SEOUL, July 13 (Reuters) - South Korea and the European Union have tentatively reached a free-trade deal that could boost their more than $90 billion in two-way trade and will likely make an announcement on Monday, the trade ministry in Seoul has said.
The following is a look at trade between the two:
VOLUME
Bilateral trade in 2008 was more than 65 billion euros ($90.55 billion). The trade deal is projected to increase trade by 30 to 40 percent once it is fully implemented.
In 2008, the value of EU imports from South Korea was 39.4 billions euros ($54.89 billion) with machinery and transport equipment being the two largest categories. EU exports to South Korea were valued at almost 26 billion euros ($36.22 billion) with machinery and chemicals the two largest categories.
RANKINGS
South Korea was the EU's eighth-largest trading partner in 2008. The EU is South Korea's second-largest trading partner after China. The EU is the largest supplier of foreign direct investment in South Korea.
MAJOR TRADE GOODS
South Korea's top three exports to the EU are ships at $10 billion annually, mobile phones at $7.5 billion and automobiles at $5.2 billion. Top EU exports include pharmaceuticals at $1.6 billion, semiconductor manufacturing equipment at $1.6 billion and automobile parts at $1.5 billion.
WHAT THE DEAL WILL DO
The deal will eliminate duty on 96 percent of South Korea's imports and 99 percent on the EU's imports over three years, according to an analysis by the Korea International Trade Association.
AUTOMOBILES
The EU's automobile sector, with a 10 percent import duty and employing 2.3 million people directly, is unhappy over potential advantages gained by South Korean carmakers due to duty drawback.
Under duty drawback, South Korean carmakers can import cheap components and have all import duties paid on those parts reimbursed if they are in cars destined for the EU market.
South Korea's import tariff on cars is 8 percent.
Cars make up more than 18 percent of South Korea's exports to the EU. The proposed deal will eliminate import duties on all cars within five years on both sides.
AGRICULTURE
The sector has not been a major point of contention. This marks a contrast with the trade deal South Korea struck with the United States that led to mass protests by South Korean farmers, who said their livelihoods would be ruined by the end of protectionist measures called for in the agreement.
In 2008, the EU exported about 1.1 billion euros worth of agricultural products to South Korea. (Sources: Korea International Trade Association, European Union, South Korea's trade ministry, Reuters news. ($1=.7178 Euro) (Reporting by Jon Herskovitz and Jack Kim; Editing by David Fox)