The Free Trade Agreement between South Korea and the European Union (KOREU FTA) has been now been ratified by both parties, paving the way for elimination of tariffs on EU pharmaceutical exports to South Korea. EU pharmaceutical exports are expected to increase with the implementation of KOREU FTA, posing a potential threat to US pharmaceutical exporters. KOREU FTA is expected to go into effect on July 1st, 2011.
South Korea has the highest healthcare expenditure of the “Asian Tigersâ€, fueled by its aging population. Previously, South Korean government policies were not always transparent and largely favored local manufacturers. However, the KOREU FTA will ease tariff and other barriers between the two parties.
Many of South Korea’s tariffs on imports of pharmaceutical products from EU states will be phased out immediately upon implementation of KOREU FTA, with the rest being phased out within three years. The KOREU FTA stipulates that South Korean authorities must align practices with international standards through new rules and a more secure regulatory environment. Such provisions include detailed and binding rules on transparency in the reimbursement process, better recognition of innovative products, and the possibility of reviewing price decisions in court.
Status of US-South Korea Free Trade Agreement
The Korea-US Free Trade Agreement (KORUS FTA) is still pending Congressional approval before it can go into effect. Thus, American products exported to South Korea are not yet duty-free. However, President Obama and some members of Congress are pushing for the legislation to be passed by July 1st, 2011 in order to match the KOREU FTA.
For more information, please see our previous newsbrief.