Korea-EU Free Trade Agreement

An Expert's View about Food , Beverages and Tobacco in South Korea

Last updated: 17 Jul 2011

Korea-EU Free Trade Agreement (ROK-EU FTA) went into effect on July 1, 2011. This report provides a brief overview of the provisions of the agreement that impact agriculture trade.

THIS REPORT CONTAINS ASSESSMENTS OF COMMODITY AND TRADE ISSUES MADE BY USDA STAFF AND NOT NECESSARILY STATEMENTS OF OFFICIAL U.S. GOVERNMENT POLICY Voluntary Public - Date: 7/7/2011 GAIN Report Number: KS1127 Korea - Republic of Post: Seoul KOREA - EU FTA Report Categories: Trade Policy Monitoring Approved By: M. Kathryn Ting Prepared By: M. Kathryn Ting / Michael Francom / Yong Keun Ban / Kwon Joung Report Highlights: Korea-EU Free Trade Agreement (ROK-EU FTA) went into effect on July 1, 2011. This report provides a brief overview of the provisions of the agreement that impact agriculture trade. General Information: On July 1, 2011, the Korea-EU Free Trade Agreement (ROK-EU FTA) went into effect. This agreement has been hailed as Korea?s largest FTA to date. Under the agreement, nearly 98 percent of duties in terms of value will be phased-out over the next five years, based on a July-June year. The tariffs on most agricultural products will fall to zero when the agreement is fully implemented. In light of domestic sensitivities, rice and rice products were excluded from the agreement, while the base rate duties remain fixed for several items like onions, peppers, garlic, tangerines, naked and un-hulled barley, and food grade soybeans. In addition to the standard duty reductions, the ROK-EU FTA contains tariff-rate quotas (TRQ) on a range of products, including: flatfish, milk, food whey, butter, cheese, honey, oranges, malt, prepared milk, feed ingredients and dextrins (Table 1). These duty free quotas are administered by industry organizations or the Korea Agro Fisheries Corporation (aT), the government?s state trading body. The trade pact also contains safeguards for sensitive Korean agricultural products, including: beef, pork, apples, malt and malting barley, potato starch, ginseng, sugar, alcohol, and dextrins. Safeguards provide for duty increases when specified annual import volumes are exceeded; the annual import volumes and applicable tariff rates are described in Annex 3 to the Agreement. Of note, EU beef and apples currently do not have access to the Korean market due to sanitary and phytosanitary restrictions. The European Union was the fourth largest supplier of Korea's agricultural, fish and forestry imports in 2010 with imports totaling $1.7 billion or about 7 percent of the total. By comparison, imports from the United States - the largest supplier - during the same period reached $6.1 billion or 26 percent of total imports. Meanwhile, China, and Australia respectively supplied 14 and 9 percent of total agricultural, fish and forestry imports. The EU was a stronger player in certain categories. For example, even excluding $240 million in imports of spirits, the EU accounted for 44 percent of the remainder of Korean beverage (Chapter 22) imports. Accounting for $276 million or 41 percent of 2010 Korean pork imports, the EU is the third largest supplier of red meat and poultry (Chapter 2), after the United States and Australia. It is also the leading supplier of cocoa and products (Chapter 18), Dairy, Eggs and Honey (Chapter 4), and Lac, gums and resins (Chapter 13.) The EU trails China and Australia in Milling products, malts and starch (Chapter 11) and is a major supplier of baking related and prepared meat (Chapter 19) and fish (Chapter 16), which together account for $100 million worth of Korean imports from the EU annually. The two most talked about EU commodities that will benefit from the agreement are pork and wine. The 15 percent duty on wine fell to zero. We understand that much EU wine had been being held in bonded warehouse pending the tariff elimination on July 1. The duty on frozen pork bellies ? Europe?s top pork cut to Korea ?dropped 2.3 percent to 22.7 percent with the implementation of the agreement. However, this reduction will not be that significant this year since the government opened an additional 130,000 metric ton duty free quota for certain pork cuts from July 1-December 31, as noted in KS 1126. MIFAFF reports that they have allocated 57,000 metric tons under this duty-free quota as of July 5. Other agricultural goods whose duties dropped immediately to zero also included items such as breeding animals, tilapia, rock fish, cherries and strawberries. However, Korea imports very little, if any, of these duty free products from the European Union. The ROK-EU FTA negotiations began in April 2007 and the deal finished nearly a year-and-a-half later on October 2009. The deal was signed on Oct 2010 and ratified by the EU parliament in February 2011 and the Korean National Assembly on May 4, 2011. The ROK-EU FTA chronology is available on Korea?s Ministry of Foreign Affairs & Trade (MOFAT) website. The full text of the agreement is available on the European Commission website. Table 1 below provides details on the TRQ?s for agricultural products in the ROK-EU FTA. Table 2 shows the tariff treatment for the specific tariff lines constituting the bulk of ROK agricultural imports from the EU. Table 1 Ref TRQ No HS Number Product . Year Duty-free 2010 Out-quota Quota Imports duty (MT) from EU (MT) 1 800 customs 2 800 duties on 3 864 originating 4 933 goods 5 provided for 1,008 in the items in 6 1,088 staging 7 1,175 category ?12- 8 1,269 A? in a 9 1,371 Party?s 10 1,481 Schedule shall 11 1,599 remain at base 12 1,727 rates during years one through 1 0303.39.0000 Flatfish 1,090 nine. Beginning on the first day of year 10, customs duties shall be removed in four equal annual stages, and such goods shall thereafter be free of any customs 13 Unlimited duty 1 1,000 2 1,000 3 1,030 Milk 4 1,060 or cream powder 5 1,092 less than 1.5 0402.10.1010 percen 6 1,125 t fat and customs 0402.10.1090 buttermilk, Milk and 7 1,159 duties on 0402.10.9000 cream powder 8 1,194 originating 0402.21.1000 sweetened and 9 1,229 goods 0402.21.9000 unsweetened over 1.5 2 10 1,266 provided for 0402.29.0000 2,063 percent fat (whole 0402 11 1,304 in the items in .91.1000 milk powder), Milk 0402 12 1 staging ,343 .91.9000 and cream 0402.99.1000 13 category ?E? 1,384 (evaporated) 0402.99.9000 14 shall remain at 1,425 sweetened or base rates 0403.90.1000 15 1,468 unsweetened and/or no 16 1,512 t concentrated. After year 16, the in- 17 quota quantity shall remain the same as the quantity of year 16. 1 3,350 customs 2 3,350 duties on 3 3,450 originating 4 3 goods ,554 5 provided for 3,660 in the items in 6 3,770 staging 7 3,883 category ?10- 8 4,000 B? in a 9 4,120 Party?s 10 4,243 Schedule shall be reduced to 20 percent ad valorem on the date this Agreement 0404.10.1010 0404.10.1090 enters into 0404.10.2110 0404.10.2120 force and 3 Food whey 0 0404.10.2130 remain at 20 0404.10.2190 0404.10.2900 percent ad valorem through year two. Beginning on the first day of year three, customs duties shall be removed in nine equal annual stages, and such goods shall thereafter be free of any 11 Unlimited customs duty 1 350 customs 2 350 duties on 3 360 originating 4 371 goods 5 provided for 382 in the items in B 6 393 utter and other fats staging 7 405 4 0405.10.0000 0405.90.0000 and oils derived from 900 category ?10? m 8 417 ilk in a Party?s 9 430 Schedule shall 10 443 be removed in 11 equal annual stages beginning on 11 Unlimited the date this Agreement enters into force, and such goods shall thereafter be free of any customs duty 1 4,560 customs 2 4,560 duties on 3 4,696 originating 4 4 goods ,837 5 provided for 4,982 6 in the items in 5,132 staging 7 5,286 category ?15? 8 5,444 in a Party?s 9 5,608 Schedule shall Fresh, curd grated or 0406 10 5,776 .10.1000 be removed in powdered, 5 0406.20.0000 0406.30.0000 11 5,949 2,563 16 equal processed, and all 0406.900000 12 6,128 annual stages other cheeses 13 6,312 beginning on 14 6,501 the date this 15 6 Agreement ,696 enters into force, and such goods shall thereafter be free of any 16 Unlimited customs duty 1 50 2 50 3 51 4 53 5 54 6 56 7 57 8 customs 59 duties on 9 61 originating 10 63 goods 11 65 provided for 6 0409.00.0000 Honey, natural 12 67 15 in the items in 13 69 staging 14 71 category ?E? 15 73 shall remain at 16 75 base rates After year 16, the in- quota 17 quantity shall remain the same as the quantity of year 16. 1 20 customs 2 20 duties on 3 20 originating 4 20 goods 5 provided for 20 in the items in 6 20 staging 7 40 category ?S- 8 40 B? shall be 9 40 subject to the 10 40 following 11 40 provisions: 12 60 (i) for goods entered into Korea from 1 September through the end of February, customs duties shall remain at base rates; and (ii) for goods entered into Korea from 1 March 7 0805.10.0000 Oranges 260 through 31 August, Af customs ter year duties shall be 12, the in- reduced to 30 quota percent ad quantity 13 valorem on shall remain the date the same as this the quantity Agreement of year 12. enters into force and remain at 30 percent ad valorem through year two. Beginning on the first day of year three, customs duties shall be removed in six equal annual stages, and such goods shall thereafter be free of any customs duty 1 10,000 customs 2 10,000 duties on 3 10,800 originating 4 11 goods ,600 5 provided for 12,400 6 in the items in 12,772 staging 7 13,155 category ?15? 8 13,549 in a Party?s 9 13,956 Schedule shall Ma 10 14,375 be removed in lt and malting 8 1003.00.1000 1107.10.0000 11 14,806 2,637 16 equal barley 12 15,250 annual stages 13 15,707 beginning on 14 16,179 the date this 15 16 Agreement ,664 enters into force, and such goods shall thereafter be free of any 16 Unlimited customs duty 1 450 customs 2 450 duties on 3 463 originating 4 477 goods 5 provided for 491 6 in the items in 506 staging 7 521 category ?10? 8 537 in a Party?s 9 553 Schedule shall 10 570 be removed in Prepared dry milk 9 1901.10.1010 1901.10.1090 206 11 equal and other annual stages beginning on the date this Agreement enters into force, and such goods shall thereafter be free of any 11 Unlimited customs duty 1 5,500 customs 2 5,500 duties on 2309.90.2010 2309.90.2020 Supplementary feeds, 3 5,665 originating 10 9,049 2309.90.2099 2309.90.9000 animal 4 5,834 goods 5 6,009 provided for 6 6 in the items in ,190 7 6,376 staging 8 6,567 category ?12? 9 6,764 in a Party?s 10 6 Schedule shall ,967 11 be removed in 7,176 12 13 equal 7,391 annual stages beginning on the date this Agreement enters into force, and such goods shall thereafter be free of any 13 Unlimited customs duty 1 28,000 customs 2 28,000 duties on 3 30,500 originating 4 33,000 goods 5 35,000 provided for 6 36,050 in the items 7 37,131 in staging 8 38,245 9 category 39,392 10 40 ?12? in a ,574 11 41 Party?s ,791 12 43,045 Schedule shall be removed in 3505.10.40103505.10.4090 Dextrinsl 23,330 13 equal 3505.10.50103505.10.5090 11 annual stages beginning on the date this Agreement enters into force, and such goods shall thereafter be free of any customs 13 Unlimited duty Table 2 Tariff 2010 Rate Korean effective Imports July 1, from 2011 Tariff Percent EU ($ Base (Ad Elimination Annual Tariff Product HS Code million) Duty valorem) July 1 of - Reduction 0101901010, Horses, live 0101901090 4.601 8 6.67 2016 1.33 Chickens, live, for breeding 0105111000 2.567 9 0 2011 Ducks, geese, for breeding 0105191010 3.631 0 0 2.27 Pork, Streaky 0203291000 200.813 25 22.727 2021 SAFEGUARD 4.17 Pork, Other 0203299000 75.905 25 20.833 2016 SAFEGUARD Edible offal 0206499000 11.599 18 15 2016 3 Poultry parts, wing 0207141030 5.007 20 18.57 2024 1.43 Poultry parts, other 0207142090 1.350 27 24.55 2021 2.45 TRQ Table 1 Flat fish 0303390000 2.076 10 10 2023 Ref 1 Frozen Blue fin tuna, not fillet 030345 7.839 10 0 2011 Toothfish 0303620000 1.465 10 7.5 2014 2.5 2.5 (last 4 Mackerel, exc fillet 030374 2.074 10 10 2023 years only) Frozen Rock Fish, not fillet 0303799070 2.830 10 9.5 2021 variable Skate 0303799093 1.339 10 9.09 2021 0.91 Ray 0303799096 1.315 10 9.09 2021 0.91 Blue fin tuna, fillet 0304295000 11.203 10 7.5 2014 2.5 Milk & cream, not concentrated or sweetened, fat content > 6%, not frozen 0401309000 5.878 36 33.43 2024 2.57 TRQ Skim milk powder 0402101010 6.336 176 176 NA Table 1 Ref 2 0404102129, 0404102139, 2.2 beginning Whey, Modified for 0404101019, 2013TRQ, food 0404102199 14.532 49.5 20 2021 Table Ref 3 Products of natural milk constituents 040490 57.458 36 32.73 2021 3.27 9.09, TRQ, Table 1 Butter 0405100000 4.596 89 80.91 2021 Ref 4 Dairy spreads 04052000 0.978 8 0 2011 2.25 Cheese, unprocessed TRQ, Table 1 (fresh) mozarella 0406101010 10.409 36 33.75 2026 Ref 5 2.25 Cheese, unprocessed, TRQ, Table 1 other 0406101090 7.032 36 33.75 2026 Ref 5 Grated or powdered 5 cheese 040620 2.623 36 33.75 2026 Cheese, Not elsewhere 2.25 TRQ, specified, gouda 0406902000 2.838 36 33.75 2026 Table 1 Ref 5 2.25 Cheese, Not elsewhere TRQ, Table 1 specified, other 0406909000 3.253 36 33.75 2026 Ref 5 Guts, bladders 0504001090 3.632 27 25.07 2024 1.93 Down 050510 2.287 3 2016 0.50 Bulbs, tulip 0601101000 1.348 8 0 Bulbs, lily 0601102000 5.485 4 0 Live plants, other 0602901090 1.318 8 0 Dried Veg 0712902099 0.375 30 26.25 2018 3.75 5.0 beginning 30 (excl 2013 Sep 1-Feb TRQ Table 1 Oranges 0805100000 0.272 50 28) 2018 Ref 7 Raspberry, blackberry, mulberry lignons, froz 0811200000 0.540 30 25 2016 5 Coffee, not roasted, not decaf'090112 090112 2.925 2 0 2011 Coffee, roasted, not decaf 090121 12.354 8 6.67 2016 1.33 Wheat, other than durum 100190 91.645 3 0 2011 Applied Corn, for processing 1005909000 70.576 328 304.57 2024 23.42 Potato Starch 1108130000 31.508 455 425.56 2026 SAFEGUARD Wheat gluten 1109000000 4.049 8 0 2011 Forage seeds 120929 2.322 0 0 2011 Veg seeds for sowing 120991 8.461 0 0 2011 Vegetable saps and extracts, other 1302199099 23.450 8 0 2011 Pectin 1302200000 5.961 8 0 2011 Olive oil, virgin 150910 30.698 8 6.66 2016 1.33 Sun/safflower seed oil, refined 1512191010 7.413 10 8.33 2016 1.66 Veg. Fat and Oil, NES 1515909090 45.923 8 6.66 2016 1.33 Edible oil, NES 1517909000 5.428 8 6.66 2016 1.33 Sausage 1601001000 1.350 18 15 2016 3 Swine meal and offal, excl liver, in airtight container 1602491000 7.931 30 25.71 2017 4.28 BAI Top shells, prep and preserved 1605909030 26.842 20 16.66 2016 3.33 Other 1605909090 4.423 20 16.66 2016 3.33 Pure lactose, lactose 1702119000 3.541 20 18.18 2021 1.82 Pure lactose, other 1702909000 16.307 8 6.66 2016 1.33 Confectionary 1704902090 6.245 8 6.66 2016 1.33 Confectionary 1704909000 2.636 8 6.66 2016 1.33 Cocoa powder, unsweetened 1803100000 7.492 5 0 2011 Chocolate confectionary 1806201000 13.743 8 6.66 2016 1.33 Cocoa, > 2 kg blocks, >50 % cocoa 1806209010 18.823 8 6.66 2016 1.33 3.27 TRQ, Table 1 Infant formula 1901101010 1.482 36 32.73 2021 Ref 9 Extract, Mix 1901209000 2.791 X No change Extract, fat > 30% 1901902020 7.079 36 34.29 2031 1.71 Spaghetti, (pasta cont egg) 1902111000 11.399 8 6.66 2016 1.33 Pasta, (cont no egg) 1902199000 6.150 8 0 2011 Corn flakes 1904101000 1.179 5.4 0 2011 Prepared food, Swelled and roasted grain, other 1904109000 1.619 5.4 0 2011 Grape juice 2009690000 1.914 45 0 2011 Juice, other 2009801090 1.923 50 43.75 2018 6.25 Vegetable juice 2009802000 2.454 30 25 2016 5 Juice Mixtures 200990 1.394 50 2011-2023 Coffee Extracts 210111 2.148 8 6.66 2016 1.33 Essences/concentrates 210112 3.405 8 6.66 2016 1.33 Yeast, Baking 21021030 4.378 8 6.66 2016 1.33 Yeast, Other 2102109000 5.264 8 6.66 2016 1.33 Ice cream 2105001010 5.357 8 7 2018 1 Ice cream 2105001090 3.457 8 7 2018 1 Food preparations, cola 2106901010 13.900 8 0 2011 Food preparations, other 2106908099 25.816 8 6 2012 2 Food preparations, >70%butter 2106909023 12.900 8 7 2018 1 Waters, unsweetened 220110 6.996 8 6.67 2016 1.33 Waters sweetened 220210 4.674 8 0 2011 Non-alch bev, of fruit juice 2202902000 0.930 9 0 2011 Beer 2203 16.466 30 26.25 2018 3.75 Wine 220410,220420 65.418 15 0 2011 Spirits 2208 239.201 20 Cognac 2208201000 7.276 15 12.5 2016 2.5 Grape brandy, other 2208209000 1.673 15 12.5 2016 2.5 Scotch whiskey 2208301000 223.551 20 15 2014 5 Vodka 2208600000 2.581 20 16.67 2016 3.33 Liquers & Cordials 2208709000 2.738 20 16.67 2016 3.33 Vinegar 2209 2.071 8 6.67 2016 1.33 Fish meal 2301201000 10.024 5 4.166 2016 0.83 Residue starch 2303100000 1.213 0 0 2011 Beet Pulp 2303200000 4.794 5 0 2011 Animal feed, for pigs, retail pack 2309901010 4.650 4.2 0 2011 Animal feed, for fish, retail pack 2309901030 3.387 5 0 2011 3.89 TRQ, Table 1 Animal feed, flavorings 2309902020 3.370 50.6 46.708 2023 Ref 10 3.89 TRQ, Table 1 Animal feed, other 2309902099 7.738 50.6 46.708 2023 Ref 10 Animal feed, antibiotics 2309903010 2.528 5 0 2011 Animal feed, vitamins 2309903020 1.435 5 0 2011 Animal feed, other 2309903090 1.373 5 0 2011 3.89 TRQ Table 1 Other 2309909000 6.360 50.6 46.708 2023 Ref 10 Tobacco, partially stemmed, oriental 2401203000 10.351 20 18.18 2021 1.82 Tobacco, partially stemmed, other 2401209000 20.519 20 18.18 2021 1.82 Tobacco sheets 2403911000 2.735 32.8 29.82 2021 2.98 3301299000 2.643 5 0 2011 3301904800 3.413 8 0 2011 Casein, for coffee creamer 3501901110 10.858 8 6.67 2016 1.33 Casein, other 3501901190 6.015 20 16.67 2016 3.33 Dextrin 3505101000 1.559 8 0 2011 29.67 TRQ, Table 1 Dextrin and modified Ref 11 starch. Other 3505105010 19.474 385.7 356.03 2023 SAFEGUARD 29.67 TRQ, Table 1 Dextrin and modified Ref 11 starch for food 3505105090 4.716 385.7 356.03 2023 SAFEGUARD Bovine,equine hides and skins, whole, fresh or wet salted 410150+B38 4.181 1 0 2011 Bovine,equine hides and skins, w/o hair, wet nes 4104190000 1.460 5 0 2011 Hides and skins, tanning reversible 4107190000 9.500 5 0 2011 Grain splits 4107920000 7.400 5 0 2011 Bovine leather, other 4107990000 13.743 5 0 2011 Raw furskins 4301 42.748 3 0 2011 Hides and skins, lamb 4302199020 1.524 5 0 2011 Hides and skins, tanned ot dressed, whole 4302300000 6.391 5 0 2011 Rough wood, spruce 4403207000 3.267 0 Coniferous wood, Sawn, 4407107000 10.384 5 4 2016 1.00 spruce wood Veneer, <6 mm, nonconiferous, patterned 4408909992 1.576 3 2.5 2016 0.50 Board, continuously shaped 4409 22.076 8 6.67 2016 1.33 Particle Board 4410111000 17.652 8 6.86 2018 1.14 Fiberboard 441192 1.873 8 6.86 2018 1.14 Plywood, veneer & laminate, non coniferous, floorboard 4412324000 7.607 11 8.8 2016 2.20 Plywood, veneer & laminate, non coniferous, other 4412325000 1.553 11 8.8 2016 2.20 Plywood, veneer & laminate, non coniferous, floorboard 4412326000 2.839 11 8.8 2016 2.20 Plywood, veneer & laminate, non coniferous, other 4412327000 2.542 11 8.8 2016 2.20 Plywood, veneer & laminate, NES, other 4412991031 2.412 11 8.8 2016 2.20 Plywood, veneer & laminate, NES, floorboard 4412991041 2.807 11 8.8 2016 2.20 Densified wood blocks 441300 5.868 8 6.67 2016 1.33 Cotton ?5201009050 2.705 0 Notes: Safeguards, which provide for duty increases when specified annual import volumes are exceeded, are described in Annex 3 to the Agreement. A number of products are included in tariff-rate quotas Korea has implemented to meet its WTO market access commitments or are subject to temporary tariff reductions as anti-inflationary measures. Rules of origin also apply.
Posted: 17 July 2011, last updated 17 July 2011

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