Impact of the EU-South Korea Free Trade Agreement on Swedish Manufacturing Firms

Abstract

A Free Trade Agreement (FTA) between the EU and South Korea entered into force on July 1, 2011. The agreement is the most ambitious FTA between EU and a country in Asia so far. While South Korea has become a major world economy, its relative share of trade with the EU has declined since the 1980s. In contrast, intra-regional trade has become more important for South Korea, especially with China. The FTA is estimated to significantly increase Sweden’s export to South Korea but could also increase competition in respective markets. It is still early to measure the agreement’s full effect on trade statistics; however, there is a need to examine attitudes and reactions of Swedish firms to provisions in the agreement. Interviews with officials from twelve international Swedish firms together with trade and investment statistics, and a theoretical background, aim to give a full overview of the topic. The main objective of this paper is to investigate the short-term impact the FTA have had on Swedish manufacturing firms’ strategies, operations, trading pattern, competitiveness, and future prospects of the agreement.