Once the Korea-EU free trade agreement comes into effect in July next year, Korea will see GDP grow an extra 0.56 percent on annual average for the next decade, Korean think tanks predict. The country's GDP amounted to W1,063 trillion (US$1=W1,119) last year.
The 27-member EU is the world's biggest economy with a combined GDP of US$16.4 trillion, accounting for about 30 percent global GDP. Korea will have an opportunity to make inroads into the European market ahead of China or Japan, given that it is the first country in East Asia to sign an FTA with the EU.
In a press conference after the signing in Brussels on Wednesday, a Japanese journalist asked José Manuel Barroso, the president of the European Commission, why the bloc picked Korea and whether there are plans to strike a similar deal with Japan. Barroso said he regarded Korea as a country that met conditions set by the EU, and that therefore it was possible to make rapid progress.
On Wednesday, 10 government-funded think tanks, including the Korea Institute for International Economic Policy, released an analysis of possible economic effects of the Korea-EU FTA. They forecast Korea's GDP will grow a mere 0.1 percent additionally in the short term but in the long term up to 5.6 percent 10 years on with increasing productivity and exports.
Koreans' purchasing power will reach $32 billion over the next decade as the removal of tariff barriers will lead to bigger profit for exporters, lower import prices and more income.
Korea's trade surplus with the EU is expected to grow by about $361 million on annual average for the next 15 years compared to before the FTA. Korea's total exports will grow $2.53 billion on annual average and imports $2.17 billion.
The manufacturing industry will enjoy a $395 million surplus on average annually due to increased exports of key products such as cars. But agriculture will likely suffer a $31 million deficit and the fisheries industry a $2.4 million deficit.
The think tanks also predicted the FTA will create up to 253,000 new jobs for the next decade, especially in the service industry, which is expected to employ about 219,000 more people.