste of what’s in store for them when tariff-free goods fill their shelves. And in the coming weeks, supermarket prices will fall in varying degrees as tariff-free or reduced-tariff goods are brought in. Prices will fall for an array of products, including tea, coffee, pasta, almonds, pork belly, chocolate, tequila and vodka.

Wine prices will drop an average of 11 percent today. At the recent Wine Expo in France, Lotte Mart announced plans to expand its selection by 10 brands. Homeplus agreed with its mother company, Tesco, to increase its wine lineup by almost 40 percent.

“Although the products currently being sold in the market have already been imported [and were exposed to tariffs], we have made the decision to lower prices since consumers have high expectations on the July 1 date,” said an official from Keumyang International, a foreign wine and liquor importer.

The FTA has been years in the making. The two sides embarked on negotiations in May 2007. After eight rounds of negotiations in Brussels and Seoul, a final agreement was reached in July 2009. Then in October of last year, the two sides officially signed off on the pact.

Today marks provisional ratification of the deal, meaning that 99 percent of the agreement will go into effect immediately. After the pact is signed by all 27 EU member nations, it will go into full effect. The deal will cut tariffs by 99 percent on Korean exports to the EU over the next three years, while tariffs on EU imports to Korea will be slashed 96 percent.

The trade pact will shave a noticeable amount of money off consumers’ receipts. Tariffs on imported tea, coffee, pasta and almonds will be wiped out immediately. And since the tariff for European tea was currently 40 percent as of yesterday, Korean consumers might be saying “tea time” more often.

The price of pork belly has become burdensome in Korea recently but when tariff-free European pork reaches butchers, consumers will see immediate savings of up to 2.5 percent, which will extend to 25 percent in the next decade, falling 2.5 percent each year.

Consumers will also save on big-ticket items, especially imported automobiles as tariffs are gradually reduced.

The biggest winners

Korean companies will benefit from preferred access to the largest economic trade zone in the world.

In particular, Korea’s automobile industry will see some of the biggest benefits, as the 8 percent tariff imposed on Korean made vehicles will be wiped out over five years, while the same will happen for the 10 percent tariff imposed on vehicles made in EU nations that are imported to Korea.

As for Korean exports, vehicles equal to or exceeding 1,500 cubic centimeters (1.5 liters) will have tariffs wiped out in three years, while those with less than 1,500cc will need to wait five years. The 8 percent tariff on vehicle parts will be wiped out immediately, creating more opportunities for Korean companies to enter the EU market.

Industry experts expect the added price competitiveness to help Korean automakers to increase their market share in the European market. The Korea Institute for International Economic Policy expects exports from the auto sector to increase by $1.4 billion this year.

In Korea, import carmakers got a head start when they cut prices equivalent to tariff cuts weeks ago. Volvo, Mercedez-Benz and Peugeot have lowered their prices, while BMW, Volkswagen and Audi are planning to follow suit.

“The trade industry welcomes the ratification of the Korea-EU FTA. It’s more significant than existing FTAs, since it includes the globally leading economic zone,” said Sakong Il, chairman of the Korea International Trade Association. “Even with the importance of the EU market, Korean imports only took up 1 percent of all of the EU’s imports last year, and we hope that the FTA helps more Korean products to be made available in the EU market, as well as boosting Korea’s trade volume to exceed $1 trillion.”

The biggest losers

The trade deal will not benefit everyone. Korea’s agricultural and cosmetics industries are expected to struggle to compete with cheaper, and in many cases, better products.

Europe’s big three cosmetics companies - Sephora, Douglas and Marionnaud - might make life difficult for Korean cosmetics companies. But Korean brands say they are not worried since the tariff reductions will be gradual.

And the Korean agricultural industry, which has struggled to modernize and raise efficiency to keep costs down, will receive government support to help it compete.

The government agreed to support the agricultural and fisheries industry to the tune of 21.1 trillion won ($19.8 billion won) over the next 10 years, while Seoul will pony up 2.2 trillion won over the same period to support the livestock, cosmetics and medical instrument industries.

Experts forecast exports of pork, dairy and stock farm products will increase by $7 million, while imports will rise $37.5 million.

“The FTA with the EU, the largest economic zone and an important partner for Korea, will create an opportunity to increase investments and trade and strengthen the partnership between the two sides,” said the Ministry of Foreign Affairs and Trade through a statement yesterday. “We will continue to promote and explain the benefits of the Korea-EU FTA and support our companies to fully utilize the FTA.”

Experts warn that while the FTA will create new opportunities for international trade, companies, especially small ones, face significant disadvantages compared to multinational corporations.

By Jung Seung-hyun [seungjung@joongang.co.kr]

한글 관련 기사 [연합]

한ㆍEU FTA 7월1일 0시 잠정발효

인구 5억 GDP 16조달러 시장 ‘활짝’

인구 5억명의 세계 최대 경제권인 유럽연합(EU)과 우리나라의 자유무역협정(FTA)이 내달 1일 0시 잠정 발효된다.

28일 통상교섭본부에 따르면 우리나라와 EU는 FTA 잠정 발효를 앞두고 각자 내부절차를 모두 매듭지어 발효시기만을 남겨둔 상태다.

유럽 27개국으로 구성된 EU는 2009년 국내총생산(GDP)이 16조4천억달러로, 세계 전체 GDP의 30%를 차지할 뿐 아니라 미국(14조3천억달러)을 능가하는 세계 최대의 단일 경제권이다.

또 우리나라와의 교역액이 지난해 922억달러로, 중국에 이어 두번째 교역 상대국이기도 하다.

아직 개별 회원국의 비준 절차가 남아있어 FTA 정식 발효는 2년 정도의 시간이 필요하지만 EU회원국 전체의 동의가 필요한 문화협력, 지적재산권 형사집행 분야를 제외한 전체 협정의 99%가 내달 1일자로 이행돼 사실상의 공식 발효로 볼 수 있다.

한ㆍEU FTA가 잠정 발효되면 양측이 품목별로 합의한 단계에 따라 무관세로 수출입을 할 수 있게 돼 무역, 투자, 서비스 등 경제 각 분야의 교역에서 새로운 전기를 맞게 될 것으로 보인다.

협상내용을 보면 EU측은 공산품 전 품목에 대해 5년 내 관세를 철폐하고 이 가운데 99%는 3년 안에 없애기로 했다. 우리나라는 3년 내 관세철폐 품목이 96%이며, 일부 민감한 품목은 관세철폐 기간을 7년으로 설정했다.

관심 품목인 승용차는 양측 모두 배기량 1,500㏄ 초과 승용차는 3년 이내, 1,500㏄ 이하 승용차는 5년 이내에 관세를 단계적으로 철폐토록 했다. 민감 품목인 쌀은 관세 철폐 대상에서 제외됐다.

더구나 EU는 평균 관세율이 5.3%로 미국(3.5%)보다 높은 것은 물론 한국의 주요수출품목인 자동차(10%), TV 등 영상기기(14%), 섬유.신발(최고 12~17%) 등의 관세율이 매우 높다. FTA를 통한 관세 철폐로 한국 수출품들은 그만큼의 가격경쟁력을 갖게 된 것이다.

이미 한ㆍEU FTA 잠정 발효를 앞두고 업계의 움직임도 부산하다.

국내 와인수입 1위업체인 금양인터내셔날은 FTA 발효시점부터 와인가격을 평균 11% 내리기로 했으며 S.T.듀퐁 등 일부 명품 브랜드도 가격 인하에 동참할 움직임이다.

현대자동차[005380]를 필두로 한 자동차ㆍ부품 및 전자ㆍ전기업계 등은 유럽 시장공략을 강화하고 있고 영국 등 유럽의 대형로펌도 국내 법률시장 공략을 위해 서울 사무실 계약을 마무리하는 등 바쁘게 움직이고 있다.

통상교섭본부 김희상 FTA협상 총괄과장은 "한ㆍEU FTA는 지금까지의 다른 FTA와 는 달리 90%의 품목이 5년 내 관세가 철폐돼 경제ㆍ사회적 효과가 엄청나다"면서 "특히 수출 기여도가 높을 것으로 예상돼 경제 각 분야에 긍정적인 영향이 기대된다"고 말했다.

통상교섭본부는 내달 1일 오전 청사에서 주한 EU 및 EU회원국 대사, 경제단체장 등을 초청해 한ㆍEU FTA 발효 기념 리셉션을 열 예정이다.