Although diplomatic relations between the Republic of Korea (ROK, or South Korea) and the European Union (EU) were established in July 1963, it was not until the end of the 1980s that significant ties began to be formed. Even as European leaders were preoccupied with the challenge of implementing the Single Market (to remove physical, tax, and technical barriers to ensure the freedom of movement of people, capital, and goods among member states) by 1992, South Korea's transition to democracy, along with its increasing importance in the global economy, led EU policy makers to realize the necessity of improving relations with East Asia's third-largest economy. This aim was part of a general change of EU policy toward Asia, which sought to promote European business interests in a region perceived to be the engine of world growth. From the Korean perspective, the integration of the European market to form the world's largest single trading bloc was an opportunity to sustain South Korea's outward-oriented development strategy and reduce its excessive dependence on the U.S. market.
Economic issues, especially trade policy and marketaccess negotiations, have dominated bilateral relations. The export success that fueled the transformation of the ROK into a major trading country led to frequent trade frictions with the EU and the establishment of import restrictions—notably antidumping duties—on Korean products, raising the specter of "Fortress Europe," the fear that European integration would secure benefits only for member countries and that outsiders would face protectionism. South Korea responded with a surge of direct investment in European manufacturing, starting in the early 1990s. From the European standpoint, one major source of conflict has been the existence of structural barriers in the ROK, such as lax enforcement of intellectual property rights, negative sentiment against imported cars, and restrictive regulations on pharmaceuticals, which hinder access to the Korean market.
The Framework Agreement on Trade and Cooperation was signed in October 1996, was ratified by all EU member states and the ROK, and entered into force in April 2001. This agreement was a clear indication that the EU and the ROK recognized the importance of institutionalizing and deepening their relations by committing all parties to work toward improved market access and cooperation on a wide range of issues such as maritime transport, intellectual property, and standards. These trends were impacted by the Asian financial crisis of 1997, in which currency speculation in Thailand spread rapidly to other Asian economies. The contagion reached South Korea, leading to sharp declines in the value of the Korean currency (won), the stock market, and other asset prices. In the aftermath of the crisis, the opening of the Korean market accelerated—chiefly to alleviate the capital-shortage constraint—and the EU emerged as the largest source of foreign direct investment, showing European firms' strong commitment to South Korea's potential for expansion.
Despite the continued importance accorded to economic relations, the EU has also realized the need to broaden its bilateral agenda with South Korea and support international efforts to secure stability in Northeast Asia. Political dialogue, focusing mainly on the Korean peninsula, has gradually increased since the mid-1990s. In 1997, the EU joined the Korean Peninsula Energy Development Organization, a consortium founded by the United States, Japan, and the ROK to replace North Korea's nuclear facilities with more proliferation-resistant light-water reactors; since 1995 the EU has been a consistent donor of assistance including humanitarian aid (40 million euros of medicines, water and sanitation proects, and winter clothes), food assistance (188 million euros of food, fertilizers, and farm cooperative projects), and contributions to the KEDO project (75 million euros). As a long-standing advocate of direct dialogue between the two Koreas, the EU has been a strong supporter of the policy of the South Korean president Kim Dae-jung to seek engagement with the north, and the decision by most EU member states to establish diplomatic ties with Pyongyang (North Korea), ahead of the United States, was encouraged by Seoul to help invigorate the peace process. This European foray into intra-Korean affairs should be perceived as a complement to—not a substitute for—the leading U.S. role on the peninsula and may be a significant initiative to heighten Europe's diplomatic profile in the region.
Further Reading
Dent, Christopher M. (1999) The European Union and EastAsia: An Economic Relationship. London and New York: Routledge.
