CEPII, Recherche et Expertise sur l'economie mondiale
The Economic Impact of the Free Trade Agreement (FTA) between the European Union and Korea

Yvan Decreux
Chris Milner
Nicolas Péridy

This study presents an updated and extended quantitative assessment of the EU-Korea FTA for goods, services and FDI. It also complements the trade sustainability impact assessment (SIA) of the EU-Korea FTA which was launched in October 2007 and finalized in October 2008. Its first contribution relates to the new and novel calculations of ad valorem tariff equivalents (AVEs) of non tariff protection. Whenever possible, these calculations are based on the use of observed information about trade costs. As a second contribution, the simulations have been implemented with the new version of the Computable General Equilibrium MIRAGE model, which considers differentiation of products according to quality, the explicit introduction of Foreign Direct Investments as well as dynamic effects. Third, the simulations are very close to the official schedule of the agreement concerning tariff elimination, reductions in NTBs and in service restrictions. Finally, this report presents a separate analysis for the automotive industry, which is based on a specific analysis (both qualitative and econometric) concerning especially trade costs.

 Keywords : ALE
CEPII Research Report
N°2010-02, May 2010

Full Text


 Fields of expertise

Trade & Globalization