European Scrutiny Committee Contents


31 EU-Republic of Korea Free Trade Agreement

(31569)

8502/10

COM(10) 137

(31570)

8523/10

COM(10) 136

Draft Council Decision concluding the Free Trade Agreement between the European Union and its Member States and the Republic of Korea

Draft Council Decision authorising the signature and provisional conclusion of the Free Trade Agreement between the European Union and its Member States and the Republic of Korea

Legal baseArticles 91, 100(2), 167(3) and 207 TFEU; consensus
Document originated9 April 2010
Deposited in Parliament25 May 2010
DepartmentBusiness, Innovation and Skills
Basis of considerationEM of 28 May 2010 and Minister's letter of 20 July 2010
Previous Committee ReportNone, but see footnote 135
To be discussed in CouncilSeptember 2010
Committee's assessmentLegally and politically important
Committee's decisionCleared, but further information requested

Background

31.1 In April 2007, the Council authorised the Commission to open negotiations with the Republic of Korea, with a view to concluding a Free Trade Agreement (FTA). According to the Commission, those negotiations finished last summer, and the agreement, which was initialled on 15 October 2009, now needs to be signed by the Commission on behalf of the EU, by the Member States, and by the Republic of Korea.

31.2 In March 2010, the Commission said that it aimed to propose the signature of the Agreement to the Council the following month, and, although the then Government expected a consolidated version of the text to accompany the Commission's formal proposal for a Council Decision to authorise signature, it decided in the absence of an official text to submit an Explanatory Memorandum, in order to enable scrutiny to take place before the Easter recess and the dissolution of Parliament prior to the General Election. That Memorandum was duly considered by the previous Committee, when it decided to release the Agreement from scrutiny on the basis of a full Report to the House.[135]

The current documents

31.3 The first of these two documents (together with its Annexes) comprises a draft Council Decision authorising the conclusion of the Agreement, whilst the second would apply its provisions on a provisional basis pending ratification by all the relevant parties. Their terms are virtually identical to those set out fully by the previous Committee on 30 March (covering the liberalisation of industrial and agricultural tariffs, technical barriers to trade, sanitary and phytosanitary standards, trade in services, payments and capital movements, government procurement, intellectual property, competition and sustainable development), and, in the main, we see no need for them to be drawn further to the attention of the House. However, we do think it right to refer briefly to two aspects of the Agreement not previously addressed.

31.4 First, the Explanatory Memorandum of 28 May 2010 supplied by the Minister for Employment Relations, Consumer and Postal Affairs (Mr Edward Davey) has attached to it an Impact Assessment. After rehearsing the general benefits arising from increased trade, this points out that the Agreement with Korea is the most comprehensive such agreement ever negotiated by the EU, and it goes on to highlight both the strength of the Korean economy and its continuing rapid growth, as well as Korea's importance as a trading partner for the EU (and the UK).[136] It says that, although some sectors of the UK economy — notably electrical machinery, industrial machinery and automobiles — will face increased competition in the short term, the full impact of the various tariff changes will not be felt for five years, and that the Agreement is expected thereafter to produce a benefit of around £500 million a year to the UK.

31.5 Secondly, the Minister's Explanatory Memorandum also drew attention to the inclusion in the Agreement of so-called Mode 4 provisions, which deal with the movement of personnel providing services, and which are essentially similar to commitments which have been made under the World Trade Organisation's General Agreement of Trade in Services (GATS) and in a number of other Free Trade Agreements. However, the Minister tells us that these now fall within the scope of the UK's Title V opt-in measures under the Lisbon Treaty in the field of Justice and Home Affairs, and he said that the Government would be considering over the next few weeks whether or not the UK should opt into the Mode 4 provisions.

31.6 We subsequently received from him a letter of 20 July 2010 confirming that the UK has now exercised its opt-in so far as these arrangements are concerned.

Conclusion

31.7 It does not seem to us that the developments since our predecessors' Report of 30 March 2010 raise any new or significant policy issues, and we are therefore clearing these two documents. However, there is a legal point on which we think it necessary to question the Minister.

31.8 The Council Decisions to sign and conclude the FTA with the Republic of Korea are founded on the EU's common commercial, transport and cultural policies, not Freedom, Security and Justice polices under Title V TFEU, to which the opt-in procedure applies. Consistent with the legal bases, the recitals to the FTA do not foresee the possibility of the UK or Ireland opting into the part of the FTA which deals with Title V measures. Also, under Article 2, the opt-in Protocol (Protocol 21) applies only to international agreements concluded by the EU pursuant to Title V, which is not the case here.

31.9 It is therefore unclear to us on what legal basis the Government considers it necessary to opt into the Mode 4 provisions on the temporary movement of personnel. We would be grateful if the Minister could explain this, and in so doing indicate whether Ireland has followed the same approach as the UK in thinking that the opt-in Protocol applies.





135   (31430) - : see HC 5-xvi (2009-10), chapter 5 (30 March 2010). Back

136   In 2007, EU exported €25.6bn of goods and €7.2 bn of services to Korea, and imported €39.4 bn and €3.9 bn respectively. Back


 
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