South Korea and the European Union (EU) agreed to meet in late June, seeking for an early bilateral free trade agreement (FTA) settlement, South Korea's trade ministry said.

South Korean Trade Minister Kim Jong-hoon and his EU counterpart, Catherine Ashton, met for free trade negotiations on the sidelines of a South Korea-EU summit held on Saturday and discussed ways to resolve the remaining sensitive issues, such as duty drawbacks.

"Both sides agreed to conclude a free trade deal at an earlier date, and to hold minister-level talks in Paris in late June," the ministry said in a statement.

After South Korean President Lee Myung-bak, European Commission President Jose Manuel Barroso and Czech President Vaclav Klaus, who currently holds the EU's rotating presidency, held a summit earlier in the day, the leaders announced a joint statement on which they said the South Korea-EU FTA is an important opportunity to strengthen their tie.

In March, the two sides settled a "provisional" agreement on bilateral free trade, leaving the thorniest issues, a duty drawback and rules of origin, to their trade ministers.

Kim and Ashton met in London in April, hoping for reaching a conclusion, but failed to narrow differences.

South Korea still stands firm in its earlier request on duty drawback scheme, under which South Korean firms, which use imported materials to make export products, would be returned import tariffs.

While South Korea is strongly pushing EU on the matter, saying its rejection would severely undermine the effect of tariff reductions, the EU opposes it on the ground that it does not allow the scheme for its former free trade partners, Mexico and Chile.

The EU stood as South Korea's second-largest trading partner after China last year, with two-way trade reaching over US$90 billion.

If the agreement is finalized, South Korea's exports are expected to increase by US$11 billion and gross domestic product by 3.08 percent, according to a forecast by the Korea Institute for International Economic Policy.

(Xinhua News Agency May 24, 2009)