Final compromise on the safeguards agreement of free trade EU-South Korea

The free trade agreement between the EU and South Korea took another step forward on January 26, 2011 the final compromise reached to safeguard the Council in mid-December 2010.

The safeguard measures would enable the EU to suspend further reductions in customs duties or increase them to previous levels, if lower rates were to lead to an excessive increase in imports from South Korea, causing or threatening to cause “serious injury” to EU producers.

Back in September, MEPs approved Parliament’s amendments to the safeguard measures. However, they postponed the final vote on the agreement to allow more time for negotiations with Council on outstanding issues, with a view to reaching a first-reading agreement.

In the negotiations, MEPs have pushed for a simple, effective safeguard clause to tackle any surge in South Korean imports and also to make the EU-South Korean free trade agreement more attractive to European industry.

“The position of the Members of the European Parliament has always been united in the negotiations with the Council,” said Parliament’s rapporteur and chief negotiator Pablo Zalba Bidegain (EPP, ES), adding that MEPs “have added a series of elements of protection, and thanks to these elements the European industry, in particular the EU automotive industry, is now better covered.”

Main improvements introduced by Parliament

MEPs have made a number of changes to the legislation. First, the European Parliament as well as industry will now have the right to ask the Commission to launch an investigation that could lead to activation of the clause, and the Commission may now look at a wider range of factors when determining if any “injury” has been caused.

The definition of products subject to the safeguard clause has been clarified, which is of particular importance to the automotive industry.

The Commission will introduce surveillance measures, especially for the most sensitive sectors, if there is a rise in imports concentrated in one or several EU Member States.

Monitoring will be tightened up, especially of products which might be affected by the duty-drawback clause. Information on the monitoring of these products will be shared regularly with Parliament, the Council and EU industry.

Another key change by Parliament is on compensation. Any Member State applying for aid under the European Globalisation Adjustment Fund may refer to the safeguard clause.

The Commission will have to report to the interested parties all decisions relating to safeguard measures as well as statistics on EU-South Korea trade.

A new online platform will be set up to make the exchange of information between Commission and interested parties easier and to save time.

Lastly, as regards the free-trade deal South Korea reached recently with the USA, the Commission has formally assured MEPs that if anything changes in this agreement, it will automatically apply to Europe as well.

Free trade agreement on the way

Following two and half years of negotiations, the EU-South Korea free trade agreement was signed at the EU-South Korea summit in Brussels on 6 October. However, it can only enter into force after both the safeguard regulation (co-decision) and the free trade agreement (consent) have been adopted by Parliament. The free-trade agreement will be put to the vote in the International Trade Committee on 7 February.

The Lisbon Treaty gives Parliament co-decision powers over common commercial policy implementing measures, such as the safeguard clause. This is the first time that Parliament has exercised these new powers. For the free trade agreement itself, only Parliament’s consent is needed.

Next steps

The whole Parliament will vote on the safeguard clauses during its plenary session in mid- February in Strasbourg. The committee will vote on the report on the EU-South Korea free trade agreement, drafted by Robert Sturdy (ECR, UK), on 7 February. This report is also expected to be put to the vote in plenary in mid-February.

Both the EU-South Korea free trade agreement and the safeguard regulation are due to come into force in July 2011.

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