Abstract
The EU-Republic of Korea FTA (EU-ROK FTA) has so far been beneficial to both parties, although relatively more so for the EU (as it was already a more open market than South Korea). This has been partly due to the trade liberalisation with the FTA and partly due to macroeconomic factors, such as the slow GDP growth and sluggish demand in the EU, and the Euro depreciation vis-à-vis the Korean Won over the last 5 years. Sectorial developments have also been at work, such as the reduction in Korean output and thus exports in key sectors due to global overcapacity and oversupply, and a cross-border reorganisation of production in sectors that are important in EU–Korea competition. The most important increase in exports from the EU to South Korea has been in transport equipment, more specifically cars and trucks, but the size of the increase is substantially lower than that forecast. There was also a significant increase in EU agricultural and food product exports (food and beverages), with the greatest increases in meat and dairy products. Concerning the auto industry, EU imports from South Korea increased by 16% from 2010 to 2014. On the export side, the EU exported 6 million motor vehicles in 2014, worth EUR 124 billion, which is 27% up on 2010 and the largest increase was indeed to South Korea. The EU-ROK FTA is the first comprehensive FTA completed with a fully industrialised and developed economy. As such, it serves as a test for the EU’s ability to implement beneficial FTAs with economies characterised by important non-tariff barriers to trade (technical barriers to trade, regulatory provisions in the services sector, a lack of access to government procurement markets) and other less evident trade barriers (such as anti-competitive practices that restrict access to markets by companies from the other party).
