European Parliament 2014-2019
Committee on International Trade
23.5.2016
MISSION REPORT
following the INTA delegation to South-Korea
Committee on International Trade
Members of the mission: Bernd Lange (S&D) (Leader of the mission) Adam Szejnfeld (PPE) David Martin (S&D) Joachim Schuster (S&D) Hannu Takkula (ALDE) Klaus Buchner (Verts/ALE) David Borrelli (EFDD) Nirj Deva (ECR)
Secretariat of European Parliament: Heikki Suortti Administrator Leon Peijnenburg Administrator
Accompanying Members: Ralf Kühne (S&D) Urša Pondelek (ALDE) Martin Köhler (Verts/ALE) Stefano Felician (EFDD)
CR\1095601EN.doc PE583.873v01-00
EN United in diversity EN Introduction
Chaired by INTA Chairman Mr Bernd Lange (S&D); with Mr Adam Szejnfeld (EPP) - INTA Standing rapporteur for Korea, Mr David Martin (S&D) - INTA Coordinator, Members: Mr Joachim Schuster (S&D), Mr Hannu Takkula (ALDE); Klaus Buchner (Greens) and David Borrelli (EFDD); accompanied by Mr Nirj Deva - Chairman of the Delegation for Relations with Korea; 14 staff: 4 group advisors, 2 INTA Secretariat, 8 interpreters.
The Committee met with key-interlocutors and stakeholders in Korea regarding the implementation and possible revision of the EU-Korea FTA, including the former chief negotiator of the EU Korea FTA, the present Deputy Minister for trade negotiations in the Ministry of Trade, Industry and Economy, the Minister for Agriculture, Deputy and Vice Ministers for Economic Affairs in the Ministry of Foreign Affairs, key members the Committee on Trade, Industry and Energy of the National Assembly of Korea, the European Chamber of Commerce in Korea, the Korea Automobile Importers & Distributors Association (KAIDA), representatives of Samsung Electronics (Korean major single stakeholder of the FTA in relation to electronics), representatives of the Korean Trade Unions, an environmental member of the Korean Domestic Advisory Group, Commercial Counsellors of the Member States in Korea, the US Ambassador, and key academic university professors in the field of international trade and EU-Korea relations. The Delegation also visited the Joint Security Area/Demilitarized Zone in the context of the Kaesong Industrial Zone.
Summary account of meetings
Members underlined the importance of the EU Korea FTA as the first new generation comprehensive FTA given consent by Parliament. Parliament is committed to continue monitoring of its implementation. The Korean interlocutors agreed that the FTA is a success story in many aspects. Members stressed that present trade figures should not be taken as the basis for final assessment of the agreement. Both sides agreed that the FTA should be updated if necessary. Members in principle welcomed the ongoing process. There were strong objections regarding the Korean request to include ISDS provisions in connection to investment protection provisions. Investment protection should nevertheless be given thorough consideration. Currently, ICS is the only available and workable model for possible dispute settlement. Members also underlined the importance of respecting labour standards as part of the FTA and called for the ratification of core ILO conventions. Civil society organisations must also be fully involved in the monitoring of the implementation of commitments by the parties to the FTA. Members also called on companies to take up their corporate social responsibility.
Main meetings
Meeting with Ambassador of the EU Delegation to the Republic of Korea
The Delegation was briefed by the Ambassador of the EU Delegation to the Republic of Korea, Dr Gerhard Sabathil. The briefing covered the current political situation, assessment of the results of the elections of the National Assembly in April, developments in the Korean
PE583.873v01-00 2/2 CR\1095601EN.doc EN economy, situation on the Korean Peninsula, Korean trade relations and the implementation and impact of the EU - South Korea FTA in particular.
Meeting with Minister Mr. Lee Dong-Phil, Ministry of Agriculture
While accepting requests for more speedy SPS authorisation procedures, the Minister of Agriculture called for cooperation on animal diseases, and regional cooperation. In addition, he requested that efforts should be made to speed up the authorisation procedures for the Korean traditional chicken soup. Generally, GI's are not problem for Korea, though Korean GI's are less familiar to consumers. The Minister reminded that in comparison to the EU, Korea is a small country, with self-sufficiency in agricultural products less than 50%. Agrifood imports from the EU have increased very much as a result of the FTA. Korean farmers are worried about these developments.
Meeting with the Ministry of Trade, Industry and Energy, experiences on the FTA Deputy Minister for Trade Negotiations, Mr. Kim Hak-do
Deputy Trade Minister underlined that bilateral trade has developed positively especially under the tariff-lines liberated by the FTA and new ways need to be sought to reap the fruits of the agreement. Among other things, as a result of the unexpected trade effects of the FTA (EU exports to Korea have overtaken Korean exports to the EU), the Deputy Minister called for an amendment to the agreement, amongst other through the inclusion of an investment chapter. This would boost bilateral investment. Although traditionally a strong supporter of the Investor-State Dispute Settlement (ISDS) system, he expressed his openness to consider the new EU model for an Investment Court System (ICS), wishing to replace the 22 Bilateral Investment Treaties (BITS). The Minister highlighted some recent ISDS cases involving Korea using these BITs. He explained that technical bilateral meetings are held regularly aiming to improve the functioning of the agreement. He also called for more attention to renewable energy, biotechnology and nanotechnology in the hope to improve the trade balance. In most meetings with other ministers the same message was received with different flavourings from the Korean side.
Meeting with university professors and the EU Centre in a round table format: Experiences of the EU-Korea FTA; Professor Sung-Hoon Park, Jean Monnet Chair KU- KIEP-SBS EU Centre, Professor Han Sung Kim Department of Economics Ajou University and Yoo-Duk Kang, Ph.D., Head of Europe Team, Korea Institute for International Economic Policy - KIEP
The delegation was briefed by three leading Korean academic experts on (1) the Korean assessment of the EU-Korea FTA, (2) Korea's FTA policy and the TPP and (3) the East-Asian Trade agenda.
The briefings covered topics such as Issues at Stake, Increasing Complexities in East Asian Regional Architecture and Trade Agenda, Newly Emerging Initiatives, Critical Evaluation, Key Issues Related to the Future Shape of Regional Architecture, Structure of Initiatives for East Asian Regionalism, Future of East Asian Regionalism, TPP vs RCEP: Challenges and Opportunities, Implementing the Korea-EU FTA Post-FTA issues.
CR\1095601EN.doc 3/3 PE583.873v01-00 EN Field trip to the Joint Security Area(JSA)/ Demilitarized Zone (DMZ); including visualising the Kaesong Industrial Zone; the Neutral Nations Supervisory Commission (NNSC), Major General Mats Engman (SE) and Major General Urs Gerber (CH)
The delegation was received and guided in the Joint Security Area (JSA) by the United Nations Command Security Battalion Officers. The Delegation was also received by the two leaders of the Neutral Nations Supervisory Commission (NNSC) by Major General Mats Engman (SE) and Major General Urs Gerber (CH). The Delegation was given a comprehensive briefing regarding the history and the state of play in the JSA/DMZ. During the visit in the DMZ, the delegation was able to see the Kaesong Industrial Zone in the north side of the border. The Kaesong Industrial Zone has been regularly put on the agenda for the FTA revision by the South-Korean side. More than 50,000 North Korean workers were employed there by 120 South Korean companies until February 2016. Due to North Korean provocations, South Korea closed down the operation. In discussions during the visit, South Korean representatives considered it unlikely, that the Kaesong question would become topical in relation to the FTA anytime soon, at least not before North Korea puts end to its nuclear programme.
Meeting with US Ambassador Mark Lippert
The US Ambassador underlined the importance of enhancing EU's relations with South Korea through the FTA in particular. According to the Ambassador there has been recent good progress in various issues under the Korea - US FTA. Some concerns were expressed in relation to the developments in the general business climate in Korea.
Briefing and Meeting with the European Chamber Of Commerce in Korea (ECCK), President Mr Jean-Christophe DARBES
In addition to the President Mr Jean-Christophe DARBES and the Secretary General, the ECCK delegation comprised chairmen of its industry committees and major EU businesses present in South Korea. According to the ECCK, the FTA has been a success story, but Europe needs to address arising Korean market access issues. The FTA should be revised to take into account amongst others the direct transport provision, a provision to exempt repaired goods from customs duty upon re-entry. The ECCK also pointed out that there are problems in implementation of public performance rights and the restrictive and cumbersome SPS authorisation procedures. In addition, data protection and IT regulations are putting increasing pressure on operators. Many of these concerns were echoed by the Member States trade counsellors.
Committee of the National Assembly, Chairman Mr Young-Min ROH
The delegation joined the meeting of the Trade, Industry and Energy Committee of the National Assembly lead Chairman Mr Young-Min ROH. The EU - Korea FTA together with the Korea US FTA are two most important pillars of the Korean trade policy. New areas of cooperation would be needed, so that the agreements can show their full potential. Members of the Committee expressed also that there are diverging views regarding labour rights issues and ratification of ILO core conventions. The meeting echoed many of the views of the
PE583.873v01-00 4/4 CR\1095601EN.doc EN government representatives. Although understanding an assessment is premature, some members expressed concerns regarding the growing Korean trade deficit with the EU, making it difficult for the Parliamentarians to justify the benefits of the FTA to domestic stakeholders. Korean Parliamentarians said that there is a need for an amendment to the FTA and the inclusion of an investment chapter including investment protection and arbitration. This is in particular with a view to recent cases against Korea based on bilateral investment agreements.
Meeting with Ministry of Foreign Affairs Mr Tae-ho Lee, Deputy Minister for Economic Affairs, MOFA and Mr Lee Hye-Min, Former Chief Trade Negotiator and present Vice Minister
The general impression is that the EU-Korea FTA is widely accepted by the Korean public. In order to achieve acceptance, civil society participation was also considered essential. Most important issues are increasing transparency and improved functioning of the economy. The EU-Korea FTA lays a good basis for developing our relations, which are mainly based on economic cooperation and trade. The FTA has a built in agenda for revision, and investment protection is high on the Korean agenda. Pointing to the swift in the trade balance and moderate development in trade volumes in general, the Ministry of Foreign Affairs stressed that without the FTA Korea trade figures could be worse. There are many factors affecting the figures: weakening of the euro over time against the Korean won, oil imports from the UK, and the surge of the European car imports, which is much based on Korean consumer preferences. The EU FTA has to be seen as part of Korea's wider FTA agenda. Korea also hopes to join the TPP, though it will have to wait until it has been ratified by all 12 current participants. There were concerns regarding a quick ratification. Government representatives expressed that South Korea might consider reopening of the Kaesong Economic Zone, which was shut down last February, located in North Korea and where South Korean companies employed 54000 North Koreans. However, this is unlikely to become topical during the current presidential term, and any reopening would require that North Korea would abandon its nuclear policy. Only after very positive developments Kaesong could be put back again on the FTA agenda as an outward processing zone.
Meeting with Member States' Trade Counsellors (A, BE, ES, FI, IT, PL, SE, SV, UK)
The Counsellors pointed out important trade irritants, which may be due to the Korean business climate. For example, there have been recently show-case tax audits to several companies, difficult to say if these are targeted. Some non-tariff issues were considered clearly discriminatory and disproportionate, such as the ban on Polish pork. The low level of GI protection is an issue, and the number of GI's should be increased. There is a pending SPS issue on oranges from the EU. The Counsellors pointed out that the replacement of the current 22 BITs with one EU wide agreement is regularly raised by the Korean side.
Meeting with representatives of the Korean Trade Unions (KCTU and FKTU) and Meeting with environmental organisations' representative in the Domestic Advisory Group (DAG)
The trade unions were very critical of the policy of the Korean government regarding respect for workers' rights. The right of assembly is not guaranteed for public sector workers and
CR\1095601EN.doc 5/5 PE583.873v01-00 EN several public sector trade unions leaders are jailed. According to trade unions, the government does not see labour representatives as people they need to talk to. The government is stalling the ratification of the four core ILO conventions as well as the nomination of labour representatives in the Korean Domestic Advisory Group. Also according to environmental NGOs, the Korean government is slow in implementing policies which do not suit Korean big business.
Conclusions
1 July 2016 will mark the 5th anniversary of the EU Korea FTA. At the FTA Trade Committee and the Korea-EU Summit in Seoul on 15 September 2015 Commissioner Malmström and Korea's former Trade Minister agreed to start exploring a 'package' of FTA amendments, taking into account the interests of both sides. The outline of such revision could be agreed already in the autumn of 2016.
The INTA delegation to South Korea was extremely timely and relevant. The delegation received valuable information from various interlocutors and key players of the EU-Korea FTA. The information received will feed into the implementation report on the EU Korea FTA, which INTA will be drafting in the coming 6 months.
The delegation was assured about the good perception of the EU - Korea FTA by the Korean side, despite the trade deficit for Korea, which has emerged. There have been significant positive developments regarding those tariff lines which have been subject to liberalisation by the agreement. In addition, some developments, which are independent from the FTA, have also affected to occurrence of these imbalances, such as currency exchange rates, oil prices (Brent), and outsourcing of Korean production in third countries, as well as Korean investments in the EU, which do not feature in the Korean export figures.
There were concerns regarding the functioning of the Domestic Advisory Group and the TSD Chapter. Attention should be paid for solving the current outstanding issues. Supporting the work of the DAGs on both sides and the Civil Society Forum is extremely important.
The EU - South Korea Free Trade Agreement is considered by both parties a success story. After five years of implementation the agreement needs updating. Both sides have expressed key areas, where the agreement could be improved. The Korean side is seeking for including provisions on investment protection. The EU stakeholders were mostly concerned over practical application and possible omissions in the wording of the agreement, which are leading to exclusion of certain products, and very importantly some worrying developments in the Korean business climate, rising number of various NTMs and market access issues.
PE583.873v01-00 6/6 CR\1095601EN.doc EN ANNEX I
FINAL PROGRAMME INTA DELEGATION TO SEOUL, REPUBLIC OF KOREA (16-20 MAY 2016)
Monday 16 May
Arrival of Members and staff at Incheon airport, individual transfers to hotel
Tuesday 17May
Four Seasons Hotel 97 Saemunan-ro, 8.45 Departure from the Hotel Jongno-gu, Seoul, 03183 Korea EU Delegation Meeting with Ambassador of EU Delegation to the 16th Floor, S-Tower, 116 09:00-11:30 ROK, Dr Gerhard SABATHIL, briefing Shinmoonro1-ka, Chungro-ku, Seoul, Korea Venue: WESTIN Lunch with European Chamber of Commerce in CHOSUN 12:00-13:30 87 Sokong-Dong Chung- Korea (ECCK) ku, Seoul,
Venue: WESTIN Meeting with the trade section staff of EU Delegation CHOSUN HOTEL 13:40-14:40 Rose Room to the ROK, briefing 87 Sokong-Dong Chung- ku, Seoul Meeting with the Ministry of Trade, Industry and Venue: WESTIN Energy, experiences on the FTA CHOSUN HOTEL 15:00-16:00 Rose Room Deputy Minister for Trade Negotiations, Mr. Kim 87 Sokong-Dong Chung- Hak-do ku, Seoul, Venue: WESTIN Meeting with university professors and the EU Centre CHOSUN HOTEL 16:00-18:00 in a round table format : Experiences of the EU-Korea Rose Room FTA 87 Sokong-Dong Chung- ku, Seoul,
CR\1095601EN.doc 7/7 PE583.873v01-00 EN Wednesday 18 May
Four Seasons Hotel 97 Saemunan-ro, Depart 8:30 Departure from the Hotel Jongno-gu, Seoul, 03183 Korea Field trip Joint Security Area(JSA)/ Demilitarized 10:00-13:30 Zone(DMZ) / Visualisation of the Kaesong Venue: DMZ Industrial Complex Venue: US Embassy 188 Sejong- 16:00-17:00 Meeting with US Ambassador Mark Lippert in Seoul daero, Jongno-gu, Seoul Briefing and Meeting with Member States 17:30-18:30 Venue: EUDEL Commercial Counsellors Dinner with Korea Automobile Importers & 19:00-21:00 Distributors Association (KAIDA) Venue: Plaza Hotel
Thursday 19 May
Four Seasons Hotel 97 Saemunan-ro, 8.45 Departure from the Hotel Jongno-gu, Seoul, 03183 Korea Meeting with the Committee of Trade, Industry and Venue: National 10:00-11:00 Economy key Members of National Assembly Assembly
Meeting with Minister Mr. Lee Dong-Phil, Ministry 11:30-12:30 Venue: Marriot of Agriculture Meeting with representatives of the Korean Trade Unions (KCTU and FKTU) on the human rights and 12:30-13:30 Venue: EUDEL labour of the EU-South-Korea FTA (Sandwich boxes served) Meeting with representative in the Domestic Advisory Group (DAG), on the environmental and 13:40-14:4 0 Venue: EUDEL consumer implementation of the EU-South-Korea FTA Meeting with Ministry of Foreign Affairs, implementation of the EU-South-Korea FTA in the Venue: MOFA 9Fl. 15:00-16:00 broader political context Bilateral Meeting Room H.E. Lee Hye-Min (G20 Sherpa, Head of EU-KOR FTA, Vice-Minister level)
PE583.873v01-00 8/8 CR\1095601EN.doc EN Meeting with Ministry of Foreign Affairs, implementation of the EU-South-Korea FTA in the Venue: MOFA 9Fl. 16:00-17:00 broader political context Bilateral Meeting Room Mr. Lee Tea-Ho (Deputy Minister for Economic Affairs) Meeting with Samsung Electronics and visit to their Venue: Samsung 18:00-20:00 Show Room and Dinner Electronics, Gangnam
Friday 20 May
Departure of Members to Europe, individual transfers to the Incheon airport
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