By Kim Seung-yeon
SEOUL, April 2 (Yonhap) -- Green regulations in force or being pushed for by the European Union (EU), including the legislation on reshoring critical minerals, are "reasonable and necessary" given the decarbonization trend, and they offer South Korea a chance to deepen economic ties with the bloc, the head of a Seoul-based German business lobby has said.
Martin Henkelmann, president and CEO of the Korean-German Chamber of Commerce and Industry (KGCCI), also called for Seoul and Brussels to launch the renegotiation process for the Korea-EU free trade agreement (FTA) to reflect changes in the market landscape, as it will help further move the economic relationship forward.
"More control on the supply chain is reasonable and very necessary," Henkelmann said in an interview with Yonhap News Agency on Thursday. "I think in many countries, consumers and customers demand this also and the market requires that we know what is in our supply chain."
The EU laid out a proposal on March 16 (local time) designed to ensure the production of strategic raw materials, such as copper and nickel -- key components for electric vehicle batteries -- is maintained in the region.
The Critical Raw Materials Act (CRMA) draft calls for at least 40 percent of the critical minerals the EU needs each year to be processed within the region by 2030. At least 10 percent of them will have to be extracted locally, and 15 percent has to be recycled in the region.
It also states that no more than 65 percent of the minerals should come from a single third country, apparently referring to China, a dominant global supplier of critical raw materials.
The proposed CRMA is among a raft of regulatory revamps the EU has been pushing for in efforts to meet emissions goals. It is also seen as designed to strengthen its clean tech markets, primarily the supply chains.
"We think it's very important that these criteria are defined and aligned with value-based nations," Henkelmann said.
"They lead to this aspect of not only near-shoring but also friend-shoring. That we don't only look to get investment in our country, but we're open to sourcing it (from) a friend," he said.
Henkelmann stressed that the EU regulations are not there to cause difficulties for foreign companies and the revamps can actually be opportunities South Korea can seize on to expand its presence in the region.
"A country, which has so many high tech products and is so strong at scaling up the technology, like Korea, I think it has a good chance to show with their products that they can be compatible and participate in this high level production in decarbonizing the economy," he said.
"Companies need to stay agile, to continuously adapt to what comes up in this field," he added.
Henkelmann also emphasized the need to revise the Korea-EU FTA.
"We'd like to modernize the FTA. We need an 'EU-Korea FTA 2.0.' As long as this FTA is newly negotiated, at least we get a better application of what is a more positive application of some of the rules when it comes to recognizing the standards," he said.
Henkelmann, who is in his third year as the head of the German business chamber in Korea, said the COVID-19 pandemic in fact has served to elevate his country's impression of its Asian partner, thanks to Seoul's much-lauded handling of the outbreak, among other factors.
"The trade volume between Korea and Germany grew to US$33.6 billion in 2022 from $30.2 billion in 2020, volumes we hadn't seen before. (It) shows how robust that is," Henkelmann said.
As both are exports-oriented countries, decarbonization is a common challenge for Korea and Germany, Henkelmann said, pointing to areas such as renewable energy, e-mobility, hydrogen and biotechnology as fields that hold huge potential for future cooperation between the two countries.
In the short term, the two countries have much to look forward to, as this year marks the 140th anniversary of diplomatic relations, he added.
The chamber is organizing a variety of events this year in celebration, including a climate industry and energy expo slated to take place in the port city of Busan, 325 kilometers southeast of Seoul, in late May.
"I think the bond between the two nations will grow closer together," Henkelmann said. "When we look back in 10 years, we'll see what has been done in the last 10 years and we'll see the two nations and companies in the two countries will have developed great things together."
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