REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND THE COUNCIL Annual Report on the Implementation of the EU-Korea Free Trade Agreement
Date: 2016-06-30
Institutions: Directorate-General for Trade and Economic Security, European Commission
Subjects: South Korea, export (EU), import (EU), investment abroad, most favoured nation, motor vehicle, service, tariff preference, trade agreement (EU), vehicle parts

EUROPEAN 
COMMISSION 

Brussels, 30.6.2016  
COM(2016) 268 final 

REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND 
THE COUNCIL 

Annual Report on the Implementation of the EU-Korea Free Trade Agreement 

{SWD(2016) 162 final} 

EN 

   EN 

 
 
 
 
  
 
REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND 
THE COUNCIL 

Annual Report on the Implementation of the EU-Korea Free Trade Agreement 

1. 

Introduction 

1 July 2015 marked the fourth anniversary of the Free Trade Agreement (FTA) between the 
EU  and  its  Member  States  and  the  Republic  of  Korea  (‘Korea’).  The  FTA  has  been 
provisionally applied since July 2011. On 13 December 2015, it entered formally into force 
following the ratification by EU Member States.  

The EU-Korea FTA is the first of a new generation of FTAs, characterised by its far-reaching 
and comprehensive nature. It is also the EU's first trade deal with an Asian country and the 
most ambitious FTA implemented by the EU so far. 

The FTA has  already seen its  first  amendment. The Additional Protocol to the FTA to take 
into  account  Croatia’s  EU  accession  was  signed  in  March  2014  and  provisional  application 
started on 26 May 2014. It entered into force on 1 January 2016. 

This is the fourth Annual Report on the implementation of the FTA, in accordance with the 
provisions of Regulation (EU) No 511/2011 of the European Parliament and of the Council of 
11  May  2011  implementing  the  bilateral  safeguard  clause  of  the  Free  Trade  Agreement 
between the European Union and its Member States and the Republic of Korea1. According to 
Article 13(1) of the said Regulation, the Commission shall make public an annual report on 
the  application  and  implementation  of  the  Agreement.  Furthermore,  Article  3(3)  stipulates 
that  the  Commission  shall  present  an  annual  monitoring  report  to  the  European  Parliament 
and  the  Council  on  updated  statistics  on  imports  from  Korea  of  products  in  the  sensitive 
sectors  and  those  sectors  to  which  monitoring  has  been  extended.  This  report  therefore 
combines these two reporting requirements. The evolution of EU imports from Korea in the 
sectors covered by the monitoring and the results of the specific monitoring on duty drawback 
are presented in the Commission Staff Working Document attached to this report. 

The  report  also  gives  an  overview  of  the  activities  of  the  various  committees  and  working 
groups  established  under  the  FTA  to  monitor  the  implementation  of  the  agreement.  Since 
most  of  these  met  in  the  second  half  of  2015,  this  report  covers  the  period  July  2014  until 
December  2015.  The  analysis  of  trade  statistics  covers  the  fourth  implementation  year,  i.e. 
July  2014  to  June  2015  to  allow  for  a  comparison  with  the  corresponding  12-month  period 
before the FTA took effect, whereas the summary of the activities of the FTA implementation 
bodies covers the calendar year 2015. 

1 

OJ L 145, 31.5.2011, p. 19 

2 

 
 
 
 
 
 
 
 
 
                                                 
2. 

OVERALL  ASSESSMENT:  EVOLUTION  OF  TRADE  AFTER  FOUR  YEARS  OF  FTA 
IMPLEMENTATION 

2.1.  Methodology used for the analysis 

The below analysis of the bilateral trade flows for goods between the EU and Korea is based 
on a comparison of data for the fourth year of implementation of the FTA (July 2014 – June 
2015) with the 12-month period before the FTA took effect and provisional application started 
(July 2010 – June 2011).  

As regards trade in services, the analysis is based on annual data until 2014. 

It should be noted that changes in trade flows cannot be attributed solely to the FTA, as also 
other  factors  influence  trade  flows.  However  the  figures  provided  below  give  a  good 
indication of how the FTA has worked so far. 

2.2. 

Overall evolution of trade in goods  

EU exports to Korea increased by 55%, from 30.6 billion EUR in the 12-month period before 
the FTA took effect to 47.3 billion EUR in the fourth year of the FTA. The annual increase in 
exports was more than 15% in the first year of FTA implementation2, 8%-9% in the second 
and third years and 14% in the fourth year. 

EU exports to Korea of products that were fully or partially liberalised by the FTA grew by 
57% and 71% respectively compared to the 12-month period before the FTA took effect (by 
8.8 billion EUR and 1.7 billion EUR respectively), whereas EU exports of products subject to 
zero MFN tariff grew by 25% (1.9 billion EUR). The respective growth of EU exports to the 
world3  of  these  products  was  19%  for  the  fully  liberalised  products,  26%  for  the  partially 
liberalised products and 13% for the zero MFN products.  

Graph 1: EU Exports to and Imports from Korea, July 2010-June 2015 (billion EUR) 

2 First year of FTA implementation (July 2011-June 2012), second year (July 2012-June 2013), third year (July 2013-June 

2014), fourth year (July 2014-June 2015). 

3 This refers to extra-EU trade only, i.e. trade with EU Member States is excluded. 

3 

 
 
 
 
 
 
 
 
                                                 
Source: EUROSTAT-COMEXT (extracted in October 2015) 

EU imports from Korea in the fouth year of the FTA amounted to 40.0 billion EUR, having 
increased  by  5%  since  the  12-month  period  before  the  entry  into  effect  of  the  FTA.  In  the 
third and fourth years of implementation, imports increased annually by 6%, whereas in the 
second year they decreased by 6% compared to the previous year.  

It  is  worth  noting  that  in  the  fourth  year  of  FTA  implementation,  EU  imports  from  Korea 
increased  more  than  EU  imports  from  the  world,  which  increased  by  2%  compared  to  the 
previous year.  

EU imports from Korea of products that were fully or partially liberalised by the FTA grew 
by 35% and 64% respectively compared to the 12-month period before the entry into effect of 
the  FTA  (by  5.0  billion  EUR  and  0.5  billion  EUR  respectively),  whereas  EU  imports  from 
Korea of products subject to zero MFN tariff decreased by 29% (by 5.8 billion EUR).  

Overall, the EU's 7.6 billion EUR trade deficit with Korea in the 12-month period before the 
FTA took effect has turned into a trade surplus, amounting to 7.3 billion EUR in the fourth 
year of the FTA. 

The EU's share in total Korean imports increased from 9% before the entry into effect of the 
FTA to 13% in its fourth year. Over the same period of time, the EU's share in total Korean 
exports declined from 11% to slightly less than 9%4. 

2.3. Sectoral effects 

In terms of EU exports, the most important product categories are: 

•  "Machinery  and  appliances"  (HS5  16),  accounting  for  30%  of  total  EU  exports  to 

Korea, which increased by 24%. 

•  "Transport equipment" (HS 17), representing 21% of total EU exports to Korea, which 

increased by 134%. 

•  "Chemical products" (HS 06), accounting for 12% of total EU exports to Korea, which 

increased by 21%. 

•  Other  categories  of  products  that  have  shown  a  significant  increase  in  EU  exports 
since July 2011 are "Mineral products" (HS 05)6), "Pearls & precious metals" (HS 14), 
"Footwear" (HS 12) and "Wood" (HS 09).  

The current level of EU exports to Korea would have generated duty payments of 2.8 billion 
EUR had the FTA not been in place7. 

4 The EU's share in total Korean imports refers to Korea's imports from the EU as a share of Korea's imports from the world. 
The  EU's  share  in  total  Korean  exports  describes  Korea's  exports  to  the  EU  as  a  share  of  Korea's  exports  to  the 
world. 
5 Harmonised system 
6 EU exports of "Mineral products" to Korea increased mainly in the first year of FTA implementation. They account for 7% 

of total EU exports to Korea. 

7 This calculation is based on Korean imports from the EU at HS6 level, in the fourth year of the FTA implementation (ITC 

data). 

4 

 
 
 
 
 
 
 
 
 
 
 
                                                 
As far as EU imports from Korea are concerned, the main product categories are: 

•  "Machinery  &  appliances",  accounting  for  36%  of  EU  imports  from  Korea,  which 

decreased by 16%.  

•  "Transport  equipment",  accounting  for  26%  of  total  EU  imports  from  Korea,  which 
fluctuated  over  the  four  years  and  in  June  2015  were  almost  at  the  same  level  as  in 
June 2011.  

•  Significant increases were noted in EU imports of "Chemical products" and "Plastics" 
(HS 07), which have increased by 115% and 59% respectively since the FTA's entry 
into effect.  

2.4. 

Bilateral trade of motor vehicles and car parts 

EU  exports  of  motor  vehicles  (HS  8703)  have  increased  by  206%,  from  2.0  billion  EUR 
(74,600 units) in the 12-month period preceding the entry into force of the agreement to 6.1 
billion  EUR  (210,900  units)  in  the  fourth  year  of  the  FTA,  accounting  for  13%  of  total  EU 
exports  to  Korea.  The  annual  increase  in  exports  was  around  35%  in  the  second  and  third 
years of the FTA, whereas in the fourth year it was 61%. 

EU imports from Korea have grown by 53% from 2.6 billion EUR to 4.0 billion EUR or by 
13%  in  terms  of  units  imported  (from  300,000  to  339,000).  The  entire  increase  (53%) 
occurred in the first year of FTA implementation. Motor vehicles account for 10% of total EU 
imports from Korea.  

Graph 2: EU Exports to and Imports from Korea of Motor Vehicles, July 2010-June 
2015 (billion EUR) 

Source: EUROSTAT-COMEXT (extracted in October 2015) 

5 

 
 
 
 
 
 
 
 
EU exports of car parts to Korea8 were around 1.2 billion EUR in the fourth year of the FTA, 
having increased by 18% since the 12-month period before the FTA took effect. The highest 
annual increase (12%) occurred in the fourth year of FTA implementation. 

EU imports from Korea of car parts increased by over 36% from 2.2 billion EUR in the 12-
month  period  before  the  FTA  took  effect  to  3.0  billion  EUR  during  the  fourth  year  of  the 
FTA.  The  23%  increase  in  imports  in  the  first  year  of  the  FTA  was  followed  by  a  13% 
decrease in the second year and a 12% annual increase in the third and fourth years. 

2.5. Trade in services and Foreign Direct Investment (FDI)  

In  2014  EU  exports  of  services  amounted  to  11.9  billion  EUR,  having  increased  by  11% 
compared  to  the  previous  year.  At  the  same  time,  EU  imports  of  services  from  Korea 
amounted to 6.0 billion EUR, noting a 4% increase compared to 2013. EU trade in services 
with Korea represents 1% of extra-EU trade in services. 

Table 1: EU-Korea trade in total services (million EUR) 

EU Imports (Debit) EU Exports (Credit) EU Trade Balance 
2,687 
3,262 
4,092 
4,975 
5,958 

7,436
7,864
8,980
10,722
11,917

4,749
4,602
4,888
5,747
5,959

2010 
2011 
2012 
2013 
2014 

Source: Eurostat (BOP) 

In  2014  EU  FDI  outward  stocks  to  Korea  were  equal  to  43.7  billion  EUR,  whereas  the  EU 
FDI  inward  stocks  from  Korea  totalled  20.3  billion  EUR  (35%  increase  compared  to  the 
previous year). These figures represent 1% of extra-EU FDI stocks. 

Table 2: EU-Korea Foreign Direct Investment (million EUR) 

Stocks 

Flows 

Inward 

Outward 

Inward 

Outward 

2010 
2011 
2012 

2013 (b) 
2014 

13,140 
10,782 
16,866 

14,871 
20,252 

37,480
36,306
35,206

32,308
43,720

4,012
1,810
4,302

1,751
4,436

2,448 
2,217 
-179 

1,172 
5,629 

Note: (b) break in series. Data for 2010-2012 is compiled according to the BPM5 methodology and is not 
comparable with data for 2013-2014 which is based on the BPM6 methodology. Special-Purpose-Entities 
(SPEs) are included9.   

8 Car parts include tyres (401110, 401211), engines (840733, 840734, 840790, 840820) and parts (8708). 
9 In 2014 SPEs accounted for 44% of  EU outward stocks to Korea and 3% of EU inward stocks from Korea. 
Regarding  flows, 84%  of  EU  outward  flows  to Korea  and 19% of  EU  inward flows from  Korea  refered  to 
SPEs.  

6 

 
 
 
 
 
  
 
 
  
  
                                                 
2.6. Use of tariff preferences under the FTA  

Based on data received for the fourth year of FTA implementation, the overall EU Preference 
Utilisation  Rate  (PUR)  on  the  Korean  market  was  65%.  This  compares  to  66%  in  the  third 
year of the FTA. This rate shows to what extent EU exporters are using the FTA provisions10. 
The use of preferences in agricultural products was higher than in industrial products (86% vs. 
64%). 

At  EU  Member  State  level,  the  use  of  preferences  fluctuated  between  6%  and  91%.  The 
Member  States  with  the  highest  PURs,  above  80%,  are  Latvia,  Austria  and  Slovakia,  while 
the Member States with the lowest PURs, below 16%, are Malta and Luxembourg. 

At HS section, the highest overall PURs are found in "Transport equipment" (HS 17) and in 
"Live animals & animal products" (HS 1) at 93%. The lowest overall PURs (below 50%) are 
found in "Mineral products" (HS 05), "Pearls & precious stones" (HS 14), "Base metals" (HS 
15) and "Machinery" (HS 16).  

With respect to the Korean exports to the EU, the overall PUR on the EU market was higher 
than the EU PUR, at 84% in 2014. At HS section, the highest overall PURs were in "Mineral 
products", "Transport equipment"  and "Plastics & rubber" (above 90%), whereas  the  lowest 
overall  PURs  were  in  "Wood"  and  "Pearls"  (around  9%  and  34%  respectively).  It  is  worth 
noting that the Korean PUR for machinery was 72%, i.e. much higher than the respective EU 
PUR of around 48%11.   

3. 

ACTIVITIES OF THE FTA IMPLEMENTATION BODIES  

The  institutional  provisions  of  the  FTA  established  seven  Specialised  Committees,  seven 
Working  Groups  and  an  Intellectual  Property  (IP)  Dialogue.  The  annual  EU-Korea  FTA 
Trade  Committee  at  ministerial  level  plays  a  supervisory  role  and  ensures  that  the  FTA 
operates  properly.  In  2015  most  committees  and  working  groups,  including  the  Trade 
Committee,  took  place  in  Korea,  as  summarised  below.  In  addition,  the  EU-Korea  Summit 
was held in Seoul, Korea, on 15 September 2015.  

The  Committee  on  Sanitary  and  Phytosanitary  Measures  took  place  in  Sejong  City, 
Korea,  on  9  June  2015.  The  Committee  discussed  Korea's  Special  Act  on  Imported  Food 
Safety Management and its subordinate legislation under preparation, the quantity of sample 
collection for testing on high value products, the progress of the import approval procedure on 
EU  beef,  the  EU's  request  to  apply  regionalisation  principles  and  to  lift  the  import  bans  on 
pork from Poland and poultry and poultry products from certain EU Member States, the “born 
and raised” clause in the bilateral sanitary protocols between  EU Member  States and  Korea 
and  the  EU  exports  of  non-pasteurized  cheese  to  Korea,  Korean  exports  of  chicken-ginseng 
soup and live olive flounder to the EU and EU Member States' standards for iodine content in 
seaweeds.   

10 It is equal to the following ratio: 
Korea's preferential imports (the value of EU exports to Korea that enter Korea under the preferential rates) 
Korea's preference eligible imports (the value of EU exports to Korea that are eligible for preferential rates) 
11 Data on the EU and Korean PUR are not directly comparable as they refer to different periods (July 2014 to June 2015 for 

the EU PUR, and January-December 2014 for the Korean PUR). 

7 

 
 
 
 
 
 
 
                                                 
The  Working  Group  on  Motor  Vehicles  and  Parts  met  in  Seoul  on  10  June  2015.  The 
agenda was divided into FTA implementation issues, market access issues and a discussion on 
future  regulatory  development  and  convergence.  Under  FTA  implementation  issues  and  a 
separate technical meeting, progress was made on the technical update of Annex 2-C. During 
the  Working  Group,  the  Korean  side  confimed  the  acceptance  of  EURO  VI  certificates  for 
heavy  duty  commercial  vehicles  and  simplified,  electronic  documentary  procedures  for 
imports of E-marked tyres. Market access issues discussed included, inter alia, truck-tractors, 
self-certification  and  marking  of  car  parts,  new  emission  standards  for  petrol  cars,  CO2 
targets, vehicle width limit, auxiliary braking system of large-sized buses and safety standards 
for armrest impact.  

The Working Group on Pharmaceuticals and Medical Devices which met in Seoul on 11 
June  2015  discussed,  inter  alia,  the  Korean  pharmaceuticals  pricing  system  and  the 
appropriate  recognition  of  the  value  of  innovative  drugs  and  technologies,  proposed 
amendments  to  the  Korean  National  Health  Insurance  Act,  implementation  by  Korea  of 
serialisation  for  drugs,  Korea's  application  for  white-listing  of  Active  Pharmaceutical 
Ingredients  (APIs)  in  the  EU,  the  reimbursement  price  cuts  based  on  the  import  price 
methodology of medical devices, clinical test requirements, and the proposed amendments to 
the EU medical device legislation related to the CE marking system. The Working Group was 
followed  by  an  experts’  meeting  where  both  sides  shared  the  inspection  results  in  the 
pharmaceutical sector within the framework of the Pharmaceutical Inspection Convention and 
Pharmaceutical  Inspection  Co-operation  Scheme  (PIC/S)  and  their  views  on  regulatory 
harmonisation in the medical devices sector, and also discussed Korea's application for APIs. 

On the same day, on 11 June 2015, the Working Group on Chemicals met in Seoul to share 
information on the implementation of each side’s REACH, in particular regarding restricted 
substances  and  risk  management  methods,  the  compatibility  of  Korea's  IT  systems  with 
OECD  formats  and  the  International  Uniform  Chemical  Information  Database  (IUCLID), 
ways  of  ensuring  confidentiality  on  the  registered  chemicals  under  the  Korean  REACH, 
cumbersome  requirements  for  confirmation  on  R&D  substances  exempted  from  registration 
and for importers' annual report,etc. The EU side also updated the Korean side about the EU's 
Biocidal Products Regulation in view of concerns raised by some Korean exporters. 

On  7  September  2015,  the  Committee  on  Outward  Processing  Zones  (OPZ)  on  the 
Korean  Peninsula  met  in  Seoul.  The  Korean  side  provided  an  overview  of  the  Gaeseong 
Industrial  Complex,  the  inter-Korean  factory  park  located  in  North  Korea.  The  Committee 
futher  took  stock  of  the  discussions  of  the  previous  Committee  meeting.  In  addition,  it 
discussed the textual proposal submitted by Korea to amend the OPZ related provisions of the 
FTA.  Both  sides  acknowledged  the  political  sensitivity  of  the  issue  of  OPZ  but  agreed  to 
continue the discussions at working level.  

On 8 September 2015, the Committee on Trade in Goods met in Sejong City. It discussed 
the  overall  implementation  of  the  FTA  after  four  years,  including  how  to  improve  FTA 
utilisation  by  businesses.  Other  issues  discussed  included,  inter  alia,  recent  regulatory 
developments in the EU for electrical and electronic products, the review by Korea of Article 
4  (Transitional  arrangements)  of  Annex  2-B  of  the  FTA  to  move  products  under  lighter 
certification  schemes  and  further  regulatory  cooperation  in  the  field  of  electrical  and 
electronic products. Market access issues of the EU cosmetics industry were also discussed, 

8 

 
 
 
 
 
 
 
i.e.  in  particular  Korea's  electronic  data  interchange  system  and  the  provisions  related  to 
downtown duty-free shops. In addition, in the absence of a dedicated committee or working 
group for the implementation of the Competition Chapter of the FTA, the implementation of 
this chapter, in particular in respect of subsidies was discussed. Finally, the parties discussed 
the preparation of the Trade Committee.  

On  9  September  2015,  the  Committee  on  Trade  and  Sustainable  Development  met  in 
Seoul.  The  parties  exchanged  views  on  their  respective  environment  and  labour  policies. 
Chapter 4 below describes these discussions in more detail. 

The  Working  Group  on  Geographical  Indications  (GIs)  met  twice  in  2015.  The  first 
meeting took place in Seoul on 14 September 2015, followed by a second meeting in Brussels 
on 4 November 2015. Progress was made on the new GIs to be added to the list of protected 
GIs under the FTA and discussions continued on the process leading up to such additions. In 
both  meetings  the  parties  also  discussed  enforcement  of  some  European  GIs  on  the  Korean 
market and some Korean GIs on the EU market. 

On  24  September  2015,  the  Committee  on  Trade  in  Services,  Establishment  and 
Electronic Commerce met in Brussels. The parties discussed and exchanged information on 
the implementation of the FTA in a number of areas, including the review of the investment 
legal  framework,  financial  services,  especially  in  respect  of  transfer  and  processing  of 
financial  information  as  well  as  performance  functions,  personal  data  protection  and  postal 
and  courier  services,  where  the  review  of  the  postal  principles  as  well  as  express  delivery 
services were discussed. Finally, the parties updated each other on their negotiations related to 
trade in services and investment. 

On  the  same  day,  24  December  2015,  the  Working  Group  on  Mutual  Recognition 
Agreements (MRA) for Services gathered in Brussels. Both sides exchanged views on their 
respective  MRA  initiatives  with  other  countries  and  took  stock  of  the  progress  in  MRA 
discussions  between  professional  associations  in  the  areas  of  engineeering  and  architectual 
services.  They  also  discussed  future  work  in  these  areas  and  agreed  that  the  professional 
associations should be continued to be encouraged to work together.  

On  4  November  2015  the  Customs  Committee  met  in  Brussels.  It  discussed  possible 
amendments  to  the  FTA  in  the  customs  area,  e.g.  the  EU's  proposal  to  amend  the  direct 
transport  clause  and  to  add  a  clause  on  repaired  goods,  and  Korea's  suggestion  to  abolish 
Article  14  of  the  Rules  of  Origin  Protocol  of  the  FTA  concerning  exemption  from,  or 
drawback of, customs duties. The technical update of product specific rules from HS2007 to 
HS2012,  requested  by  Korea,  was  also  discussed.  Furthermore,  the  committee  addressed 
issues related to the rules of origin, such as the interpretation of primary ingredient of surimi 
base, origin verification procedures and the approved exporter system. In addition, the parties 
discussed the new measures by the Korea Customs Service on express shipments by express 
operators and mutual administrative assistance on a specific case.  

The  IP  Dialogue  took  place  in  Brussels  on  5  November  2015.  Both  sides  gave  an  update 
about  the  legislative  and  policy  developments  in  the  IP  area,  notably  on  copyright,  patents, 
trade  marks  and  enforcement.  The  EU  side  raised  the  importance  of  maintaining  a  balance 
between  the  right  holders  of  standard  essential  patents  and  implementers  in  Korea's 
competition  policy.  The  EU  side  further  expressed  its  concerns  about  the  lack  of 

9 

 
 
 
 
 
 
 
 
implementation of the FTA provisions on public performance rights, pending the revision by 
Korea  of  the  Copyright  Act  and  underlined  the  economic  importance  for  both  the  EU  and 
Korea of this issue.  

The Trade Committee took place on 15 September 2015 in Seoul, back to back with the EU-
Korea Summit on the same day. It was co-chaired by the Commissioner for Trade, Ms Cecilia 
Malmström  and  Korea's  Minister  for  Trade,  Industry  and  Energy,  Mr  Yoon  Sang-jick.  The 
Committee assessed the development of bilateral trade after four years of implementation of 
the  FTA  and  the  rate  of  preference  utilisation  by  exporters  on  both  sides.  The  Korean  side 
expressed  their  concerns  about  their  trade  deficit  with  the  EU,  which  had  deepened  in  the 
fourth  year  of  the  FTA.  While  there  were  many  reasons  for  this,  such  as  the  decreased 
demand in the EU, it made it difficult for the Korean Government to justify the benefits of the 
FTA to its domestic stakeholders.  

The Trade Committee also discussed the possible future revision of the FTA, in particular in 
view of Korea's interest to include investment protection provisions into the FTA and the EU's 
request to amend certain provisions, such as the direct transport clause. Both sides agreed to 
start exploring a possible package of FTA amendments, taking into account the interests and 
sensitivities on both sides.  

Both  sides  also  raised  their  respective  concerns  related  to  the  implementation  of  the 
agreement or market access in general, in particular in the areas of SPS, technical barriers to 
trade and intellectual  property  rights  and instructed the specialised  committees  and working 
groups to continue to seek solutions to the issues of both sides.  

Finally, at the EU-Korea Summit, which was held in Seoul after the Trade Committee on 15 
September  2015,  the  leaders  reiterated  that  the  full  implementation  of  the  FTA  and  an 
increase  in  trade  volume  between  Korea  and  the  EU  was  important,  in  order  to  bring  the 
expected benefits to both sides in a balanced way. They futher encouraged their trade officials 
to produce tangible outcomes on the FTA implementation issues and agreed to explore ways 
to improve investment norms, while continuing discussions on other FTA improvements. 

4. 

IMPLEMENTATION  OF  CHAPTER  13  OF  THE  FTA  CONCERNING  TRADE  AND 
SUSTAINABLE DEVELOPMENT  

As  indicated  above,  the  fourth  meeting  of  the  Committee  on  Trade  and  Sustainable 
Development (CTSD) was held in Seoul on 9 September 2015.  

In  line  with  the  well-established  practice  of  previous  meetings,  the  Co-Chairs  of  the  Civil 
Society  Forum  (CSF)  updated  the  CTSD  on  the  work  of  the  Domestic  Advisory  Groups 
(DAGs) since the last Committee meeting.  

The  environment  segment  included  a  presentation  by  the  Korean  side  on  the  Recycling 
Society,  the  flagship  of  the  Korean  environmental  policy,  including  an  update  on  recent 
developments  regarding  the  ‘Act  on  Promotion  of  Transition  to  Resource  Circulating 
Society’,  which  will  be  enforced  from  2017.  The  parties  further  discussed  illegal  logging, 
where the EU side expressed readiness to cooperate with Korea to identify best approaches to 
halt  import  and  trading  of  illegally  harvested  timber  and  derived  products.  Korea  informed 

10 

 
 
 
 
 
 
 
 
 
about  its  legislative  proposal  addressing  trade  in  illegally  harvested  timber  and  timber 
products. The parties also discussed the state of ratification of the Minamata Convention on 
Mercury.  

The  labour  policy  segment  was  introduced  by  a  presentation  of  the  International  Labour 
Organisation  (ILO)  on  developments  regarding  the  implementation  of  ILO  Convention  111 
and lessons learned from ways to overcome obstacles to compliance. 

The  labour  issues  discussed  included  commitments  under  Art.  13.4  of  the  FTA  to  respect, 
promote and realise in law and practice the ILO fundamental principles and rights at work as 
well as to effectively implement the ILO Conventions that Parties have ratified respectively 
and  to  make  continued  efforts  towards  ratifying  the  core  ILO  Conventions  and  other 
Conventions  classified  as  'up-to-date'  by  the  ILO.  The  Parties  updated  each  other  on  work 
towards ratification and effective implementation of ILO fundamental, priority and other up-
to-date  conventions,  as  well  as  on  labour  market  policy  developments  which  may  have  an 
impact on trade and/or investment.  

The  EU  invited  Korea  to  speed  up  efforts  to  ratify  the  fundamental  ILO  conventions  that  it 
hasn't yet ratified, in particular concerning forced labour, freedom of association and the right 
to  collective  bargaining.  The  Korean  side  agreed  to  share  before  the  next  meeting  of  the 
CTSD  and  the  CSF  texts  setting  out  additional  intended  concrete  steps  towards  removing 
remaining obstacles for ratification of the core ILO Conventions.  

Regarding cooperation under Annex 13 of the FTA, in order to further their commitments in 
the field of labour under the FTA, and building on the ILO's presentation, the Parties agreed 
to launch a project under the Partnership Instrument (PI) to look into the implementation of 
ILO Convention 111 on non-discrimination in employment and  occupation, with the aim of 
better understanding the state of play of implementation in Korea and EU Member States, and 
identifying  obstacles, lessons learned and best practices to enhance  compliance.  The Parties 
also discussed their commitment to responsible business conduct and the possible launch of a 
PI  project  in  the  field  of  CSR.  Finally,  the  parties  discussed  recent  developments  regarding 
the ongoing negotiations on an Agreement on Environmental Goods and their cooperation in 
this context. 

The Committee agreed that the ambitious Trade and Sustainable Development chapter in the 
FTA  shows  the  Parties'  common  commitment  to  the  overarching  objective  of  sustainable 
development, which must be lived up to in implementation – both in spirit and in letter.  

The  CSF  held  its  fourth  meeting  on  10  September  2015  in  Seoul.  It  was  preceded  by  a 
workshop on labour-related aspects on 9 September with a discussion on fixed-term contracts 
and minimum wages. 

The CSF started with a briefing by the co-chairs of the CTSD who reported on the outcome of 
their  discussions  the  day  before  and  shared  with  the  CSF  members  suggestions  concerning 
areas for future work and analysis by the CSF. This was followed by a discussion on labour 
standards, CSR, the civil society contribution to climate change policy and the programme for 
further work of the DAGs and the CSF.  

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5. 

CONCLUSION 

Based on more than four years of implementation, one can conclude that the EU-Korea FTA 
has worked very well. EU exports of goods to Korea increased by 55% in the fourth year of 
FTA  implementation,  compared  to  the  12-month  period  before  the  FTA  took  effect.  At  the 
same time, also Korean exports increased, even though less than the EU's exports. The weaker 
performance  of  Korean  exports  of  goods  has  to  be  seen  in  the  context  of  the  decreased 
demand in the EU following the financial crisis. However, when looking at the development 
of  bilateral  trade  in  goods  which  has  been  fully  or  partially  liberalised  by  the  FTA,  the 
situation  looks  much  brighter  also  for  Korea,  with  an  increase  of  35%  in  exports  of  fully 
liberalised goods and 64% of partially liberalised goods to the EU. 

On the EU-side, exports of fully and partially liberalised goods have also increased more than 
exports  overall,  with  an  increase  of  57%  for  fully  liberalised  goods  and  71%  for  partially 
liberalised goods. 

Also trade in services has increased by 11% in EU exports to Korea and 4% in EU imports 
from  Korea  in  2014  compared  to  2013.  Over  the  same  period,  bilateral  FDI  stocks  have 
increased by 35%.  

Full  implementation  of  the  FTA  continues  to  be  of  key  importance,  in  order  to  bring  the 
expected  benefits  to  both  sides.  Some  implementation  and  bilateral  trade  issues  still  persist. 
For  example  in  the  SPS  sector,  cumbersome  authorisation  procedures  create  barriers  which 
affect in particular EU beef and pork exports. Implementation has also caused concern in the 
areas of intellectual property rights, in particular in respect of public performance rights and 
geographical indications, as well as trade and sustainable development, where there is a need 
to speed up the ratification of fundamental ILO conventions.  

In  this  respect,  the  specialised  committes  and  working  groups  establised  to  implement  the 
FTA  will  continue  to  discuss  and  seek  solutions  to  the  implementation  and  market  access 
issues,  with  the  aim  to  produce  tangible  results.  These  implementation  bodies  have  also 
proven  to  be  very  useful  forums  to  discuss  current  and  future  regulatory  developments  and 
areas of future cooperation. 

Finally, as agreed at the Trade Committee in September 2015, the EU and Korea will continue 
discussions  on  a  package  of  FTA  amendments,  with  the  aim  of  reaching  a  balanced  and 
mutually agreeable outcome.  

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