And that’s not all as FTAs come into force July 1
Here’s a new take on the classic UK-centric newspaper headline, “Fog in Channel. Continent Cut off.” The BBC reports that “South Korea lifts Scotch whisky import barriers”. True, as far as it goes: Effective today, a new free trade agreement eliminates 70% of all tariffs immediately (98.7% within five years) between the 27-member European Union, the world’s largest economic bloc, and South Korea, Asia’s fourth largest economy.
Back to the Scotch: the South Korea-EU FTA phases out Korea’s 20% spirits import duty as well as specific labeling and warehousing requirements for the whisky, which was the UK’s biggest export to South Korea in 2010.
The EU announcement provides a bigger picture. The FTA is expected to create new trade in goods and services for the EU worth €19.1 billion (about US$27.6 billion), and to more than double South Korea-EU bilateral trade in the next 20 years compared to a scenario without the agreement.
Now for the US-centric viewpoint. As the Associated Press reports, this a “come from behind victory” for the EU, which opened negotiations on its FTA with Korea a month after the US signed an FTA with Korea that still awaits Congressional approval. “The earlier entry into force of the Korea-EU FTA is really significant,” Choi Seok-young, Seoul’s top free trade negotiator, told the AP, citing the lowering of tariffs. “US competitors in the Korean market and EU market would face comparatively disadvantaged positions from today onward.”
Also entering into force July 1 are the FTAs between Colombia and European Free Trade Association (EFTA) member Switzerland, and Peru with EFTA members Switzerland and Liechtenstein.
Colombia Reports notes that the Colombia-Switzerland FTA is part of a larger agreement with EFTA, which also includes Iceland, Norway and Liechtenstein. Although developed and signed jointly, the implementation process is different for each country. By concluding its implementation first, Switzerland becomes the first developed country to sign such an agreement with Colombia. (The Colombia-Canada FTA which had been set to take effect July 1 is now to go into force August 15.)
Across the Pacific, the India-Malaysia Comprehensive Economic Cooperation Agreement (CECA) takes tariff liberalization beyond ASEAN FTA commitments (to which both countries are party) today. This is India’s fourth such bilateral agreement (the others are with Singapore, South Korea, and Japan). Trade between India and Malaysia reached US$10 billion in 2010-11, an increase of 26% from the previous year, India’s Ministry of Trade and Commerce reports. It is expected that the CECA coming into force July 1 will boost bilateral trade to US$15 billion by 2015.