The EUㆍKorea FTA : Challenges and opportunities to China, Japan, Taiwan and South East Asia

1. The EUㆍKorea FTA: Challenges and opportunitiesto China, Japan, Taiwan and South East Asia Yonghyup Oh (CEPS, www.yongoh.net)

2. Bilateral trade agreements: assessments • Positive view: - Dialogues are fast and results are visible. - It could be the way to form a new global trade network, facing a hold-up of a global initiative as the Doha round since 2008. • Negative view: - Conflicting consessions with global agreement - Reinforcing regionalism - Spagetti bowl - Seemingly little impact of bilateral FTA on trade, etc. (view frequently seen in economics literature)

3. EU-Korea FTA predictions • Small, but positive gains to both parties • Relatively larger overall advantage to South Korea • Differing effects by sectors: - Expected gains for the EU: Services (retail and wholesale trade, transportation services, financial services, business services), goods (phamaceuticals, auto parts, industrail machinery, electronics parts, some agricultural products and processed foods) - Expected gains for South Korea: manufacturing of passenger automobiles, ships, telecommunications devices, chemical products and imaging equipment) Very comprehensive with almost complete tariff phase-out and no clause on sanctions with worker’s rights and environment, nor on investment protection (unlike the US-Korea FTA).

4. EU-Korea FTA in ASEAN + 3 (China, Japan, Taiwan and Southeast Asia) • This area is one of the most active areas in the world in terms of bilateral FTA. The number of concluded FTAs is 166 (June 2011, ADB). They include Singapore (20), the PRC (12), Japan (11), India (11), Thailand (11), and Malaysia (10), Korea (7) with many FTAs under negotiation. • How did it affect to trade? It should be noted that the degree of the intra-regional trade variesby nation.

5. Intra-trade as percentage of the total by ASEAN+3 countries and trend of FTAs (See also Economist, Nov. 29th, 2011)

6. Asia’s FTA: Challanges • Improving Firm-Level Use of FTA Preferences • Tackling the Asian Noodle Bowl (Rules of Origine) • Promoting Comprehensive Coverage of Agricultural Trade • Increasing WTO-Plus Elements • Forming a Regionwide FTA (from Asian Development Bank)

7. EU-Korea FTA: Challenges and opportunities for other ASEAN + 3 • First mover advantage for Korea as a threat to other competing countries • If Korean entrepreneurs react well to the FTA preference from Korea, this could send a strong signal to competiting Asian firms operating in Europe. • The EU-Korea FTA is a starting step for strengthening of the EU-Korea diplomacy and international cooperation of the two parties in many fields. This could trigger different reactions by large (China, Japan) or small-medium nations or neighborhood situations. • However its impact on the trade with others by both parties in Asia would be moderate, as is the prediction on the effect of the EU-Korea FTA on bilateral trade. • The EU-Korea FTA is the first for the EU with Asian countries, somewhat unique in a noodle bowl of the Asia’s FTAs. This could help settle on the norm in Asian FTAs.

8. EU-Korea FTA: Challenges and opportunities for other ASEAN + 3 (con’t, work-in-progress)

9. Thanks!