FTA boosts Europe-bound exportsKorean exports of manufactured products to the European Union surged 16.1 percent on-year in the second half of 2011 thanks to lowered tariffs under a bilateral trade pact, government data showed yesterday.
The free trade agreement, which went into effect in July last year, calls for Seoul and Brussels to eliminate or phase out tariffs on 96 percent of EU goods and 99 percent of Korean goods within three years of the accord taking effect.
According to data by the Ministry of Strategy and Finance, exports of five main manufactured products that benefited from the FTA posted solid gains during the six-month period.
Exports of refined petroleum products surged 235.4 percent, with those of automobiles and car parts jumping 71.8 percent and 15.3 percent each. Outbound shipments of tires and plastic resin also gained 9.1 percent and 3.9 percent, respectively.
The gains are much higher than the EU’s imports of the same products from other countries that reached just 6.7 percent.
Initially, 35.7 percent and 32.5 percent of Korean and EU products were subject to tariff cuts. Tariffs on refined petroleum and car parts were abolished outright, with duties levied on cars, tires and plastic resin all adjusted down.
The data is noteworthy because overall exports to the EU contracted 7.4 percent overall, mainly because shipments of products not affected by the FTA nosedived 29.1 percent.
Weak sales were caused by a drop in demand for ships, integrated chips and communications equipment. Shipments of all three products fell 40 to 50 percent on-year even though the EU had not slapped tariffs on such products even before the FTA was signed.
The latest data, meanwhile, showed that imports from the EU gained 19.9 percent, slightly lower than the overall inbound product increase of 20.2 percent tallied for the six-month period from the year before.
European exports of vehicles and car engine parts and various pumps all rose by double digits.
The finance ministry said that 61.4 percent of Korean companies took advantage of the FTA, with numbers standing at 47.1 percent for EU businesses.