EUROPEAN COMMISSION Brussels, 20.10.2017 SWD(2017) 345 final COMMISSION STAFF WORKING DOCUMENT Implementation of Regulation (EU) No 511/2011 Accompanying the document Report from the Commission to the European Parliament and the Council Annual Report on the Implementation of the EU-Korea Free Trade Agreement {COM(2017) 614 final}



1.Implementation of Regulation (EU) No 511/2011 Regulation (EU) No 511/2011 (‘the Safeguard Regulation’) is the EU's internal legislation to implement the bilateral safeguard clause of the EU-Korea FTA. As provided for in Articles 3 and 11 of the Safeguard Regulation, the Commission has been monitoring the evolution of imports and exports of Korean products in sensitive sectors potentially affected by duty drawback such as cars, car parts, textiles and consumer electronics. Since the provisional application of the FTA started in July 2011, the Commission has been sharing the results of the monitoring with the EU Member States, the European Parliament and the relevant stakeholders every two months. The Safeguard Regulation also provides for the possibility to initiate a safeguard investigation or to introduce prior surveillance measures, under certain conditions defined in the Regulation. During the fifth year of FTA implementation, the Commission did not receive any such requests. 2.Evolution of imports into the EU from Korea in the sectors covered by the monitoring The results of the monitoring during the fifth year of FTA implementation are summarised below. For the purpose of the monitoring exercise, data has been compared on the basis of FTA implementation years (July-June). The comparison under the monitoring exercise is based on quantities imported from Korea to the EU, i.e. units in the case of cars and 1000 kg in the case of car parts, textiles and electronics. It is also worth noting, that for the purpose of the present monitoring, statistical regime 1 of Eurostat (normal trade) has been used, in contrast to the overall assessment in the annual report which is based on statistical regime 4 (total trade, i.e. including trade under inward and outward processing procedures). This explains why the figures are in some cases different. (i) Car sector EU imports of cars from Korea increased by 32% in the fifth year of FTA implementation (July 2015 - June 2016) compared to the fourth FTA implementation year (July 2014 - June 2015). Imports of cars with medium/large engines increased by 8%, while imports of electric cars increased significantly. Imports of electric cars, however, are still negligible in comparison to the total car imports. The current level of car imports is still below the year July 2007 - June 2008 (several years before the FTA took effect) when imports reached around 530,000 units. As regards EU imports of car parts, an increase of 17% occurred in the fifth year of FTA implementation compared to the previous year. This increase is significant compared to the rather stable level of imports over the first three years of the FTA, and also compared to the reference period (July 2010 - June 2011, i.e. the last 12 months before the provisional application of the FTA started).





(ii) Textile sector The decreasing trend in textile imports continued. EU imports of textiles from Korea decreased by 31% in the fifth year of FTA implementation compared to the previous year. Imports are also significantly lower than in the reference period. (iii) Electronics sector The increasing trend of imports in the electronic sector that started in July 2012 stoppedin the fifth year of the FTA implementation. Imports were 23% lower in the fifth year compared to the previous year, and slightly higher than in the reference period. Source: Eurostat – Comext (‘regime 1 – normal trade’) 3. Duty drawback Duty drawback is the refunding, remission or non-payment, either partial or complete, of customs duties or equivalent charges on foreign inputs (raw, semi-manufactured materials or components) that are used in the production of a final product which is exported to a third country. The Commission carries out specific monitoring on duty drawback in relation to the rules of origin as provided for in Article 11(1) of the Safeguard Regulation, to assess the foreign content in the Korean manufacturing process and thus in the exports of final products from Korea to the EU. Article 11(1) provides for a procedure for the application of Article 14 of the Rules of Origin Protocol on drawback or exemption from customs duties. The analysis is based on the import value of products subject to monitoring during 2016, compared to 2015. In the electronics sector, EU imports from Korea increased in the following HS headings: 8519 (+19%), 8525 (+24%) and 8526 (+39%), and decreased in the following headings: 8521 (-25%), 8525 (-4%), 8527 (-45%) and 8528 (-21%).