This is the fifth in a series of blogs looking at South Korea’s foreign relations in the run up to the next Korean administration taking office on May 10. The series also includes blogs on relations with North Korea, the United States, China, Japan, Russia, the Middle East, ASEAN, Africa, and Latin America.

By Gwanghyun Pyun

Since 1963, the Republic of Korea (ROK) and what has evolved into the European Union (EU) have been steadily developing economic and diplomatic relations. The EU, a large single market consisting of 28 European countries, is an important trading partner for the ROK and its soft power in the global community can assist with peace on the Korean peninsula. Most importantly, the EU and South Korea share important values such as human rights, democracy and a market economy, making the EU an important partner for South Korea and the next presidential administration.

The fundamental basis of the EU-Korea relationship, a Free Trade Agreement (FTA)

When the EU-ROK FTA talks began, the South Korean government sought to expand its export market, raise the amount of foreign investment in South Korea and increase job opportunities. The EU is the world’s largest trade block and an advanced economy that primarily trades in are automobiles, machinery and appliances, transport equipment and chemical products with South Korea. In fact, the amount of trade between the EU and the ROK has steadily increased to 90 billion euros since the agreement came into effect in 2011.

However, South Korea has not seen the results it expected. According to a report by the Korea Institute for International Economic Policy (KIEP), five years later, the EU-ROK FTA has resulted in just one-third of the benefits that the South Korean government expected initially. The report concluded that the result comes from the economic recession in the EU from lingering Eurozone related issues, but that South Korea has fared better than other countries such as China and Japan.

Although this unsatisfying result has been caused by the EU’s economic recession, there are rising voices saying that the FTA should be revised. Indeed, at a meeting of Asia-Europe Meeting (ASEM) last year, then President Park Geun-hye and EU leaders already shared the view that there was a need to revise the FTA.

Besides the economic relationship, the EU and South Korea have developed a strategic partnership.

The EU and ROK have entered into and developed three major agreements – the FTA (2011), an EU-Korea Framework Agreement (2010) and The Framework Participation Agreement (2014). With these agreements, the EU and South Korea can promote coordination and cooperation on international and regional concerns.

Based on these partnerships, the EU can support South Korean international policy. For example, when North Korea conducted their fifth nuclear test last year, South Korea and the EU agreed to utilize all means necessary for denuclearization. Also, the EU has currently imposed unilateral sanctions against North Korea. On the other hand, Last February, Chancellor Angela Merkel said during a meeting with the U.S. President Trump that ‘the EU-Korea FTA is win-win deal’ to champion free trade. In addition, the EU can expand its free trade market to other Asian countries based on the case of EU-Korea FTA that is the EU’s first trade deal with an Asian country.

Furthermore, South Korea and the EU have many areas of possible corporation because they share common values in various fields. First, both recognize the importance of higher education. They have kept up academic exchanges through Erasmus+ and the co-funded Industrialised Countries Instrument — Education Cooperation Programme (ICI-ECP). Also, South Korea and the EU cooperate in the cultural field through a protocol on cultural cooperation under the EU-ROK FTA. In science, they have arranged the Agreement on the Scientific and Technological Cooperation (2007) and decided to cooperate on research related to ICT, nanotechnology, health/bio, energy and satellite navigation. Both can work together to solve energy problems, as the EU is a leading energy consumer and South Korea is the 12th largest country of greenhouse gas emission.

An uncertain future for the EU

Now, the EU faces a number of uncertainties. The EU has an advantage as an economic and political union of 28 European countries. However, the opinion on the union is split among various countries in the EU. This is because of a strong unity that limits each country’s sovereignty, while maintaining the union can place an economic burden to some of the EU countries.

Last year, a majority of British citizens voted for the United Kingdom (UK) to exit from the EU. The process of ‘Brexit’ is still in the process of being completed but should be concluded in two years. This year, in the first round of the French Presidential election, the right-wing politician Marine Le Pen got 21.3 percent of the vote, slightly less than the leading vote getter Emmanuel Macron at 24.01 percent. Le Pen has said that if she wins the election, she will seek to pull France out of the EU or redenominate France’s debt in franks, placing the euro at risk.

On the other hand, this wave to exit the EU cannot easily break the union because many of the EU leaders and European politicians are trying to maintain the union. Last January, German Chancellor Angela Merkel said Britain cannot do ‘cherry picking’ during Brexit and urged the unity of the other EU members. Two major French parties, the Socialist Party and the Republicans, along with outgoing President Francois Hollande, declared their support for Macron who is a pro-EU politician and received 64% support from the French people in an initial poll after the first round of the French presidential election.

Stability in the EU matters for South Korea as Germany, France, the UK and Italy are top four export markets for South Korea as they account for 43 percent of the Korea’s export to Europe.

The most urgent task for Korea is to continue relations with the EU as well as the UK.

Amid the crisis of the EU, South Korea should try to maintain a ‘win-win’ relationship with European countries. Fortunately, the EU President Jean-Claude Juncker said that Brexit would not have any impact on EU-ROK relations, and insisted that the EU would continue to keep bilateral cooperation with South Korea as a ‘trustworthy’ partner.

In addition, South Korea will need to build new economic ties with the UK as it exits from the EU. A report by the Korea Institute for International Economic Policy estimated that Brexit will cause a 0.5-0.8 percent decrease in Korea’s economic growth rate in the short-run if South Korea does not sign a UK-ROK FTA. However, in the long-run, if South Korea has a FTA with the UK as well as the EU, the Korean economy is expected to experience more trade benefits than before. South Korea and the UK sent positive signals to each other in a meeting between the Korean Foreign Minister and the British Ambassador to Korea, indicative that they would reinforce economic relations between the two countries.

The EU is an important partner for South Korea

When the new Korean administration takes office, the EU-ROK FTA revision and the UK-ROK FTA negotiation will be on the docket. They must not forget that the EU is an important global partner for South Korea and the EU-ROK FTA and other agreements are the basis of the relationship.

The new administration will also need to closely observe the situation in the European Union. First of all, when the UK exits from the EU, South Korea will need to reaffirm ties with the UK as an important partner on trade and security issues, while keeping in mind that a strong partnership with the EU and the UK would help South Korea economically, politically as well as socially.

Gwanghyun Pyun is currently an Intern at the Korea Economic Institute of America as part of the Asan Academy Fellowship Program. He is also a student of Sogang University in South Korea. The views expressed here are the author’s alone.

Photo from the European Parliament’s photostream on flickr Creative Commons.