Korea-EU Free Trade Agreement Growing Opportunities for Korea and Bulgaria

(October 27th, 2011, 1:30 p.m., Sheraton Hotel, Sofia)

On the 27th of October 2011 in Sheraton Hotel in Sofia, a business conference entitled “Korea-EU Free Trade Agreement: Growing Opportunities for Korea and Bulgaria” took place. The event was organized by the Atlantic Club of Bulgaria in cooperation with the Embassy of the Republic of Korea in Bulgaria and the Institute for Cultural Diplomacy. The purpose of the conference was to analyze trade and investment relations between the European Union and the Republic of Korea as well as the Bulgaria’s opportunities as a member of the EU.

Special guests at the forum were H.E. Dr. Chun Bee-ho, the Ambassador of the Republic of Korea to Bulgaria and the Minister of the Economy, Energy and Tourism Traycho Traykov, while the Republic of Korea was also represented by government officials and representatives of the trade department of the Korean Embassy in Bulgaria - KOTRA.

In his opening remarks, the President of the Atlantic Club of Bulgaria Dr. Passy pointed out that the Free Trade Agreement (FTA) between South Korea and the EU is the second largest in the world, after the North American agreement - NAFTA. He added that Korea is the 9th largest trade partner of the EU and the exchange between the two countries is expected to grow with roughly 1/3 during the next year. Mr. Passy proposed our experience in negotiating the agreement to be used by other countries, which are interested in intensifying their trade relations with Korea.

Ambassador Chun Bee-ho commenced his speech by saying that the FTA can improve not only the relations between Korea and the EU, but between Korea and Bulgaria as well. With the removal of tariff and non-tariff barriers the Ambassador hopes the trade volume to grow significantly. As far as he is concerned European and Korean companies will win the most since the agreement grants them the opportunity to enter new markets and this will inevitably affect customers, who will have a greater variety of products, whilst competition will cause the prices to fall. The Ambassador specifically addressed the agricultural manufacturers in Bulgaria, who produce products with high quality and according to him can successfully enter the Korean market.

Minister Traykov also confirmed the great importance of the FTA. He said that, starting from November, a Bulgarian trade mission will begin to operate in Seoul. According to him the volume of the bilateral trade between Korea and Bulgaria has nearly doubled in 2010 and Bulgarian export to Korea has quadrupled. He added that after the FTA comes into effect all trade barriers for nearly 90% of the Bulgarian goods exported to Korea will be removed. The agreement also provides for an increase in the amount of investments coming to Bulgaria from Korean companies. The Minister said that Bulgaria could become a window for the Korean goods to Europe and all the neighboring regions.

The first panel was entitled “Korea-EU FTA Policy Implications - Open Markets, Mutual Benefits, Future Policy Directions”. Speakers in that panel were Mr. Chang Sung-gil, Director of FTA Negotiation Coordination Division in the Ministry of Foreign Affairs and Trade and Diyana Naydenova, Director of directorate “Foreign Economic Policy” at the Ministry of Economy, Energy and Tourism. Mr. Chang began his presentation by pointing out that according to statistic data from 2010 Korea’s GDP depends about 80% on trade. He stated that Korea currently has seven FTAs and next year a new one with the U.S. will come into effect. The lector concentrated on the negotiations and underlined that all the EU member states must ratify it. Mr. Chang made a thorough examination of the FTA and mentioned the main points in it. He confirmed that the EU is one of Korea’s main trade partners and according to the last economic predictions a serious increase in the trade volume is to be expected after the FTA. As far as Bulgaria is concerned he mentioned that the tendencies were descending up until 2010, but in 2011 there was an increase in the trade. He also suggested that Bulgaria could become a window for the Korean products to the rest of Europe. On the other hand, he added that Korea can be the EU’s window to the whole of Asia, since this is the first FTA of the EU with an Asian country.

Mrs. Diyana Naydenova stated that the EU has reconsidered its trade policy. She said that the Union is cooperating with countries, with which it has significant trade relations and mainly countries, which obey the international trade rules and are willing to liberalize and open their markets. The EU has the largest contribution to the world exchange with 16, 2% of the global export and 17,3% of the global import. Korea also has a serious share of world trade.  Mrs. Naydenova pointed out that the direct foreign investments from the EU in Korea are about 28,9 billion euros. In 2011 there has been a positive tendency in the bilateral relations between Bulgaria and Korea. The lector continued by telling in detail all the major goods constituting the trade exchange and listed the main spheres with potential to intensify relations - electronics, food and fabrics. Mrs. Naydenova continued with the main advantages of the FTA - it provides for the liberalization of some of the major trade sectors, rules, which guarantee easier access to the public projects market and encourage investment cooperation, initiate severe regulations for competition, state subsidies, and intellectual property protection. The agreement also ushers in clear and transparent regulations for the business, treats questions related to standards, recognizes standards in areas of priority importance. Protection is provided against disloyal trade practices and anti-dumping measures and certain institutional decrees are to come into force, including the creation of a joint Korea-EU committee, which will be a dispute solving body. As far as Bulgaria is concerned the main benefit is the growing opportunities and better access to the Korean market, and the fact that over 95% of our export to Korea will be duty free.

The topic of the second panel was “Details on Customs Reduction Schedule and Customs Requirements to benefit from the Korea - EU FTA”. Participants were Mr. Borislav Stefanov, Director of the agency InvestBulgaria, Mr. Park Yung-suh from the Korean Embassy in Bulgaria and Mr. Lim Chae-ik, Director of KOTRA. Mr. Borislav Stefanov made a review of the Bulgarian-Korean bilateral economic relations and the opportunities for making business in our country. He focused on the incentives, which the Bulgarian government gives to investors and on the actions taken by the InvestBulgaria agency aimed at increasing investments from Korea. Mr. Stefanov’s presentation presented the main trends in the economic development of Bulgaria. In his opinion our country is experiencing fast post-crisis development and there are prospects for reaching the pre-crisis level of development soon. The diagrams displayed Bulgaria’s indexes from the last few months and the lector believes they are good. Mr. Stefanov specified that the main share of foreign investments to Bulgaria come from the EU and are directed to four specific areas - reel estate, finance, trade and manufacturing. To end his presentation he pointed the main reasons to invest in Bulgaria. Our country is a NATO and an EU member, it has currency board and low budged deficit and external debt. Besides, expenses for the business are low - 10% corporate tax and low cost of labor. Bulgaria is among the first countries in Europe on these issues. Also our country is the only one in Europe, which received an upgrade on its credit rating.

Mr. Park Yung-suh from the Korean Embassy in Bulgaria concentrated his attention on the bilateral Bulgarian-Korean relations and the opportunities for Bulgarian producers to enter the Korean market. Last year, the exchange between the two countries has increased significantly, not only in total value, but also as regards to Bulgarian export to Korea. Mr. Park also made some comments on the main reasons for Korean investors to choose Bulgaria. He emphasized that our country has achieved significant progress in fighting corruption, increasing the efficiency of the government and the quality of services. The lector pointed some of the most successful Korean companies in Bulgaria - Hyundai Heavy Industries and Sunday SDN Company. At the end of his presentation Mr. Park made a few remarks on the future prospects for trade cooperation between Bulgaria and Korea. He named four strategic areas, in which the two countries can intensify their relations - social infrastructure, energetic, agriculture and food industry, and technologies.

In his presentation Mr. Lim Chae-ik, the director of KOTRA, emphasized on a number of important questions. First, he went through the main products, which form the trade volume and added that, according to him, the food industry has great potential to offer goods to the Korean market. Mr. Lim said that the Bulgarian production is esteemed highly on the Korean peninsula and Bulgarian producers can find niches in the market. Some of the products, which are selling best, are wine, beef, cheese and pork. The lector also gave a few advices to future investors, who are planning to enter the Korean market. He urged the business in Bulgaria to use KOTRA or the Korean Embassy in Sofia as a source of information and guidance.

“Review of the Korea-Bulgaria Bilateral Trade & Economic Cooperation and Business Opportunities in Korean Market for the Bulgarian business” was the topic of the third part of the conference. In this panel Mr. Sung Tae-gon, counselor in the Korean Embassy in Brussels, talked about introducing a system for certifications, which will facilitate trade. The changes in the FTA will make the process of receiving certificates easier and companies will have the opportunity to use an easier procedure. Many of the required documents will be removed and significant part of the procedure will be available in 22 out of the 27 official languages of the EU, as well as in Korean. In conclusion, Mr. Sung confirmed Korea’s desire to continue liberalizing trade relations with the EU.

The other participant in the third panel was Mrs. Veska Todorova, who is a state expert on tariff policies in the “Customs” agency. She focused on the so called protocol of origin. She named the documents, which have been removed by the FTA and mentioned the declaration of origin as a proof of the preferential treatment of products. This document is valid 12 months starting from the day it was issued by the country of export.