Four years after the launch of Global Europe – the European Union’s trade strategy from 2006 – policymakers are now confronted with the first negotiated agreement with one of the rising economic powers in the Far East. The EU-Korea Free Trade Agreement (hereafter EUKOR) is the first of Europe’s “new” Free Trade Agreements (FTAs). Traditionally a sceptic of bilateral, or preferential, trade agreements unless they were part of a broader political strategy (like a stepping-stone to full accession to the European Union), the EU in 2006 ventured in to a strategy which had FTAs front and centre.
It is well known to trade economists and practitioners that preferential trade agreements are far from ideal. Principally, they are based on discrimination against third countries. Practically, they are often difficult and cumbersome to negotiate, and are seldom of great value to global firms who cannot adjust sales or sourcing strategies after a bilateral agreement.