South Koreas auto, drug barriers block talks, EU cos say

March 23 | Updated: Mar 24 2006, 05:30am hrs
South Korea must lower barriers to the automobile, pharmaceutical and legal services industries, and give stronger protection to intellectual property rights, before free trade talks with the European Union can start, EU businesses said in Seoul today.

Trade barriers still affect too many European companies in a broad range of industries in Korea, Peter Thewlis, vice- president of the EU Chamber of Commerce in Korea said at a chamber media event. Thewlis is managing director of the South Korean unit of London-based Burberry Group Plc.

The South Korean government is relying on rising exports to help the economy grow 6 percent this year, the fastest pace since 2002.

The countrys exports to the EU jumped 15 percent last year to $43.7 billion, while EU exports to Korea rose 13 percent to $27.3 billion, according to the chamber of commerce.

South Korea is due to begin trade negotiations in June with the U.S., its third-largest trading partner.

European companies welcome moves toward free trade providing lasting trade irritants between the two parties are addressed and solved once and for all, Thewlis told reporters. He cited an increase in gross violations of intellectual property rights, saying the countrys laws, the best in the region, are not enforced.

South Korea needs to relax regulations on automobile- related technologies, such as adaptive headlights and active cruise control, which prevent European automakers from selling their latest brands in Korea, said Kim Hyo Joon, the chambers automotive committee chairman and head of Germanys BMW Korea Co.

Tax Changes

The country should make tax changes to encourage car buying, he said. Instead of heavy taxes at the time of purchase, alternatives like levying a road tax should be considered.

Imported cars have about 3.4 percent of Koreas market, while, based on past experience in Japan, 8 percent to 10 percent is possible, he said.

European pharmaceutical companies such as Denmarks Novo Nordisk Pharma Korea Ltd. have tried for the past seven years to persuade South Korean regulators to clarify drug pricing procedures, said Novo Nordisks general manager, Eric Reurts, the chambers pharmaceuticals committee chairman.

The drugmakers also want to take part in debates with health authorities on the new reimbursement system for patients under National Health Insurance, he said.Law firms want more deregulation in Korea, said John H. Kwon the chambers legal services committee chairman.

It is surprising to find that even North Korea allows foreign law firms to operate in its territories, Kwon said. South Korea lets foreign firms set up branches but restricts employment of Korean lawyers or the establishment of partnerships with Korean law firms, he said.

South Korea has free trade agreements with Chile, Singapore, the European Free Trade Association composed of Iceland, Liechtenstein, Norway and Switzerland and the Association of Southeast Asian Nations, made up of Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam.

Bloomberg