EU-S. Korean FTA to Cost Taiwan US$640M. in Trade

Taipei, Sept. 23, 2010 (CENS)--The European Union (EU) recently agreed to sign a free trade agreement (FTA) with South Korea, with the accord to take effect July 1, 2011 and make S. Korea the first Asian nation to sign FTA with EU.

The FTA between the EU and S. Korea, long-time trade rival against Taiwan, is expected to cost Taiwanese industries an estimated US$640 million initially.

S. Korea has in recent years been aggressive to facilitate trade with major economies. In 2007 it signed FTA with the U.S., and plans to do the same with Canada, Japan, China, Russia, Mexico, Australia etc.

Taiwan's economic officials say the FTA between S. Korea and EU will allow export of 97% of EU-made products to S. Korea duty-free, including cars, auto parts, agricultural & fishery products, textiles, machinery etc.

The EU imposes taxes ranging from 3.96% to 13.06% on the above-mentioned products imported from Taiwan, which will be handicapped in trade with the EU when competing against S. Korea. Taiwan, due to the FTA, may initially lose US$640 million in trading machinery, processed food, transportation equipment, plastic & rubber products, and textiles.

To remain competitive, Taiwan is now also negotiating to sign soon an FTA with the EU, with such accord to be mutually beneficial, enabling Taiwan's GDP to grow 0.49% and EU's to rise 2.4 billion euro.