Exports slide despite FTA with EUKorea’s exports to the European Union fell after the free trade deal between the two was implemented last July, according to a report by the Korea International Trade Association (KITA).
But the nation’s exports of tariff-cut products to European countries benefited from the deal while the EU’s investment in Korea also surged. Korea’s shipments to the EU fell 8.5 percent on-year during the July-November period, which compares unfavorably to other drops in one-way trade to the Continent from China (2.4 percent) and Japan (0.4 percent).
Over that same five-month period, the EU saw its overall volume of inbound shipments rise 7.9 percent.
“Exports fell as shipbuilding orders decreased right after the economic crisis in 2008, but the impact of this has only been felt recently as those orders are being processed,” said Myung Jin-ho, a chief researcher at KITA’s FTA and regional studies department.
However, exports of products that had their tariffs cut or eliminated, such as automobiles, auto parts, tires, synthetic textiles and other petrochemical products, jumped 14.8 percent.
Some exporters of compact cars even reported increased profits of 200 percent in the first five months after the FTA was implemented. The KITA report said the tariff cuts will continue to benefit exporters of these products as the 10 percent tariff applied to each of them is being phased out over a period of between three and five years.
Other countries have seen relatively poor results on their exports of tariff-cut products after signing similar pacts with the European trade bloc. China saw a rise of 0.5 percent over the same period, while Japanese exporters benefited to the tune of 2.6 percent. Taiwanese companies posted a 4.5 percent drop despite the liberalization of trade.
The report showed the EU’s investment in Korea increased to $5.03 billion last year from $3.2 billion in 2010.
By Lee Sun-min [email@example.com]
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