South Korea, EU Enter Free-Trade Talks

Bilateral free trade agreements do not contradict efforts to forge a multilateral deal under the World Trade Organization, but instead help fill key gaps, the European Union trade chief said Sunday in announcing the start of two-way negotiations with South Korea.

"They add to the sum total of world trade and they reach into areas and to heights of trade opening that cannot be achieved in the current round of multilateral talks," European Union Trade Commissioner Peter Mandelson told reporters.

His remarks came at a news conference with Trade Minister Kim Hyun-chong of South Korea formally announcing the launch Monday of free trade negotiations between the 27-member EU and Asia's third-largest economy.

South Korea, fresh from a landmark agreement with the United States last month, has been aggressively seeking deals, forging a group accord with nine of the 10 members of the Association of Southeast Asian Nations, as well as smaller countries such as Chile.

Kim said over 50% of global trade volume occurs among countries that have reached free trade agreements, while foreign trade accounts for nearly 70% of South Korea's economy.

"As such, opening our market is not a matter of choice but a matter of survival," said Kim, who sees his country becoming a free trade "hub linking Europe, Asia and the United States."

The EU, meanwhile, agreed Friday to start free trade talks with ASEAN.

Mandelson said, however, that the ultimate prize remains a multilateral World Trade Organization agreement under the ongoing Doha Development Round of talks _ named after the Qatari capital where they were launched in 2001.

"We rightly prioritize the Doha round because it will deliver trade benefits to both Korea and the EU that no single bilateral agreement can match," Mandelson said. "I see any bilateral agreement between us as a complement to the DDA, not an alternative to it."

The Doha effort has stalled mostly due to disagreements over rich nations' refusal to slash farm subsidies and poor countries' reluctance to grant greater access to their markets.

Top trade representatives from six key WTO members last month proposed at a meeting in New Delhi a new end-of-year deadline to complete negotiations. The talks have missed several deadlines already, the last being December 2006.

"It is indeed a crucial moment for the Doha round and the coming weeks will determine the outcome of our negotiations for the foreseeable future," Mandelson said.

South Korea and the EU did nearly US$80 billion (euro59 billion) of trade last year. The EU is South Korea's second-biggest trading partner after China and bigger than Japan and the United States, the third and fourth largest. The EU is the biggest foreign investor in South Korea.

If successful, an EU free trade deal would be South Korea's biggest, exceeding that with the United States.

The EU's economy in 2005 totaled US$13.5 trillion (euro9.9 trillion), according to International Monetary Fund figures provided by South Korea, making it larger than the U.S. at US$12.5 trillion (euro9.2 trillion).

South Korea is seeking to increase exports to the EU of automobiles, textiles, electronics, movies and music, Kim said, as well as access for South Korean professionals such as architects and nurses.

Mandelson said the EU would be looking to increase exports of autos and gain greater access to South Korea's service sector.

"I take pride in every European car which I see on the streets of Seoul," Mandelson said. "But I would like to see very many more."

According to the Korea Automobile Importers & Distributors Association, the EU exported 18,010 vehicles to South Korea in 2005 for a 58.3% share of the import car market, beating out Japan and the U.S. by a wide margin.

South Korea and the United States carried out their 10 months of talks with a deadline dictated by the expiry of President George W. Bush's special trade negotiation powers. They reached the agreement on April 2 in Seoul with just minutes to spare.

Talks between South Korea and the EU have no particular deadline, though both Kim and Mandelson called for their conclusion in a timely manner.