The ten-year anniversary of the EU-Republic of Korea Trade Agreement comes with an impressive growth in bilateral trade of more than 50%, reaching over €110 billion. Trade in goods grew by 46% from 2010 to 2020, almost twice as fast as EU trade with countries that do not have a trade agreement with the EU. The growth of bilateral trade in goods and investment has resulted in increased demand for specialised cross-border services. Trade in services recorded a significant growth of 86% in 2019 compared to 2010, reaching €20 billion.
The EU-Republic of Korea agreement, the first-ever EU trade deal with a sustainability chapter, also played an important role in improving workers’ rights, including the Republic of Korea’s ratification of three fundamental International Labour Organization Conventions.
Executive Vice-President and Trade Commissioner, Valdis Dombrovskis, said: “We have a lot to celebrate on the 10th anniversary of the EU-Republic of Korea trade deal, which has led a big boost in our bilateral trade – in fact, trade has doubled. This shows that trade deals are very much worth negotiating and implementing and they are vital to our recovery: every €1 billion of exports supports 13,000 jobs in the EU. The deal also shows that the EU is walking the talk on workers’ rights, as the agreement has successfully contributed to the Republic of Korea’s ratification of key international labour conventions.”
The EU remains the biggest source of foreign direct investment (FDI) in the Republic of Korea, representing 37% of the country’s total FDI stock. The EU’s investment in the Republic of Korea grew by 39% since 2010, reaching €44 billion in 2019. In turn, investments from the Republic of Korea in the EU grew an impressive 151% over the same period and reached €29 billion in 2019. The Netherlands was the largest investor in the Republic of Korea, accounting for 33% of the EU’s total FDI stock, followed by Germany (23%), France (9%) and Hungary (8%). Equally, the Netherlands was the top destination for the Republic of Korea’s FDI in the EU (23% of total stock), ahead of Germany (21%), Hungary (10%), Czech Republic (10%), and Slovakia (10%).
Creating opportunities for EU farmers
The EU and the Republic of Korea reached an agreement in April this year on the extension of the list of geographical indications (GIs) protected by the EU-Republic of Korea Trade Agreement. This adds 43 new EU products and 41 from the Republic of Korea to the list of protected GIs, including Irish Cream, Kalamata olive oil and Pecorino Toscano. The agreement had already protected 163 EU GIs and 63 GIs from the Republic of Korea.
The agreement also helped EU agri-food producers increase their exports. This strong export growth to the Republic of Korea over the ten years of the agreement includes:
Wine exports tripled.
Olive oil exports more than doubled.
Cheese exports multiplied by six.
Benefits for EU companies, big and small
While the EU-Republic of Korea Trade deal has fostered growth in bilateral trade in general, trade has remained concentrated in sectors like machinery, transport equipment and chemicals – together responsible for three-quarters of EU imports from the Republic of Korea and two-thirds of EU exports to that country. Nevertheless, some smaller sectors have shown particularly impressive growth:
Footwear and hats exports multiplied by five.
Textiles exports more than doubled.
Wood exports tripled.
The trade agreement has cut custom duties on cars imported to the Republic of Korea from the EU from 8% of 2010 to 0% today. The elimination of import duties and the successful reduction in technical barriers to trade has benefited the automotive sector. An example is the German company Mercedes-Benz, whose exports to the Republic of Korea grew from 16,000 cars in 2010 to over 75,000 cars in 2020.
Le Cellier is an importer of French and Italian wines in the Republic of Korea. Thanks to the elimination of customs duties through the EU-Republic of Korea trade agreement, European wines became more price-competitive – which could have stimulated an increase in demand. According to Business France Korea, in 2019 and 2020 the exports of French wines to the Republic of Korea increased by 26% in volume.
Maersk is a Danish integrated shipping company and is the largest container shipping line and vessel operator in the world. The trade agreement has allowed the Republic of Korea and the EU to trade more easily, and Maersk has been supporting that growth with their logistics services. In 2021, Maersk is expecting a level of goods being shipped by containers between the EU and Republic of Korea that will be 40% higher compared to 2011.
Defending workers’ rights
The Republic of Korea has ratified three fundamental International Labour Organization Conventions (ILO), amended its legislation and adopted guidelines aiming to bring its trade union legislation in compliance with ILO’s principles. The Republic of Korea is also working towards the ratification of the fourth outstanding fundamental Convention on the abolition of forced labour. The EU welcomes these actions, which show the Republic of Korea’s commitment to the sustainability provisions under the agreement. They follow a dispute initiated by the EU, which confirmed that the Republic of Korea was in breach of its labour commitments under the agreement. Both sides continue to discuss and monitor compliance with the recommendations of the panel of experts.