Competition with Japan will
Intensified When ‘Japan-EU EPA’ Effectuated
Need to work on measures to improve export competitiveness to be prepared for
the effectuation of Japan-EU EPA next year -
An analysis states that
Korea’s exports to EU will be affected mainly in automotives, auto parts,
machinery and chemical products when the ‘Japan-EU Economic Partnership
Agreement (EPA)’ enters into force early next year.
The Center for Trade Studies
and Cooperation of the Korea International Trade Association (Chairman, Kim
Young-joo) issued a report titled ‘The Impact of Japan-EU EPA on Korea’s
Exports to EU and Implications’ on August 22. According to the report, when the
Japan-EU EPA, which is equivalent to the Japan-EU Free Trade Agreement (FTA), comes
into effect early next year, the 99 percent of tariffs on Japanese products
will be eliminated immediately or in series and it would have a negative impact
on Korea’s exports that have enjoyed benefits of no tariffs in the EU market.
Korea's major export items to EU are exempt from tariffs upon the effectuation
of the Korea-EU FTA in 2011.
In particular, it is
expected that the impacts on automobiles and auto parts, which are Korea’s main
export items, will be significant. The 10 percent tariffs imposed by the EU on
Japanese passenger cars will be completely abolished over the next seven years and
auto parts tariffs will be immediately removed when the EPA enters into force.
Since those areas include many items that face high export competition against
Japan, such as engine parts, tires, and small passenger cars, Korean automotive
industry needs to work on countermeasures. However, both Korea and Japan have a
large number of vehicles produced in the plants in Europe, direct impacts could
It is anticipated that the
competition will be further intensified in machinery and chemical products such
as sphere bearings, acrylic polymers, polypropylene, and so on, that are
promising items for Korea’s exports to EU and the tariffs on those items will
be instantly eliminated when the EU-Japan EPA takes into effect, because Korea
is already facing high competition against Japan in those areas.
The report states, "In
order to respond to the trade protectionism of the United States, Japan is also
working on the effectuation of ‘Comprehensive and Progressive Agreement for
Trans-Pacific Partnership (CPTPP)’ with 10 countries on the Pacific coast,
along with the Japan-EU EPA.” The report advised, “Korea also needs to consider participating in CPTPP in order to diversify
its export markets as well as to be prepared for global protectionism."
Kwak Dong-chul, a researcher
at the Center for Trade Studies and Cooperation, stressed, “Korea’s exporting companies need to differentiate their products
from Japanese ones by improving the quality of existing products while developing
innovative products. It is also important for the government to make efforts through
the Korea-EU FTA Implementation Committee to resolve the difficulties that
Korean companies face when exporting to the EU.”