Rhein on Energy and Climate

Following in US footsteps the EU has been negotiating a free trade agreement with Korea during the last two years, which is on the point of being finalised. If signed and ratified by both parties it would progressively abolish duties and other import obstacles on a bilateral trade volume of some $ 100 billion within the coming by 2015.

For the EU it would be the first free trade agreement with a Pacific country; and there is little doubt that its conclusion would raise appetites elsewhere in the region, especially in ASEAN.

There are three objections to EU-KOREAN FREE trade.

• asymmetry: why should the EU open its 500 million market to a country of 50 million ?
• distance: why should the EU artificially improve trade access to a country, which is >10 000 km away?
• ecology: transporting more goods to and from Korea as a result of free trade is bound to unduly increase the volume of C02 emissions from air and maritime transport.

In the run-up to the Copenhagen Climate Conference, the EU has suggested that international maritime and air transport be subject to a regulatory framework for reducing rapidly rising C02 emissions from these two sources. But this suggestion does not have much chance of being adopted in the foreseeable future.

Any goods travelling around the globe, especially over long distances, fail to pay for their high “external costs”. Making imported goods even cheaper by eliminating duties therefore violates the basic environmental principle that “polluter pays” for the damage caused to the environment or climate.

Trade policy and climate policy makers ignore each other, as if they were acting on two different planets. It is shocking to see this happen inside the European Commission, whose internal procedures require policy proposals to be accompanied by an environmental assessment. Nobody in the trade department seems to have given a serious thought to any detrimental consequences caused by more international to the climate.

The Commission better clarify these contradictions and also have a closer look at the poor climate policy record of Korea, before proceeding with its free trade negotiations.

Brussels, 25.03.09 Eberhard Rhein

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  1. I think that this is a false argument. The relative size of the markets does not matter – Korea is smaller so it can export and import less. Nonetheless, European producers are in a competitive disadvantage when trying to sell something to the Koreans if the US producers prices are not increased with duties.

    To overcome the problem of pollution I think it would be viable to link the free trade treaty with a climate pact and have South Korea on the board on that issue as well.

    Long distance transport indeed emits CO2, however, it sometimes reduces overall CO2 emission. In the case of fruits and some groceries it produces less CO2 output to ship them from New Zealand to the EU than to produce them in the cool Western European farmers heated greenhouses.

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  2. Antal`s size argument is acceptable. But there is a more a fundamental one tha than the asymmetry of size. The difficuly of effectively controlling the full respect of rules of origin. The EU is often a bit naive in assuming that every country in the world is up to its standards of rule of law and there is no collusion between business and government when it comes to defending national interests.

    As to the interaction and climate change it is important to raise awareness and then tackle the high C02 emissions by taxing kerosene and shipping fuel at very high rates. But how soon will we obtain an international agreement to that end?
    Eberhard Rhein

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