EU and Korea agreed Free Trade Talks

After years of negotiations, the European Union and South Korea have reached an agreement of bilateral free trade agreement ("FTA").
According to South Korean, the pact will bring greater changes to his country's international trade than a pact with any other economy, particularly for key sectors like industrial products, manufacturing, machinery, chemicals, and pharmaceuticals.
The European Union is Korea’s second-largest export destination, and Korea is the EU’s fourth-biggest non-European trade partner. Two-way trade reached $98.4 billion last year.

The agreement will eliminate the tariffs on 96 per cent of goods from the EU into Korea in three years and go fully duty-free in seven years, excluding rice and some other sensitive products.
EU will lift import duties for 99 per cent of Korean goods in three years before fully opening its market in five years.

The deal still faces domestic opposition, most fervently from European carmakers and Korean cattle and dairy farmers. A European automobile industry association last week described it as "unacceptable," raising concerns about the home market being flooded with cheaper Korean cars.

EU side especially complained about Seoul’s refunding of tariffs on imported parts when manufacturers export the final products. European companies said Korea could cut prices by using cheap Chinese products. This drawback scheme was one of key sources of contention between the Korean government and the European Commission. They at last agreed that they maintain the rule but will cap the refund if there is a significant increase in the amount of imported parts and components used by Korean companies.

It's expected the agreement will be signed next January or February and will come into force in June 2010.

(Reference: bilaterals.org web site http://www.bilaterals.org/article.php3?id_article=15549 )