10 Years of the Korea-EU FTA: "Korean Automobiles, Batteries, and Chemicals Benefit from Leading the European Market"

[Asia Economy Reporter Su-yeon Woo] An analysis has emerged that South Korea has greatly benefited from the first-mover advantage in the European market through the Korea-EU Free Trade Agreement (FTA), which marks its 10th anniversary this year. It is claimed that by signing the FTA with the EU in July 2011, the first Asian country to do so, South Korea was able to quickly capture the European market ahead of its competitors.

According to the "Korea-EU FTA 10th Anniversary Achievements and Implications" report published on the 1st by the Korea International Trade Association's International Trade and Commerce Research Institute, South Korea has benefited in sectors such as automobiles, batteries, chemical products, and certain agricultural and marine products since the FTA came into effect.

In the case of automobiles, with the elimination of EU import tariffs, exports reached $8.4 billion in 2019, more than doubling from $3.3 billion in 2010. Although exports of internal combustion engine vehicles have declined since 2017 due to increased local production, exports of electric vehicles surged from $200 million in 2017 to $4.6 billion in 2020, driving overall automobile exports. Lithium-ion batteries, a key component of electric vehicles, also saw tariffs eliminated immediately upon the FTA's enforcement, allowing exports to steadily increase under more favorable conditions compared to competing countries.

Source=Korea International Trade Association

Chemical product exports also grew significantly, from $1.2 billion in 2010 before the FTA to $7.1 billion in 2020, with an average annual growth rate of 19.2%, notably marked by an increase in exports of cathode materials, one of the battery components. Although imports from the EU still exceed exports in agricultural and marine products, exports reached $450 million in 2020, a 125% increase compared to before the FTA. Korean products such as tuna, mushrooms, kimchi and seasoned seaweed, and beverages mainly benefited from the FTA tariff advantages.

The Korea-EU FTA also contributed to diversifying sources of imports for materials, parts, and equipment. In 2010, Japan accounted for 32.6% of Korea's material imports and the EU 10.1%, but after the FTA took effect, Japan's share fell to 20.8% in 2020, while the EU's share rose to 13.6%.

The report stated, "Since the Korea-EU FTA came into effect, premium consumer goods from the EU have aggressively entered our market, which in turn has provided an opportunity for our companies to enhance their non-price competitiveness such as technology, quality, and design," adding, "As imports of automobiles from the EU increased, the number of domestic new car models also rose, and while China dominated the mid-to-low price market in home appliances, our companies timely transitioned to premium products through competition with European brands."

Jung-hwan Hong, senior researcher at the Korea International Trade Association, said, "Recently, the EU has been raising environmental and human rights standards and restructuring supply chains to reduce dependence on China, which can also present new opportunities for our companies," emphasizing, "With fierce competition expected due to competing countries signing EU FTAs, our companies should strategically utilize the Korea-EU FTA, which has fully eliminated tariffs after 10 years of enforcement."

Meanwhile, to commemorate the 10th anniversary of the Korea-EU FTA, the Korea International Trade Association will hold an online conference at 4 p.m. today to evaluate the achievements of the past decade and share future prospects. Presentations will be given by Hyun-jung Je, head of the Trade Support Center at the Korea International Trade Association, and Markus Beyer, Secretary General of BusinessEurope. The subsequent panel discussion will include former French Ambassador Hye-min Lee, along with businesspeople and experts from both countries, who will share comprehensive opinions on the Korea-EU FTA.

This content was produced with the assistance of AI translation services.