European Union (EU) Trade Commissioner Catherine Ashton and South Korean Trade Minister Kim Jong-hoon have initialed a free trade agreement (FTA) heralded as the most important ever negotiated between the EU and a third country.

The deal, estimated to be worth up to EUR19bn in new trade for EU exporters, will remove virtually all tariffs between the two economies, as well as many non-tariff barriers, and will create new market access in services and investment. The deal also makes major advances in areas such as intellectual property, procurement, competition policy and trade and sustainable development.

South Korea and the EU concluded their free trade negotiations in July and have since had two rounds of legal reviews in July and September. The document initialed on October 15 represents the final version of the agreement.

Speaking following the initialing in Brussels, Ashton said: "This is the first 21st century free trade agreement for the EU, creating deep economic ties with another developed economy. It will create new market opportunities for European companies in services, manufacturing and agriculture. This agreement is particularly important in the current economic climate, helping to fight the economic downturn and create new jobs."

According to the initialed document, tariffs on industrial goods from South Korea and the EU will be eliminated within seven and five years, respectively. This will result in the removal of about EUR1.6bn of duties for EU-based exporters to Korea. The value of all goods traded between the EU and South Korea was about EUR65bn in 2008.

The agreement also tackles key non-tariff barriers including regulations and standards in industries of European interest, like automotive, pharmaceutical, and consumer electronics. Services sectors such as telecommunications, environmental, legal, financial, and shipping are expected to see some of the greatest benefits, with substantial commitments from Korea to liberalize these sectors.

The initialing of the FTA signifies the closing of negotiations and Kim and Ashton agreed to officially sign the FTA within the next year. The European Commission will formally present the legal text of the agreement to EU member states in early 2010. Following signature of the agreement by the EU Presidency and the Commission, the FTA will be presented to be approved by the European Parliament. Entry into force of the agreement would then be expected in the second half of 2010.