South Korea and the European Union are on the verge of concluding a free trade agreement and are considering making a formal announcement at next month's meeting of Group of 20 leaders in London, an official said on Monday.
"I can say that we are very close" to reaching a deal, said Kim Hee-sang, the director of the free trade agreement coordination division at South Korea's Ministry of Foreign Affairs and Trade. Kim said the two sides will try to wrap up the negotiations during two days of talks next week in Seoul.
Trade between South Korea and the EU reached $98.4 billion in 2008. The EU is South Korea's second-largest trading partner after China, while the EU is the largest foreign investor in South Korea. The two sides have been negotiating to slash tariffs and reduce other barriers to commerce since May 2007. Automobile trade, which strongly favors South Korea, has been a contentious issue.
Kim also said that if negotiators finalize the agreement, the two sides are considering having their respective trade ministers "politically approve" the deal on the sidelines of the G-20 summit, scheduled for April 2.
Kim said South Korea and the EU have tentatively agreed to eliminate or phase out tariffs on 96 percent of EU products and 99 percent of South Korean goods within three years. He also said negotiators are working on an idea that would eliminate tariffs on small cars in five years and on mid-sized and large cars in three years.
South Koreans bought 32,756 vehicles from EU member states last year, according to the Korea Automobile Importers & Distributors Association, more than from Japan and the United States and accounting for 53.1 percent of the imported vehicle market. South Korea exported more than 623,000 vehicles to the 27-member EU in 2007, according to data provided by the Korea Automobile Manufacturers Association.
South Korea and the EU are both eager to conclude free trade agreements. South Korea reached one with the United States, its fourth-largest trading partner, in 2007, though legislative ratification of the deal has languished in political limbo in both countries.
Autos have been a focus of criticism for the deal in the United States, which also has a large deficit in the sector with South Korea.