UPDATE 1-Italy backs EU trade deal with S.Korea-EU sources

Published 09/15/2010, 12:39 PM
Updated 09/15/2010, 12:44 PM

* Support gives go-ahead to EU-South Korea free trade pact

* Formal Italian agreement expected on Thursday - diplomats

* EU-South Korea to sign deal at summit on Oct. 6

(Adds details, background)

BRUSSELS, Sept 15 (Reuters) - Italy has given its backing to a European Union-South Korea free trade deal after intense lobbying from other EU member states and the deal is to go ahead from July next year, EU diplomats said on Wednesday.

EU trade deals with third parties require unanimous backing from all 27 EU member states, but Italy had resisted supporting the pact out of concern it could damage its domestic car industry. It wanted the deal's introduction to be delayed.

EU diplomats said they had agreed with South Korean officials that the pact would come into force from July 1, 2011 -- six months later than originally planned -- and that had secured Italy's backing for the deal, one of the largest free trade agreements the EU has negotiated with a third party.

Italy is expected to give formal notification during a summit of EU leaders in Brussels on Thursday, diplomats said.

While Italy's support is instrumental to the deal going ahead, it still requires the backing of the European Parliament, which is expected to approve it in a vote later this year.

EU officials say the agreement will create about 19 billion euros ($24 bln) of new exports for EU producers. Combined EU-South Korea trade in goods was worth about 53 billion euros in 2009, according to EU figures.

The EU has been racing to secure an agreement with South Korea, the world's 12th largest economy and one of the few to avoid recession during the global economic downturn, as it wanted to strike a pact before the United States did so.

In 2009, Korea was the world's eight largest exporter and tenth largest importer, according to the World Trade Organisation. The EU is the world's largest trading zone.

EU foreign affairs chief Catherine Ashton, who previously served as EU trade commissioner and negotiated the early stages of the South Korea deal, spoke at length to Italian officials in recent days to push for their support, diplomats said.

South Korea and the EU are now expected to formally sign the pact at a summit on Oct. 6 in Brussels, they said.

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