REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND THE COUNCIL ANNUAL REPORT ON THE IMPLEMENTATION OF THE EU-KOREA FREE TRADE AGREEMENT
Date: 2017-10-20
Institutions: Directorate-General for Trade and Economic Security, European Commission
Subjects: South Korea, export (EU), foreign investment, free-trade agreement, import (EU), motor vehicle, service, tariff preference, trade agreement (EU), vehicle parts

EUROPEAN 
COMMISSION 

Brussels, 20.10.2017  
COM(2017) 614 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(2017) 345 final} 

EN 

   EN 

 
 
 
 
  
 
1. 

INTRODUCTION 

1 July 2017 marked the sixth anniversary of application of the Free Trade Agreement (FTA) 
between the EU and its Member States and the Republic of Korea (in this report referred to as 
Korea).  The  FTA  has  been  provisionally  applied  since  July  2011.  On  13  December  2015  it 
entered formally into force after ratification by EU Member States. The Additional Protocol 
to  the  FTA  to  take  into  account  the  accession  of  Croatia  to  the  EU  has  been  provisionally 
applied since 26 May 2014 and entered into force on 1 January 2016. 

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

This is the fifth Annual Report on the implementation of the EU-Korea FTA. It is prepared 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 this Regulation, the Commission shall make public an 
annual  report  on  the  application  and  implementation  of  the  Agreement.    The  report  is 
accompanied by a Commission Staff Working Document that contains the annual monitoring 
report on updated statistics on imports from Korea of products in sensitive sectors as required 
by  Article 3(3).  

On 18 May 2017 the European Parliament adopted a resolution2 to take stock of the first five 
years  of  implementation  of  the  FTA  between  the  EU  and  Korea.  The  Parliament 
acknowledged  the  very  positive  economic  results  of  the  agreement  for  the  EU,  while  also 
expressing concerns on some outstanding points and in particular as regards labour rights in 
Korea. 

2. 

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  full  calendar  year  of  2016  with  2010,  the  last  full  calendar 
year before the FTA entered into provisional application on 1 July 2011.  

For  trade  in  services  and  for  investment  the  analysis  is  based  on  the  latest  available  annual 
data from 2015, again compared with 2010. 

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

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,  in  the 
period from January 2016 to May 2017. 

1 
2 

OJ L 145, 31.5.2011, p. 19 

0225&language=EN&ring=A8-2017-0123  

http://www.europarl.europa.eu/sides/getDoc.do?type=TA&reference=P8-TA-2017-

2 

 
 
 
 
 
 
 
 
                                                 
3. 

EVOLUTION OF TRADE  (YEAR-TO-YEAR AND SINCE THE START OF 
PROVISONAL APPLICATION) 

3.1. 

Trade in Goods 

3.1.1.  Overall Evolution of Trade in Goods  

It should be noted that the gradual entry into force of agreed tariff concessions over the first 
years after the start of provisional application on 1 July 2011 ended on 30 June 2016. As of 
then, almost all tariffs are fully liberalised so that, in contrast to previous reports, there is no 
longer any distinction between fully, partially or not liberalised products. 

EU exports to Korea increased by 59.2%, from 28 billion EUR in 2010 to 44.5 billion EUR in 
2016.  The  average  increase  of  EU  exports  to  Korea  was  8.1  %,  the  average  growth  of  EU 
imports from Korea 0.8% per year. 

In 2010, the base year before the start of provisional application of the FTA, EU exports to 
Korea were 28.0 bn €, and imports from Korea were 39.5 bn €. In 2016, EU exports to Korea 
were 44.5 bn €, and imports from Korea were 41.4 bn €. So the EU's 11.6 billion EUR trade 
deficit with Korea in 2010 has turned into a trade surplus of 3.1 billion EUR in 2016. 

The  current  level  of  EU  exports  to  Korea  would  have  generated  duty  payments  of 
approximately 2 billion EUR had the FTA not been in place3. 

Graph 1: EU Exports to and Imports from Korea, 2010-2016 (billion EUR) 

EU28 merchandise trade with South Korea (in million euro) 
2014 
2016 
2015 
38,772  42,365  41,437

2011 
36,312

2012 
38,014

2013 
35,837

2010 
39,534

EU imports from South Korea 

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

data). 

3 

 
 
 
 
 
 
 
 
 
 
  
                                                 
EU exports to South Korea 
trade balance 
Source: Eurostat June 2017 

27,961
-11,573

32,515
-3,797

37,815
-199

39,910
4,073

43,188  47,787  44,506
3,069
5,422 

4,416 

Between 2015 and 2016 total EU exports to Korea declined by 6.9%. EU imports from Korea 
declined by 2.2%. This led to a decrease of the EU trade surplus from 5.4 to 3.1 billion EUR. 
The decline is in line with the overall pattern of trade for the EU in 2016. Between 2015 and 
2016 total EU exports to the world declined by 2.4%. EU imports from the world declined by 
1.2%.  

The  more  pronounced  decline  of  EU  exports  to  Korea  is  inter  alia  due    to  lower  sales  of  
machinery, transport equipment, motor vehicle (also related to the diesel engine scandal) and 
UK oil exports (due to end of Iran sanctions), and lower number of delivery of aircrafts (with 
more deliveries scheduled for the next years). Vice versa, 2016 showed a fall in EU imports 
of vessels, LCDs and petrochemicals from Korea. 

Imports from Korea represented 2.6% of total imports into the EU in 2010, and  2.4% in 2016, 
making Korea the EU's 8th largest import origin in 2016. EU exports to Korea represented 2% 
of total EU exports in 2010, and 2.6% in 2016,  making the Korea the EU 9th largest export 
market in 2016. Korea was the EU's 8th largest partner in terms of total trade. 

On the Korean side, the EU's share in total Korean imports increased from 9.1% before the  
start  of  application    of  the  FTA  to  12.8%  in  2016,  making  the  EU  the  2nd  largest  Korean 
import  origin  (after  China).  Over  the  same  period  of  time,  the  EU's  share  in  total  Korean 
exports declined from 11.5% to 10.9%4, making the EU the 3rd largest Korean export market. 
The EU was Korea's 3rd largest partner in terms of total trade (after China and US). 

3.1.2.  Sectoral Effects 

In  terms  of  EU  exports  to  Korea,  in  2016  the  most  important  product  categories  are  as 
follows: 

•  "Machinery  and  appliances"  (HS5  16)  accounted  for  29.2%  of  total  EU  exports  to 

Korea. This product category showed a decrease of 8.2% compared to 2015. 

•  "Transport equipment" (HS 17), represented 21.2% of total EU exports to Korea. This 

category showed a decrease of 6.4% compared to 2015. 

•  "Chemical products" (HS 06), accounted for 13.6% of total EU exports to Korea. This 

product category showed an increase of 8.4% compared to 2015. 

•  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).  

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. 

4 

 
 
 
 
 
 
 
 
 
 
                                                 
As far as EU imports from Korea are concerned, in 2016 the main product categories are: 

•  "Machinery  and  appliances"  accounted  for  33.9%  of  EU  imports  from  Korea.  This 

product category showed a decrease of 4.9% compared to 2015. 

•  "Transport  equipment",  accounted  for  26.1%  of  total  EU  imports  from  Korea.  This 

product category showed a decrease of 4.9% compared to 2015. 

•  Significant increases were noted in EU imports of "Chemical products" and "Plastics" 

(HS 07).  

3.1.3  Bilateral Trade of Motor Vehicles and Car Parts 

EU exports of motor vehicles (HS 8703) have increased by 244% in value from 2010 to 2016, 
from 1.68 billion EUR (64,200 units) to 5.79 billion EUR (176,900 units), accounting for 13% 
of total EU exports to Korea.  

EU imports from Korea have grown by 53% from 2.48 billion EUR to 4.79 billion EUR or by 
13% in terms of units imported (from 300,000 to 339,000). Motor vehicles account for almost 
12% of total EU imports from Korea.  

Graph 2: EU Exports to and Imports from Korea of Motor Vehicles, 2010-2016 (billion 
EUR) 

EU exports of car parts to Korea7 were around 1.4 billion EUR in  2016.  This  represents an 
annual increase of 25% over 2015.  

EU imports from Korea of car parts were around 3.5 billion EUR in 2016. This represents an 
annual increase of 9% over 2015. 

The trade deficit in car parts remained stable at around -2.1 billion EUR. 

7 Car parts include tyres (401110, 401211), engines (840733, 840734, 840790, 840820) and parts (8708). 

5 

 
 
 
 
 
 
 
 
 
 
 
                                                 
3.2. Trade in Services and Investment   

The  latest  data  available  on  services  and  investment  is  from  2015.  In  2015,  EU  exports  of 
services amounted to 11.1 billion EUR. This represents an increase of 49% compared to 2010 
(though a decrease of 7% compared to 2014). In the same year 2015, EU imports of services 
from  Korea  amounted  to  6.3  billion  EUR.  This  represents  an  increase  of  32%  compared  to 
2010  (with  a  7,3%  increase  compared  to  2014).  EU  trade  in  services with  Korea represents 
approximately 1% of extra-EU trade in services. The EU has a trade surplus in this field of 4.8 
billion EUR in 2015. 

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

EU Imports (Debit)  EU Exports (Credit)  EU Trade Balance 
7,422 
7,887 
9,005 
10,758 
11,934 
11,089 

2,653 
3,262 
4,086 
5,117 
6,066 
4,792 

4,769 
4,625 
4,919 
5,641 
5,868 
6,298 

2010 
2011 
2012 
2013 
2014 
2015 

Source: Eurostat (BOP) 

In 2015, EU outward FDI stocks to Korea were equal to 49.8 billion EUR, equivalent to 3.5% 
of  extra-EU  FDI  stocks.  In  2015,  EU  inward  FDI  stocks  from  Korea  totalled  20.9  billion 
EUR,  equivalent  to  0.7%  of  extra-EU  FDI  stocks.  So  the  EU  stocks in  Korea are  about  2,5 
times  bigger  than  Korean  stocks  in  the  EU.  EU  inward  FDI  stocks  increased  by  59%  and 
outward FDI stocks increased by 33% from 2010 to 2016.  

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

Stocks 

Flows 

2010 
2011 
2012 

2013 (b) 
2014 
2015 

Inward 
13,140 
10,782 
16,866 

14,949 
17,565 
20,914 

Outward 
37,480 
36,306 
35,206 

32,274 
45,829 
49,755 

Inward 
4,012 
1,810 
4,302 

1,340 
4,486 
1,800 

Outward 
2,448 
2,217 
-179 

823 
5,485 
-6,428 

Note: (b) break in series. Data for 2010-2012 is compiled according to the BPM5 methodology and is not 
comparable with data for 2013-2015 which is based on the BPM6 methodology. Special-Purpose-Entities 
(SPEs) are included8.   

8 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 referred to 
SPEs.  

6 

 
 
 
 
 
 
                                                 
3.3. 

Preference Utilisation Rate 

This  rate  shows  to  what  extent  EU  exporters  are  using  the  FTA  preferences  ,  i.e.  take 
advantage of the FTA's duty reductions9. In 2016, the overall EU Preference Utilisation Rate 
on  the  Korean  market  was  71%,  the  highest  rate  ever.  This  compares  to  68%  in  2015,  and 
65% in 2014 and 2013.  

At Member State level, there is a wide range of preference utilisation rates, fluctuating from 
20.8%  (Malta)  to  86.8%  (Belgium).  The  countries  with  the  highest  rates,  above  80%,  are 
Belgium,  Slovakia,  Cyprus,  Austria  and  Hungary.  On  the  contrary, the  Member  States  with 
the  lowest  rates,  below  60%,  are  Croatia,  Ireland,  the  Netherlands,  Estonia,  Finland  and 
Malta. 

By HS Section10, the highest overall rate are found in Animals and animal products (Section 
1) at 95.4% and in Transportation equipment (Section 17) at 95%. More specifically, 
Motor vehicles (Chapter 87 in Section 17), accounting for more than 20% of all preference 
EU exports to Korea, show a preference utilisation rate of 95.1%. 

On the other hand, the lowest overall rates (below 60%) are found in Base metals and 
articles made of base metal (Section 15) at 58.8%, in Pearls and Metals (Section 14) at 56.9%,  
in   the  very  important  sector  of  Machinery  and  mechanical  appliances,  electrical  equipment 
(Section 16) at 54.7%, in Hides and skins (Section 8), in Arms and ammunition (Section 19) 
and in Miscellaneous (Section 20) at 53.7%, 53.1% and 51.2% respectively. 

With respect to the Korean exports to the EU, the overall preference utilisation rate on the EU 
market was higher than the EU rate, at 87% in 2016, compared to 85 % in 2015 and 84 % in 
2014.   

4. 

ACTIVITIES OF THE IMPLEMENTATION BODIES 

The  institutional  provisions  of  the  EU-Korea  FTA  (Art.  15)  established  seven  Specialised 
Committees,  seven  Working  Groups  and  an  Intellectual  Property  (IP)  Dialogue.  The  annual  
meeting of the Trade Committee at ministerial level plays a supervisory role and ensures that 
the FTA operates properly. From January 2016 till May 2017, most meetings of committees 
and  working  groups,  including  the  Trade  Committee,  took  place  in  the  EU,  as  summarised 
below.  

The  Working  Group  on  Motor  Vehicles  and  Parts  met  in  Brussels  on  21  June  2016  and 
addressed environmental issues, technical standards, harmonization, convergence and market 
access issues. Progress was made on the technical update of Annex 2-C. During the Working 
Group,  positive  developments  were  noted  on  EU  concerns  such  as  seat  technical 
requirements, Flex-PLI test procedure and adoption of 48V technology. Market access issues 
discussed  included,  inter  alia,  truck-tractors,  self-certification  and  marking  of  car  parts, 
restricted  market  access  for  certain  vehicle  types,  vehicle  width  limit,  homologation 
certificates and policies affecting imports of motorbikes.  

9 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) 
10 Harmonized Commodity Description and Coding System 

7 

 
 
 
 
 
 
 
                                                 
The Working Group on Pharmaceuticals and Medical Devices which met in Brussels on 
22  June  2016  discussed,  inter  alia,  the  Korean  pharmaceuticals  pricing  policy  and  the 
appropriate  recognition  of  the  value  of  innovative  drugs  and  technologies,  serialisation  for 
drugs,  recognition  of  pharmaceuticals  compendiums  from  the  EU,  as  well  as  the 
reimbursement  of  single  use  devices,  clinical  test  requirements,  and  the  state  of  play  of  the 
notified bodies in the EU.  

The Committee  on  Sanitary  and  Phytosanitary  Measures  met in Brussels on  21 October 
2016.  It  discussed  the  import  approval  procedure  on  EU  beef,  the  EU  request  to  recognise 
regionalisation decisions, the lifting of the Korean bans on pork, poultry and poultry products 
from  certain  EU  Member  States,  and  the  “born  and  raised”  clause  in  the  bilateral  sanitary 
protocols  between  EU  Member  States  and  Korea.  The  EU  also  raised  issues  about    the 
quantity  of  sample  collection  for  testing  on  high  value  products  and  an  issue  related  to 
certification on Korean rules for products manufactured in one EU Member State and shipped 
to Korea via another Member State. Korea raised a point on export of chicken-ginseng soup  
to the EU. 

On  15  November  2016,  the  Trade  in  Goods  Committee  met  in  Brussels.  It  discussed  the 
overall  implementation  of  the  FTA  after  five  years  and  recognised  its  beneficial  effects  for 
both  the  EU  and  Korea.  Both  sides  discussed  the  outcome  of  the  Electronics  Dialogue  that 
took  place  the  day  before  covering  a  wide  range  of  issues  (review  of  Articles  4  and  5.2  of 
Annex  2-B  of  the  FTA,  extension  of  the  scope  of  Annex  2-B  to  include  radio  equipment 
testing,  state  of  play  of  the  implementation  of  the  EU  Eco-design  Directive  for  TV  and 
Display,  test  requirements  for  the  conformity  assessment  procedures  of  the  EU  Radio 
Equipment Directive, grace period for the implementation of new LVD and EMCD). Market 
access issues of the EU cosmetics industry were raised again, namely the Korean electronic 
data interchange (EDI) system and the requirements for downtown duty-free shops to reserve 
space for sale of products of small and medium-sized enterprises (SMEs). On competition, the 
EU side requested information on the Korean legislation regarding prohibited subsidies, and 
expressed  concern  on  Korean  support  plans  for  the  local  shipbuilding  industry.  Finally,  the 
Parties discussed preparations of the Trade Committee.  

On  16  November  2016,  the  EU  and  Korea  held  a  meeting  of  the    Trade  Remedy 
Cooperation  Working  Group  in  Brussels.  The  meeting  enhanced  the  knowledge  and 
understanding of each other's trade remedy laws, policies and practices. It also allowed for an 
exchange  of  statistics  and  information  regarding  bilateral  anti-dumping  measures  and  on-
going investigations as well as global trends in trade remedy investigations. 

The Intellectual Property Dialogue took place in Seoul on 24 November 2016. Both sides 
provided  updates  on  the  legislative  and  policy  developments  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  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 meeting of  Working Group on Government Procurement took place in Seoul on 26 
November  2016.  The  Parties  provided  information    on  recent  legislative  developments, 

8 

 
 
 
 
 
 
 
 
discussed  Korea's  broad  interpretation  of  the  security  exception  under  Article  3  GPA  and 
exchanged views on access for SMEs to procurement. Among other issues, the EU inquired 
about  a  possible  interest  from  the  Korean  side  to  create  a  common  procurement  portal  or  a 
link between the respective portals. The Parties agreed to further enhance their cooperation. 

The  Working  Group  on  Geographical  Indications  (GIs)  had  two  working  meetings 
organised  by  teleconference  in  2016,one    on  7  July  and  the  other  on  30  November. 
Discussions  continued  on  the  process  to  add  GIs  to  the  list  protected  under  the  FTA.  The 
parties also discussed the enforcement of European GIs on the Korean market and Korean GIs 
on the EU market. 

The 4th EU-Korea meeting of the Cultural Cooperation Committee was held on 6 March 
2017  in  Seoul.  Both  sides  agreed  to  renew  the  entitlement  for  EU-Korea  audio-visual  co-
productions  to  benefit  from  their  respective  schemes  for  the  promotion  of  local/regional 
cultural  content,  and  to  increase  their  information  efforts  towards  audio-visual  operators. 
Other  topics  concerned  artistic  residencies,  exchange  of  data  and  support  to  cultural 
cooperation.  

On  24  March  2017,  the  Committee  on  Trade  and  Sustainable  Development  met  in 
Brussels. The parties exchanged views on their respective environmental  and labour policies. 
Chapter 5 below describes these discussions in more detail. 

On  7  April  2017,  the  Customs  Committee  met  in  Seoul.  It  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, as well as the technical update of 
product  specific  rules  from  HS2007  to  HS2017.  The  parties  also  discussed  cooperation  on 
European  Anti-fraud  Office  (OLAF)  investigations  on  the  circumvention  of  trade  defence 
measures concerning stainless steel tube and solar panel modules originating in China  and the 
EU  provided  a  general  explanation  on  the  legal  and  practical  requirements  that  need  to  be 
fulfilled for the mutual recognition of Authorised Economic Operators.  

The Trade Committee met for the sixth time on 16 December 2016 in Brussels. The meeting 
was co-chaired by Commissioner for Trade, Ms Cecilia Malmström, and Korea’s Minister for 
Trade, Industry and Energy, Mr. Hyunghwan Joo, both accompanied by large delegations. On 
the  occasion  of  the  fifth  anniversary  of  the  application  of  the  EU-Korea  FTA,  both  sides 
welcomed  the  increase  of  bilateral  trade  relations,  and  gave  an  outlook  on  future  relations 
(e.g.  increasepreference    utilisation  rate  and  SMEs  participation,  adapt  to  technological 
change). Korea drew attention to its continuing (though lowered) trade deficit with the EU.  

As  regards  exploratory  FTA  amendment  discussions,  the  EU  reiterated  its  interest  in 
amending provisions related, inter alia, to direct transport, repaired goods and truck-tractors.  
Korea recalled that it was in principle keen to negotiate with the EU on investment protection, 
but that it was not for the time being ready to go ahead on the basis of the EU's Investment 
Court System approach. 

The  EU  expressed  serious  concerns  on  insufficient  progress  on  the  ratification  and 
implementation of International Labour Organization (ILO) conventions and on protection of 
labour  rights  in  Korea.  It  strongly  emphasised  the  need  to  allow  EU  beef  exports  to  Korea. 
Other  issues  addressed  included  regionalisation  (pork  and  poultry),  customs  procedures 

9 

 
 
 
 
 
 
 
 
 
(origin  verification),  temporary  duty  exemption  for  repaired  goods,  Intellectual  Property 
Rights  (public  performance  rights),  geographical  indications,  automotives  (homologation), 
shipbuilding (subsidies) and postal and courier services. 

Korea confirmed that it was prolonging the temporary tax exemption for repaired goods for 
another  two  years,  beyond  the  31  December  2016  deadline,  following  repeated  EU  and 
industry demands. Korea raised implementation and market access issues related to chicken 
soup, Surimi (fish), EU eco standards for UHD televisions, good manufacturing practices for 
medical  devices,  mutual  recognition  for  professional  services,  and  EU  anti-dumping 
investigations.  Both  sides  agreed  to  follow-up  the  discussed  implementation  and  market 
access issues in the context of  the respective Specialised Committees and Working Groups.    

5. 

IMPLEMENTATION  OF  THE  PROVISIONS  ON  TRADE  AND 
SUSTAINABLE DEVELOPMENT 

The Commission continued to engage with Korea on implementing commitments contained in 
the  Trade  and  Sustainable  Development  (TSD)  Chapter  related  to  labour  and  environment. 
Particular emphasis was placed on labour rights in view of ensuring progress in implementing 
commitments  made  in  terms  of,  for  example,  respecting,  the  ILO fundamental  principles  of 
freedom of association and right to collective bargaining and ratification of ILO fundamental 
conventions. 

The  fifth  meeting  of  the  TSD  Committee  was  held  in  Brussels  on  24  March  2017.  This 
allowed  the  EU  and  Korea  to  continue  their  dialogue  and  cooperation  on  implementing  the 
TSD  Chapter.  With  regard  to  labour  policy  issues,  the  EU  underlined  the  need  of  ensuring 
progress in the implementation of ILO fundamental conventions and the situation with regard 
to freedom of association. Korea provided information on the domestic context and the efforts 
made  to  ratify  ILO  fundamental  conventions,  and  on  the  situation  regarding  freedom  of 
association.  In  this  respect,  the  EU  considered  that  these  matters  would  require  further 
discussion. Korea  also presented  the  challenges  it  faces  regarding  youth  unemployment  and 
the  '4th  Industrial  Revolution'  and  referred  to  in  that  regard  to  the  importance  of  social 
dialogue.  The  EU  also  provided  information  on  the  policy  paper on  the  EU  Pillar of  Social 
Rights and made a presentation on actions taken to promote social dialogue.  

The  EU  and  Korea  also  evaluated  their  cooperation  project  on  the  implementation  of  ILO 
Convention  111  on  discrimination  in  employment  and  occupation,  which  was  seen  as 
meaningful  in  offering  greater  understanding  between  Korea  and  the  EU,  since  overcoming  
gender discrimination was seen as a common challenge. 

The  TSD  Committee  meeting  also  discussed  environment  policy  issues,  where  the  EU  and 
Korea  exchanged  information  on  their  respective  actions  to  promote  the  Circular  Economy, 
including  waste  management.  Korea  and  the  EU  considered  that  further  cooperation  and 
exchange of information would be of mutual benefit and Korea would consider the EU offer 
of a Circular Economy Mission to Korea. The EU and Korea also exchanged information on 
their  respective  efforts  to  ratify  the  Minimata  Convention  on  Mercury.  Korea  and  the  EU 
discussed their efforts with regard to combatting illegal trade in eels within the framework of 
CITES  and  with  regard  to  reaching  biodiversity  targets  set  under  the  Convention  on 
Biological Diversity. 

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On cooperation on climate change, the EU stressed the importance of collaboration between 
strategic partners and the G20 leadership role with regard to the implementation of the Paris 
Agreement and the importance of coherent climate policies. Korea and the EU reviewed the 
ongoing cooperation project on Emission Trading Systems, which was going well, and agreed 
that the involvement of other Korean ministries would be beneficial to the project. 

The Commission used a  multitude  of other  channels  to  communicate its concerns regarding 
the labour rights situation in Korea and to press for further progress. The concerns were raised 
at the Trade Committee, in correspondence from the Commissioner for Trade to her Korean 
counterpart and in numerous bilateral contacts, including by the EU Delegation in Korea. 

The implementation of the TSD Chapter was also supported by an active participation from 
civil  society  through  the  EU  and  Korean  Domestic  Advisory  Groups  (DAG),  which    since 
September 2015 met four and eight times respectively. The EU DAG was particularly active 
in  presenting  members'  opinions  regarding  the  labour  rights  situation  in  Korea.  The  fifth 
meeting of the Civil  Society Forum, which brings together the  EU  and Korean  DAGs, took 
place on 20-21 March 2017 in Brussels and was preceded by a workshop on Corporate Social 
Responsibility.  The  Forum  issued  recommendations  to  the  EU  and  Korea  on  the 
implementation of the TSD Chapter. 

6. 

SPECIFIC AREAS SUBJECT TO REPORTING OR MONITORING 

In accordance with article 3 (3) of Regulation (EU) No 511/2011 of the European Parliament 
and  of  the  Council  of  11  May  2011  implementing  the  bilateral  safeguard  clause11,  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 sensitive sectors and those 
sectors to which monitoring has been extended. The evolution of EU imports from Korea in 
the sectors covered by the monitoring (cars, textiles, electronics) and the results of the specific 
monitoring  on  duty  drawback  are  presented  in  the  Commission  Staff  Working  Document 
attached to this report. 

7. 

MAIN OPEN ISSUES AND FOLLOW-UP ACTIONS 

Full and correct implementation of the EU-Korea FTA continues to be of key importance, in 
order to bring the expected benefits to both sides.  

The EU has serious concerns in particular in the area of trade and sustainable development, 
i.e. on insufficient progress on the ratification and implementation of ILO conventions and on 
protection  of  labour  rights  in  Korea.  The  Commission  will  engage  closely  with  the  new 
Korean government in order to address them, and continue its cooperation with the EU DAG  
and with the Civil Society Forum comprised of stakeholders from all sides. 

The EU has a particular interest in exporting again beef to the Korean market which has been 
closed  to  all  EU  imports  since  January  2001.  The  acceptance  of  the  principle  of 
regionalisation  for  animal  diseases  by  Korea  is  another  important  topic  in  the  sanitary  and 
phyto-sanitary area. 

11 

OJ L 145, 31.5.2011, p. 19 

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In  the  area  of  Intellectual  Property,  Korea  needs  to  establish  a  remuneration  system  for 
public  performance  rights.  It  also  needs  to  agree  to  protect  additional  Geographical 
Indications  and  accept  the  principles  of  the  regulatory  framework  for  postal  services.  Other 
market access and implementation issues relate inter alia to electronics, cars and machinery.    

Improvements in the areas of customs procedures could contribute to increase the preference 
utilisation rate, and further facilitate the participation of small and medium sized enterprises 
(SMEs).  Technological  changes,  for  instance  in  the  area  of  electronics,  will  require 
adaptations. 

The specialised committees and working groups established under  the EU-Korea FTA will 
continue to discuss and seek solutions to the implementation and market access issues, with 
the aim to produce tangible results. They have also proven to be useful fora to discuss current 
and up-coming regulatory developments and areas of future cooperation.  

Furthermore, the Commission will pursue exploratory discussions with Korea on a package of  
amendments to the FTA or its protocols, with the aim of reaching a balanced and mutually 
agreeable outcome.  

8. 

CONCLUSIONS 

The first six years of application show that the EU-Korea FTA has worked very well.  

EU  exports  of  goods  to  Korea  increased  by  59%  between  2010  and  2016.  Also  Korean 
exports  increased,  though  at    lower  pace  given    the  decrease  in  demand  in  the  EU  in  the 
context of  the financial crisis. This has turned the EU's trade in goods' deficit of 11.6 billion 
EUR in 2010 into a surplus of 3.1 billion EUR in 2016.  

EU  exports  of  services  to  Korea  increased  by  49%,  compared  to  32%  for  EU  imports  from 
Korea from 2010 to 2015. The EU had a 4.8 billion EUR trade surplus in 2015. 

Over the same period, EU inward FDI stocks increased by 59% and EU outward FDI stocks 
(EU investments in Korea) increased by 33%.  

Though  some  difficulties  persist  as  outlined  in  section  7,  in  the  vast  majority  of  areas  the 
implementation works well and strongly supports economic development on both sides. This 
was also recognised  in  the  resolution of the European  Parliament  which was  adopted  on 18 
May 201712. 

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http://www.europarl.europa.eu/sides/getDoc.do?type=TA&reference=P8-TA-2017-

0225&language=EN&ring=A8-2017-0123 

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