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South Korea and the European Union will kick off a second round of free trade talks this week as negotiators prepare to haggle over contentious issues such as automobiles, pharmaceuticals and cosmetics.

About 180 negotiators from the two sides, headed by South Korea's Deputy Trade Minister Kim Han-soo and his counterpart Ignacio Garcia Bercero, director of trade relations at the European Commission, will discuss how to tear down barriers to bilateral trade, which totaled US$79 billion last year. The five-day meeting will begin Monday in Brussels. The first round of negotiations was held in May after South Korea concluded tough and drawn-out talks with the United States for a similar free trade agreement (FTA) in early April. Though no deadline was set to conclude the talks with the EU, South Korean officials say they hope to wrap up the negotiations by the end of this year.

While both sides believe opening up each other's markets for trade and services would be good for economic growth and prosperity, achieving it is difficult because an agreement would result job losses in weak industries.

"In some ways, South Korea will be dealing with tougher negotiations than with the Americans," said Koh Jong-hwan, an international economics professor at Pukyong National University, noting the EU's complex decision-making process involving its 27 economies.

Automobile trade is one contentious area, Koh said. South Korea sells more than 740,000 vehicles a year in Europe, while European automakers sell about 15,000 cars in South Korea.

South Korea imposes an 8 percent tariff on passenger cars, while the EU's average tariff is 10 percent. A deal would boost South Korea's auto exports to Europe by 124,000 units, or $1.47 billion, a year, according to the Federation of Korean Industries, the nation's biggest business lobbying group.

Besides tariff reduction, the EU is expected to focus on opening up South Korean markets to services and investment, and respecting intellectual property rights.

Trade experts say negotiations with the EU will not be as difficult as the ones with the U.S. -- which concluded minutes before a crucial deadline -- because Seoul and Brussels may amicably reach an agreement to exclude some sensitive agriculture items.

However, in an interview with Yonhap News Agency on Friday, the chief South Korean negotiator cautioned that negotiations with the EU are likely to be tougher than expected.

"In services and investment, the EU's call to open up South Korea is expected to be stronger than we initially anticipated," Kim said.

Noting difficulties ahead, he said this week's negotiations were aimed at establishing a "common understanding" for further discussions, rather than "give-and-take" bargaining.

The EU is South Korea's second-largest trading partner after China and the largest foreign investor in South Korea with $40.4 billion at the end of 2006.

If successful, the agreement would be the biggest yet for South Korea, larger than the agreement signed with the U.S.

An unofficial South Korean study shows that if a deal is signed with the EU, it would boost by 36 percent South Korea's exports to the region, which totaled $43.6 billion last year.

The EU can expect to increase by 47.8 percent its shipments to South Korea that stood at $30.1 billion last year, according to data from the EU's governing body, the European Commission.

South Korea and the U.S. signed an FTA earlier this month but the deal needs to be ratified by the South Korean National Assembly and the U.S. Congress.
SEOUL, July 15 (Yonhap News)