Proposal for a Council Decision concluding the Free Trade Agreement between the European Union and its Member States and the Republic of Korea
Date: 2010-04-09
Institutions: European Commission
Subjects: South Korea, free-trade agreement, ratification of an agreement, trade agreement (EU)

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EUROPEAN COMMISSION 

Brussels, 9.4.2010 
COM(2010)137 final 

2010/0075 (NLE) 

Proposal for a 

COUNCIL DECISION 

concluding the Free Trade Agreement between the European Union and its Member 
States and the Republic of Korea

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EXPLANATORY MEMORANDUM 

1. 

BACKGROUND 

The  attached  proposals  constitute  the  legal  instruments  for  conclusion  of  a  Free  Trade 
Agreement (FTA) between the European Union and its Member States, of the one part, and 
the Republic of Korea (Korea), of the other part: 

- 

Proposal for a Council Decision concluding the FTA. 

The  EU-Korea  FTA  was  negotiated  in  accordance  with  the  objectives  set  out  in  the 
Commission's Communication "Global Europe: competing in the world"1, which reviewed the 
contribution  of  EU  trade  policy  to  the  European  growth  and  jobs  strategy.  The 
Communication confirmed the EU's commitment to the World Trade Organisation (WTO) as 
the  single  most  effective  means  of  expanding  and  managing  trade  for  the  benefit  of  all.  It 
stressed  that  the  Doha  Development  Agenda  (DDA)  remains  the  EU's  first  priority.  The 
Communication also argued that the EU should build on the platform created by the WTO to 
generate  new  opportunities  for  growth  by  opening  markets  further  to  trade  and  investment. 
The Communication set out a series of linked trade policy initiatives complementing efforts to 
resume negotiations in the WTO. As part of these initiatives, it proposed to negotiate carefully 
chosen comprehensive Free Trade Agreements (FTA). 

Further to adoption of the negotiating directives by Council on 23 April 2007, the negotiations 
with Korea were launched in Seoul on 6 May 2007. The objective set out by the Commission 
in  the  Explanatory  Memorandum  accompanying  the  recommendation  from  the  Commission 
to  the  Council  authorising  the  Commission  to  negotiate  a  free  trade  agreement  with  the 
Republic  of  Korea  on  behalf  of  the  European  Community  and  its  Member  States  was  to 
complete the negotiations no later than two years after their effective start. The initialling of 
the  FTA  by  the  Trade  Commissioner  and  the  Korean  Trade  Minister  in  Brussels  on  15 
October 2009 marked the conclusion of negotiations after less than 2.5 years of talks.  

The  EU  Member  States  were  informed  orally  and  in  writing  on  the  process  of  negotiations 
with  Korea  via  the  Council's  Trade  Policy  Committee  (ex-Article  133  Committee).  The 
European Parliament has also been regularly informed on developments via its Committee on 
International Trade (INTA).  

In preparation for the negotiations the Commission has drafted an impact assessment which 
analyses  the  possible  impact  of  an  FTA  with  South  Korea.  A  more  detailed  Trade 
Sustainability  Impact  Assessment  (SIA)  examining  the  Agreement's  potential  economic, 
social  and  environmental  effects  has  been  conducted  in  parallel  with  the  negotiations. 
Additional  studies  providing  the  qualitative  and  quantitative  analysis  of  the  FTA  have  also 
been prepared.  

On 13 December 2007 the European Parliament adopted a resolution on trade and economic 
relations with Korea, which provided a valuable contribution to the negotiations. 

1 

"Global Europe: competing in the world" - COM(2006) 567, 4.10.2006. 

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2. 

NATURE AND SCOPE OF THE AGREEMENT 

As stipulated in the negotiating directives adopted by the Council, the FTA negotiations with 
Korea aimed at ensuring a comprehensive and balanced agreement fully consistent with WTO 
rules  and  obligations.  The  agreement  was  to  provide  for  the  progressive  and  reciprocal 
liberalisation of trade in goods and services as well as rules on trade-related issues. 

The EU-Korea FTA fulfils these objectives and is the first FTA for which negotiations have 
been  completed  under  the  Global  Europe  strategy.  It  includes  all  the  measures  necessary  to 
establish a Free Trade Area compatible with the provisions of Article XXIV of the General 
Agreement  on  Tariffs  and  Trade  (GATT  1994).  Both  parties  agreed  to  frontload  the 
liberalisation commitments and will eliminate 98.7% of duties in trade value for both industry 
and agriculture within 5 years. The remaining portion of tariffs will be eliminated almost fully 
over longer transitional periods, with exception of a limited number of agricultural products 
such as rice or garlic.  

In addition, sectoral annexes on electronics, motor vehicles and parts and pharmaceuticals and 
medical  devices  and  chemicals  have  been  negotiated  to  tackle  non-tariff  barriers.  The  FTA 
contains  separate  chapters  covering  Trade  Remedies,  Technical  Barriers  to  Trade,  Sanitary 
and Phytosanitary Measures, Customs and Trade Facilitation. 

The Agreement includes also a chapter on Services, Establishment and E-Commerce and the 
related schedules of commitments, which go significantly beyond both parties' commitments 
under  the  General  Agreement  on  Trade  in  Services  (GATS)  and  are  in  conformity  with 
Article V GATS. There is also a chapter on Current Payments and Capital Movements. 

As  far  as  rules  are  concerned,  the  FTA  provides  for  far  reaching  commitments  in  area  of 
Competition  including  state  aid,  Intellectual  Property  including  enforcement  and  Public 
Procurement. Enhanced and binding horizontal provisions on regulatory transparency in areas 
relevant for mutual trade and investment have been also incorporated into the agreement. 

The  Agreement  incorporates  Protocols  concerning  Rules  of  Origin  and  Administrative 
Assistance on Customs matters, which contains provisions defining the origin of the products 
that is needed to determine the duties applicable to these products when traded, on the 'proofs 
of origin' and on arrangements for cooperation between customs authorities. 

The  FTA  includes  as  well  a  dedicated  protocol  on  cultural  cooperation,  which  sets  a 
framework  to  engage  in  policy  dialogue  and  cooperate  in  facilitating  exchanges  regarding 
cultural activities. This framework entails an institutional set-up for the implementation that is 
independent from the FTA, notably through the establishment of a separate committee and a 
specific dispute settlement mechanism. 

Finally, Trade and Sustainable Development chapter covering both social and environmental 
dimensions has been negotiated. This chapter includes co-operation provisions and establishes 
novel monitoring mechanism involving civil society through a Civil Society Forum. 

The  institutional  provisions  foresee  establishment  of  a  Trade  Committee  to  supervise  the 
implementation of the FTA and consider ways to further enhance trade relations between the 
Parties. An efficient dispute settlement mechanism is included. The Trade Committee shall be 
composed of representatives of the European Union and of Korea. The Trade Committee shall 
report  to  the  Joint  Committee  established  under  the  updated  Framework  Agreement  on  its 

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activities  and  those  of  its  specialised  committees,  working  groups  and  other  bodies.  The 
updated Framework Agreement along with the FTA signal an important upgrade of the EU-
Korea  relationship.  As  requested  by  the  Council,  the  two  agreements  are  legally  and 
institutionally linked.  

The  Commission  is  of  the  view  that  the  EU-Korea  FTA  is,  to  the  largest  extent  feasible,  in 
accordance with the negotiating directives approved by the Council and the recommendations 
of the European Parliament in its resolution of 13 December 2007. 

3. 

PROCEDURES 

Pending the entry into force of the FTA, the Agreement foresees the provisional application of 
the Agreement. 

The Commission has judged the results of the negotiations to be satisfactory and requests the 
Council: 

– 

to conclude the FTA on behalf of the Union. 

The European Parliament will be called upon to give its consent to the conclusion of the FTA. 

The Member States are also parties to the Agreement, which therefore needs to be ratified by 
them according to their internal procedures. 

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2010/0075 (NLE) 

Proposal for a 

COUNCIL DECISION 

concluding the Free Trade Agreement between the European Union and its Member 
States and the Republic of Korea 

THE COUNCIL OF THE EUROPEAN UNION, 

Having  regard  to  the  Treaty  on  the  Functioning  of  the  European  Union,  and  in  particular 
Articles 91, 100(2), 167(3) and 207 in conjunction with 218(6)(a)(v) thereof, 

Having regard to the proposal from the Commission2, 

Having regard to the consent of the European Parliament3, 

Whereas: 

(1) 

(2) 

(3) 

On  23  April  2007  the  Council  authorised  the  Commission  to  negotiate  a  free  trade 
agreement  with  the  Republic  of  Korea  on  behalf  of  the  European  Union  and  its 
Member States. 

These  negotiations  have  been  concluded  and  the  Free  Trade  Agreement  between  the 
European  Union  and  its  Member  States  and  the  Republic  of  Korea  (hereinafter 
referred to as the Agreement) was initialled on 15 October 2009. 

The Agreement was signed on behalf of the European Union on [ …] and applied on a 
provisional basis subject to its conclusion at a later date. 

(4) 

The Agreement should be approved. 

(5) 

(6) 

This  Agreement  does  not  affect  the  rights  of  investors  of  the  Member  States  of  the 
European  Union  to  benefit  from  any  more  favourable  treatment  provided  for  in  any 
agreement related to investment to which a Member State and Korea are Parties.  

Pursuant to Article 218(7) of the Treaty, it is appropriate for the Council to authorise 
the  Commission  to  approve  certain  limited  modifications  to  the  Agreement.  The 
Commission should be authorised to bring about the termination of the entitlement to 
co-productions  as  provided  for  in  Article  5  of  the  Protocol  on  Cultural  Co-operation 
unless the Commission determines that the entitlement should be continued and this is 
approved by the Council pursuant to a specific procedure necessitated by the sensitive 
nature  of  this  element  of  the  agreement  which  is  to  be  concluded  by  the  European 
Union  and  its  Member  States.  In  addition,  the  Commission  should  be  authorised  to 

2 
3 

OJ C , , p. . 
OJ C , , p. . 

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(7) 

(8) 

approve  modifications  to  be  adopted  by  the  Working  Group  on  Geographical 
Indications pursuant to Article 10.25 of the Agreement. 

It is appropriate to set out the relevant procedures for the protection of Geographical 
Indications which are given protection pursuant to the Agreement, 

In the execution of its role, pursuant to Article 17 of the Treaty on European Union, 
the Commission is committed to activate the procedures relating to limitations on duty 
drawback, safeguard and dispute settlement whenever the conditions established in the 
relevant provisions are met. As regards implementation of Article 14 (Drawback of, or 
exemption  from  customs  duties)  of  the  Protocol  concerning  the  definition  of 
'originating  products'  and  methods  of  administrative  co-operation  of  the  Agreement 
the  Commission  will  be  guided  by  the  declaration  the  Commission  has  made 
accompanying the adoption of this decision, 

HAS ADOPTED THIS DECISION:  

Article 1 

The  Free  Trade  Agreement  between  the  European  Union  and  its  Member  States  and  the 
Republic of Korea is hereby concluded on behalf of the European Union. 

The text of the Agreement is attached to this Decision. 

Article 2 

The President of the Council shall designate the person empowered to proceed, on behalf of 
the European Union to give the notification referred to in Article 15.10.2 of the Agreement, in 
order to express the consent of the European Union to be bound by the Agreement. 

Article 3 

1. 

2. 

The Commission shall provide notice to Korea of the European Union's intention not 
to  extend  the  period  of  entitlement  to  co-production  pursuant  to  Article  5  of  the 
Protocol on Cultural Co-operation following the procedure set out in Article 5(8) of 
the said Protocol unless, on a proposal from the Commission, the Council agrees four 
months  before  the  end  of  such  period  of  entitlement  to  continue  the  entitlement.  If 
the Council agrees to continue the entitlement then this provision will again become 
applicable at the end of the renewed period of entitlement. For the specific purposes 
of deciding on the continuation of the period of entitlement, the Council shall act by 
unanimity. 

For  the  purpose  of  applying  Article  10.25  of  the  Agreement,  modifications  of  the 
Agreement  through  decisions  of  the  Working  Group  on  Geographical  Indications 
shall  be  approved  by  the  Commission  on  behalf  of  the  European  Union.  Where 
interested  parties  cannot  reach  agreement  following  objections  relating  to  a 
Geographical Indication, the Commission shall adopt such a position on the basis of 
the procedure laid down in Article 15(2) of Council Regulation (EC) No. 510/2006. 

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The period referred to in Article 4 (3) of Decision 1999/468/EC shall be set at one 
month. 

Article 4 

1. 

2. 

A name protected under Sub-Section C "Geographical Indications" of Chapter 10 of 
the  Agreement  may  be  used  by  any  operator  marketing  agricultural  products, 
foodstuffs,  wines,  aromatised  wines  or  spirits  conforming  to  the  corresponding 
specification. 

The  institutions  of  the  European  Union  and  Member  States  shall  enforce  the 
protection  provided  for  in  Articles  10.18  to  10.23  of  the  Agreement  also  at  the 
request of an interested party.  

Article 5 

The position to be taken by the Committee on Cultural Cooperation on decisions having legal 
effects  shall  be  determined  by  the  Council  acting  in  accordance  with  the  Treaty.  The 
representatives  of  the  European  Union  in  the  Committee  on  Cultural  Cooperation  shall 
comprise  senior  officials  from  within  the  administration  of  both  the  Commission  and  the 
Member States who have expertise and experience in cultural matters and practices, and who 
shall present the position of the European Union in accordance with the Treaty. 

Article 6 

The  applicable  provision  for  the  purposes  of  adopting  the  necessary  implementing  rules  for 
the application of the rules contained in Annex II(a) of the Protocol concerning the definition 
of ‘Originating Products” and Methods of Administrative Co-operation of the Agreement is 
Article 247a of Regulation (EEC) No 2913/92 of 12 October 1992. 

Article 7 

This Agreement shall not be construed as conferring rights or imposing obligations which can 
be directly invoked in European Union or Member State courts.  

Done at Brussels, […] 

For the Council 
The President 
[…] 

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LEGISLATIVE FINANCIAL STATEMENT FOR PROPOSALS HAVING A 
BUDGETARY IMPACT EXCLUSIVELY LIMITED TO THE REVENUE SIDE 

1. 

NAME OF THE PROPOSAL: 

COUNCIL DECISION concluding the Free Trade Agreement between the European 
Union and the Republic of Korea. 

2. 

BUDGET LINES: 

Chapter and Article: 12 0 

Amount budgeted for the end of the implementation period 

3. 

FINANCIAL IMPACT  

(cid:133) 

Proposal has no financial implications 

⌧  Proposal has no financial impact on expenditure but has a financial impact on 

revenue – the effect is as follows: 

(€ million to one decimal place)  

Budget line 

Revenue4 

Article … 

Impact on own resources 

12 month period, 
starting dd/mm/yyyy

[Year n] 

801.2 

Situation following action 

[n+1] 

[n+2] 

[n+3] 

[n+4] 

[n+5] 

Article … 

Article … 

4 

Regarding  traditional  own  resources  (agricultural  duties,  sugar  levies,  customs  duties)  the  amounts 
indicated must be net amounts, i.e. gross amounts after deduction of 25 % of collection costs. 

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4. 

ANTI-FRAUD MEASURES 

In order to protect the European Union's Own Resources, the Agreement contains provisions 
aimed at ensuring the correct application by the partner country of the conditions laid down 
for application of the trade concessions under §3 "Financial Impact", in particular in Protocol 
1 on Rules of Origin and Protocol 2 on Mutual Administrative Assistance in Customs Matters. 
These  provisions  complement  EU  customs  legislation  applicable  to  all  imported  goods  (in 
particular the EU's Customs Code and Implementing Provisions) and that on Member States' 
responsibilities  with  respect  to  the  control  of  Own  Resources  (in  particular  Council  Reg. 
1150/2000). 

5. 

OTHER REMARKS 

This  estimation  is  based  on  the  average  imports  for  the  period  2004-06.  This  should  reflect 
more  realistically  the  evolution  of  the  imports  from  Korea.  It  does  not  take  in  account, 
however, the likely increase in imports of products that will have duties reduced in stages that 
will partly compensate the lost of revenues. 

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