Korea's export-driven economy has much to gain from a bilateral free trade agreement with the European Union, the world's biggest market and Korea's second largest trading partner. Industry watchers say that the Korea-EU FTA could raise Korea's gross domestic product by as much as five percent. By concluding its FTA with the EU ahead of the U.S. and Japan, Korea could gain a valuable edge in the European market.
Korean carmakers are set to be the biggest winners. Currently a 10 percent import duty is levied on vehicles entering the EU from Korea. When the FTA comes into effect the import tax will be lowered by two percent annually, disappearing in five years. Manufacturers of electronic appliances such as those that make televisions and satellite receivers will also benefit from the trade deal as will makers of car parts.
The Korean textile industry competing in Europe against such countries as China and Taiwan is expected to get a boost with the deal as well.