July 02, 2012 10:17
Korea's exports to the EU dwindled 12 percent on-year since the Korea-EU FTA went into effect on July 1, 2011, according to data released by the Ministry of Strategy and Finance on Saturday. Korea's trade surplus amounted to US$1.8 billion, plunging to a mere eighth of the previous year's $14 billion.
But imports from the EU increased 13 percent, mainly of European designer brand goods such as bags (an increase of 35 percent), footwear (31 percent), and watches (51 percent). The retail prices of some European goods, including home appliances, wine and designer clothes, have not gone down here despite tariff cuts under the FTA.
The effect of the FTA has not been as wide-ranging as expected because of the eurozone fiscal crisis, the government said. Park Il-young of the ministry said, "Korea's exports of major goods performed poorly because of the bad economy in Europe." But for the FTA, exports could have been even worse.
The car industry has benefitted most from the FTA over the past year. Since it went into effect, exports of cars to Europe increased 38 percent and of car parts 16 percent.
The FTA has also contributed to EU member states investing more in Korea. For the 11 months since the Korea-EU FTA took effect, the EU's foreign direct investment in Korea amounted to $3.7 billion, up 35 percent on-year.
Experts say companies need to make more efforts to benefit more from the FTA, and Korea needs to monitor prices of goods imported from the EU.
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