A sweeping free trade agreement (FTA) between South Korea and the European Union will have a worldwide impact, the EU's ambassador in Seoul said Thursday, on the eve of its implementation.

Tomasz Kozlowski said the FTA was a "win-win" agreement and would be a model for others that the EU is negotiating in the continent.

The deal will "have a wide impact in Asia and in the world", Kozlowski told a news conference. "It shows the potential for increasing growth and jobs through greater trade between Europe and Asia."

Apart from multiplying the flow of goods and services, the agreement would "boost exchange of ideas, exchange of people and culture, and ultimately will bring Korea and the EU much closer", he said.

The EU is currently South Korea's second largest trading partner after China, taking almost 20 per cent of its exports.

EU exports to South Korea are worth 28 billion euros ($40.5 billion), while Korea's exports to Europe amount to 38.7 billion.

From Friday the FTA will scrap 70 per cent of customs duties, rising to 98.7 per cent over the next five years.

Within the next three years, tariffs on 96 per cent of EU goods and 99 per cent of South Korean goods will be eliminated.

Kozlowski said some studies forecast the FTA will boost trade by 50 per cent in the short term and more than double it over the next two decades.

One study forecast more than 250,000 new jobs in Korea in the long term as a result of the pact.

Shoppers would also enjoy a much broader choice of product, and the FTA would make industry on both sides more competitive.

South Korea discount stores announced plans to step up European imports and business groups also welcomed the pact.

The Korea International Trade Association said the FTA could create unprecedented opportunities for all local companies.

"The EU has a $4 trillion import market that is much larger than other markets that have been opened by FTAs in the past," it said in a statement quoted by Yonhap news agency.

The association said the market share of South Korean products in EU nations was just 1.0 per cent in 2010 compared with 7.1 per cent for China and 1.6 per cent for Japan.

"The lowering or elimination of tariffs will help local companies sell more products in Europe that can contribute to pushing up the country's overall trade volume to over $1 trillion for the first time this year," it said.

Korean auto parts firms are expected to raise their market share in the EU to more than 10 per cent this year from 8.5 per cent in 2010, the Korea Trade-Investment Promotion Agency said.

channelnewsasia.com