By Martin Banks - 6th October 2010
“This agreement goes beyond taking down trade barriers”
Jamie Fortescue
The signing of a landmark trade deal between the EU and South Korea on Wednesday has been hailed as "excellent news" by the European spirits industry.
The deal, which comes into effect next July, aims to eliminate or cut tariffs on nearly all goods within the next several years.
The agreement will be signed in Brussels during the fifth EU-Korea summit.
A statement by the commission said, "The agreement requires the two parties to eliminate 98.7 per cent of duties in trade value for both industry and agriculture within five years, and to eliminate remaining tariffs almost fully over longer periods".
The EU is South Korea's second largest trading partner and South Korea is the EU's eighth biggest trading partner.
The FTA was greeted by the European Spirits Organisation whose DG Jamie Fortescue said, "This deal gives a new boost to Europe's drive for economic recovery based on export-led growth. It is excellent news for the European spirits industry."
He said the agreement, which will eliminate a number of restrictive trade rules, will remove up to €1.6 billion of customs duties, of which € 850 million will be removed from day one.
European spirits exports will grow significantly, he said, thanks to the elimination of import duties within three years.
Korea is a key market for European spirits exports, as currently only one type of local spirit accounts for 97 per cent of the market. Taking down trade barriers will open up tremendous opportunities for EU spirits exports, in particular Scotch whisky and French cognac – the leading exports into the region.
"This agreement goes beyond taking down trade barriers," added Fortescue.
"It also lays down fundamental intellectual property rules to crack down on counterfeit spirits and to protect geographical indications. It sets a first-class benchmark for future commercial agreements with key global players, including India - an important export market for European spirits."
With over €5bn in exports annually, the European spirits industry is the largest exporter in the agro-food sector.
"An added bonus is the fact that the EU is concluding its agreement with Korea before the US – Europe's main competitor in the all important whisky market. Experience demonstrates that first-mover advantage is invaluable in building brand loyalty so European spirits will have a competitive edge over their international competitors in Korea."
Italian automakers had initially resisted an FTA with South Korea fearing that their car industry would be overtaken by cheaper Korean imports.
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