Europe agreed on Thursday a vast free trade deal with South Korea, its first ever pact with an Asian country described as a pace-setter for similar agreements with India and other regional powers.
Belgian Foreign Minister Steven Vanackere, whose country holds the European Union’s rotating presidency, hailed the deal as the “most ambitious agreement ever” after Italy dropped its objections at an EU summit in Brussels.
“This is the first of a generation of bilateral trade agreements that will bind Europe and Asia together in an ever closer economic bond,” Vanackere told reporters after foreign ministers agreed the deal.
“It is a very big step in opening markets in Asia for our companies,” he said.
The deal will be formally signed at an EU-South Korea summit in Brussels on October 6, Vanackere said.
Europe is negotiating a trade pact with India, hoping to strike a deal by December.
Following “very intense negotiations” since Friday, Rome unblocked the agreement after securing a six-month delay in its implementation to July 1, 2011, the minister said.
A “safeguard” clause will protect the small car industry from “sudden surges of imports in sensitive sectors, including small cars,” according to European Council conclusions.
Rome feared that its auto sector — with a particular concern for Fiat’s range of small cars threatened by the lowering of tariffs on rival Hyundai models — would suffer badly under the planned accord with Seoul.
The deal requires the 27-nation EU and South Korea to eliminate 98.7 percent of duties for both industry and agriculture within five years, and to eliminate remaining tariffs almost fully over longer periods.
The South Korea pact was forced onto the summit agenda after Italy used its veto power to stall the agreement over concerns that it would damage its auto industry, dominated by car giant Fiat.
Italian premier Silvio Berlusconi is struggling on the domestic political front and Rome has warned that it could veto the deal, which requires ratification by all 27 EU member states and the European parliament.
Diplomats have suggested that Berlusconi wanted to bring home a victory by securing compromises in Brussels.
The Italian prime minister was not present for the announcement, however, as his flight was delayed due to a technical problem.