By IANS
Seoul : Opening up South Korea's manufacturing sector would be the central issue in the ongoing talks for a free trade agreement (FTA) with the European Union (EU), Commerce and Industry Minister Oh Young-ho said Thursday.
Unlike the free trade accord struck with the US on April 2, where agriculture had been a sticking point, opening the market for manufactured goods may become a source of contention with the EU, the Emirates news agency WAM quoted Oh as saying.
In the first round of negotiations in Seoul, the two sides agreed to phase out tariffs on 95 percent of bilateral trade items.
South Korea's average tariff is 11.2 percent, far higher than the EU's 4.2 percent.
Oh stressed that while local companies may face stiff competition from cheap goods from the EU if an FTA is signed, an open trade policy promised expanded opportunities.
He said there was potential for greater economic and technical cooperation that could enhance the competitiveness of local businesses. The policymaker added that businesses should use the EU FTA to spur research and development and to make more value-added products.
The EU is South Korea's second-largest trading partner after China.
Two-way trade between South Korea and the EU totalled over $79 billion last year. The EU is the largest foreign investor in South Korea, with $5 billion invested in 2005 alone.
At present, South Korea has FTAs with Chile, Singapore and the European Free Trade Association comprising Switzerland, Norway, Ireland and Lichtenstein.
A partial FTA covering manufactured goods was reached June 1 with the Association of Southeast Asian Nations.