MEPs Delay Vote On Korean FTA

by Mary Swire, Tax-News.com, Hong Kong

Thursday, September 09, 2010

The European Parliament (EP) has approved safeguard measures applying to the free trade agreement (FTA) between the European Union (EU) and South Korea by a show of hands, but postponed a final vote until next month to allow for agreement with the European Council (EC).

The EU-South Korea FTA was initialed on October 15, 2009. The EC is expected to decide on September 10 whether to authorize the signing of the agreement, which, however, can only enter into force after the EP has also given its consent. That consent vote is scheduled for November this year.

The safeguard measures which the EP has proposed should be inserted into the FTA would allow 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.

An investigation into the need for such measures could be initiated by any member state, the European Commission (EC), the EU-Korea Domestic Advisory Group, the EP or associations representing at least 25% of the particular industry. If increases in imports primarily affect the domestic industry in one or more member states, but not all, the EC could, exceptionally and temporarily, authorise safeguard measures limited to those countries.

The EP also wishes to introduce a special monitoring system for the car manufacturing and related industries, as these will be among those most exposed to increased competition after the FTA enters into force.

Because these safeguard measures need to be agreed on with the EC, the EP has postponed its vote on them until October in order to allow time for that agreement to be reached. The Lisbon Treaty gives the EP co-decision powers in defining common commercial policy implementing measures such as the safeguard clause. This is the first time that the EP has exercised these new powers.

The FTA will be able to be signed only after both the safeguard regulation (co-decision between the EC and EP) and the FTA (EP consent) have been adopted.

It has also been further reported from South Korea that there will be a ministerial meeting this month between the two sides to discuss the way forward to the completion of the FTA by the end of the year.