• Competition with Japan will Intensified When ‘Japan-EU EPA’ Effectuated
    2018-08-30 hit 342

    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 be limited.


    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.


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