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EU-South Korea Relations towards the 21st Century
An increasingly solid and broad-based partnership
Over the past few years, the European Union and the Republic of Korea have shown a greater interest in each other's security, stability and prosperity than ever before. This shared interest is both economic ? reflecting the significant volume of trade and investment flows between the two sides in today's globalised economy ? and political, reflecting the increasing community of values between the European Union and modern Korea. South Korea remains an important player in the global economy, notwithstanding the severe economic crisis which struck in 1997. Sustained and rapid growth since the 1960s transformed South Korea from a largely rural nation, devastated by war, into one of the world's leading industrial powers. Over the same period, the European Union has expanded and prospered. It has established itself as the world's largest economy and consolidated its position as its leading trading bloc. South Korea and the EU have steadily become important trade and investment relationship partners.
Beginning in the late 1980s and during the 1990s, South Korea has also started to make significant progress in terms of human rights and democratisation. For its part, the European Union has always been a community of pluralistic democracies, built on values of peace, liberty and solidarity since its foundation in 1951. During the 1990s, the EU strengthened its political identity and assumed greater responsibility on the world stage. Today's relationship between South Korea and the EU is increasingly founded on shared political values.
Economic relations are mutually beneficial
General trends on trade and investment show that the European Union and Korea are strong trade partners : total two-way trade was worth Άζ 40 billion in 2002. This represents, after a fall of about 10% in EU-South Korea trade in 2001, an increase of 6,4%, thus making Korea the EU's fourth largest non-European trading partner. From a Korean perspective, the EU is its second biggest foreign investor in 2002.
Severe difficulties still persist, however, in the resolution of certain outstanding bilateral trade issues mainly in the sectors of shipbuilding (WTO panel procedure now under way) and Dynamic Random Access Memory (34,8% definitive countervailing duty imposed in August 2003 on the import of DRAM's produced by Hynix). Whilst Korea made some progress at the second Joint Committee (JCM) on certain agricultural issues, continued efforts are needed to address longstanding items.
There is also a substantial amount of dialogue on economic and trade matters where we have a mutual interest e.g. on how best to strengthen the multilateral trading system.
The EU and Korea are constructive partners in the WTO context.
Korea's economy is doing well despite tensions with the DPRK, increasing competition from neighboring economies (China) and instability in the world economy. Real GDP, although slowing, is still growing at a healthy rate (3-4 % GDP growth expected for 2003) with a rate of consumer inflation around 4% and low unemployment.
Foreign investment into South Korea is falling from a high of 15 billion US dollars (1999-2000) to 9 billion in 2002. EU FDI followed this trend, falling to 1,66 billion USD in 2002.
President Roh has promised to encourage economic reform including more flexible labour markets stricter monitoring, more strict oversight of large conglomerates and a faster pace of corporate restructuring. He has also reiterated his ambition to promote Korea as a major international location for foreign direct investment.
The second Joint Committee meeting on 7 July 2003 sent a clear message of support for Korea's reform commitments and offered the EU's experience in promoting regional economic integration.