U.S., EU trade agreement ominous

Korean exporters are expected to lose their foothold in the global market if the United States clinches a free trade agreement (FTA) with the European Union (EU), analysts said yesterday.

The outlook came as the U.S. and the EU announced Wednesday that they plan to clinch an FTA within two years. The two regions accounted for more than half of the world’s gross domestic product in 2009.

“Korea stands to benefit from a situation where there are trade barriers between the U.S. and the EU,” said Lim Noh-joong, an analyst at I’M Investment & Securities. “We may lose advantages in the two markets should they sign an FTA.”

Korea implemented free trade agreements with the EU and the U.S. in July 2011 and March 2012, respectively, clinching a total of eight trade pacts to date.

Lim said local carmakers, which engage in fierce competition with European firms, could lose market shares in the U.S. following the FTA. “There are few industries that can benefit from a U.S.-EU free trade deal.”

Kim Hyung-joo, a researcher at the LG Economic Research Institute, echoed this view, adding that a free trade deal between the U.S. and EU could also hurt China.

“ Korea may no longer benefit from preferential tariffs,” added Park Jong-han, an official from the Ministry of Foreign Affairs and Trade.

Yonhap