EU and South Korea in trade deal

The European Union and South Korea have signed a trade deal that could be worth up to 19bn euros ($28bn; £17bn) to European exporters.

The deal would remove most of the trade tariffs between the two partners.

It would "create opportunities for European companies in services, manufacturing and agriculture," said EU Trade Commissioner Catherine Ashton.

The EU said it was "the most important free trade agreement ever negotiated [with] a third country".

'Substantial commitments'

Baroness Ashton told the BBC: "At the time of economic downturn, it's even more important that we find new opportunities to be able to sell goods.

"Korea imports about 25bn euros from the EU and 6bn euros of services each year - this is a really good opportunity, lowering barriers to enable markets to grow."

She added that the deal would help fight the economic downturn and create new jobs.

The deal would see the removal of 1.6bn euros of duties for exporters to Korea.

The EU said telecommunications, environmental, legal, financial and shipping companies would see some of the greatest benefits, with Korea making "substantial commitments" to liberalise these sectors.

But the deal was not universally hailed as a positive breakthrough.

Ivan Hodac, secretary general of the European Automobile Manufacturers' Association (EAMA), said the agreement benefited South Korea, but not the EU.

He said a major cause for concern was allowing Korean manufacturers to reclaim duties paid on cheap imports from neighbouring countries - so-called duty drawback.

EU manufacturers could not do the same, the EAMA said.

He also argued that there was nothing to stop South Korea implementing new regulations to restrict access to its markets.

"It creates unfair competition - the European market will be totally open, but the Korean market will not be open for us," he argued.

The agreement is expected to come into force in the second half of next year, once it has been ratified by the European Parliament.

Trade between the EU and Korea was worth about 65bn euros in 2008.

---- excerpted from BBC