POLICY BRIEF KIM Heungchong Toward a Strategic Economic Partnership Deepening and Expanding the EU–ROK Economic Relationship

I. Introductory Remarks Why the EU and Korea Need to Strengthen Economic Relations The Republic of Korea(ROK) and the European Union(EU) stand at a pivotal moment in their economic partnership. Their 2011 Free Trade Agreement(FTA)— the first conclud ed by the EU with an Asian country and a flagship of the EU’s post- 2006“new trade policy”— laid a strong founda tion for deepening bilateral ties. Since then, trade has ex panded by over 66%, reaching€118 billion in goods and €25 billion in services by 2023. However, today’s rapidly shifting global landscape demands more than continuity; it calls for a bold recalibration of the partnership to address new challenges and seize emerging opportunities. Amid rising global economic fragmentation, accelerating climate crises, and intensifying competition over critical technologies, Korea and the EU must forge a qualitatively deeper and more strategic partnership. This imperative be comes even more pressing as the world is now facing the “Trump 2.0” era, characterized by renewed tariff assertive ness of United States(U.S.), diminishing American commit ment to carbon neutrality, and a retreat from global leader ship. In this uncertain environment, the two sides must take extraordinary steps to drive innovation, expand mar kets, and anchor prosperity through trusted cooperation. The EU— representing 450 million people and 17.5% of global Gross Domestic Product(GDP) in 2024— is under going a profound transformation through initiatives such as the Green Deal, the Digital Decade, and the Net-Zero In dustry Act. These ambitions unfold even as the Union con tends with external pressures: mounting U.S. demands for increased defense spending, a shifting transatlantic climate agenda, and the existential threat posed by an increasingly assertive Russia. Meanwhile, Korea, the world’s 13th-largest economy and a Group of Twenty(G20) member, is recalibrating its diplo matic and economic strategy to assume the role of a pro active middle power under the new administration. This evolution is unfolding despite significant domestic turbu lence— including dramatic swings between democratic backsliding and civic resistance, policy missteps over the past three years, and a deepening sense of urgency driven by declining potential growth. Korea and the EU, as open and like-minded economies, confront a common set of structural challenges: demo graphic aging, technological sovereignty, and secure access to key raw materials. Both are striving for resilient supply chains, successful green transitions, and the preservation of a rules-based trading order. These converging priorities provide a powerful rationale for institutionalized and for ward- looking cooperation. Recent geopolitical shifts— including Russia’s invasion of Ukraine, China’s growing assertiveness, and the weaponiza tion of economic interdependence— further highlight the need for“de-risking” through reliable, trust-based partner ships. In this context, a reinforced Korea–EU economic rela tionship is not merely an option but a strategic necessity. The proposals herein reflect a range of illustrative avenues for collaboration. Though not exhaustive, they underscore the strategic logic of a reimagined partnership. To sustain momentum and institutionalize long-term collaboration, a permanent platform— such as a Korea–EU Strategic Part nership Centre— should be established to generate ideas, support joint initiatives, and explore emerging areas of mu tual interest. The proposal to establish such a center is, last but not least, a defining initiative— one that embodies the shared vision and institutional resolve required to anchor a deeper and more enduring partnership. Toward a Strategic Economic Partnership 2

II. Strategic Cooperation Agenda and Priority Areas 1. Green Value Chain Integration: Toward a Joint Carbon-Neutral Economy The EU is responsible for approximately 6.1% of global CO₂ emissions in 2023 while Korea, about 1.47%. Both aim to reach net-zero by 2050, yet face structural obstacles in en ergy and industry. Korea imports over 90% of its energy, while the EU faces de-carbonization challenges in sectors such as steel, cement, and chemicals. Proposals • Co-develop low-carbon hydrogen supply chains: Korea leads in clean hydrogen policies, while the EU is diversi fying its hydrogen import sources. The EU’s introduc tion of Carbon Border Adjustment Mechanism(CBAM) is accelerating demand for low-carbon hydrogen. Korea is pursuing green ammonia projects in Malaysia and Australia. ▶ The two sides could develop a joint certification sys tem to measure and verify the carbon intensity of hydrogen; German utility RWE and Korea’s Korea Electric Power Corporation(KEPCO) could partner in green am monia projects in Australia or Chile; Pohang Iron and Steel Company(POSCO) and ENGIE could co-develop an Asia–Europe hydrogen corridor by creating joint in vestment in hydrogen pipeline and maritime transport infrastructure. • Launch an EU–Korea Green Taxonomy Forum to har monize standards and prevent regulatory divergence. ▶ The two sides could establish a joint working group to align definitions of green activities, exclusion criteria, and Do No Significant Harm(DNSH) principles; The two sides could introduce mutual recognition of green bonds issued between the EU and Korea to enhance investor confidence and capital flows. • Joint investment in carbon capture and storage(CCS) infrastructure in North Sea and East Asian waters. Ko rea is conducting CCS pilot projects utilizing offshore reservoirs such as the Donghae Gas Field, while the EU is establishing CCS hubs around the North Sea. The two sides are keen on scaling technology and securing geological storage. ▶ Joint Research and Development(R&D) on CCS tech nology— for example, collaboration between Korea’s Daelim Engineering& Construction(DL E&C) and Royal Dutch Shell in developing post-combustion capture solutions; The two sides could establish cross-border CO₂ transport agreements to enable maritime shipping between the two under International Maritime Organi zation(IMO) and International Energy Agency(IEA) guidelines. • Creating Common Clean Steel Certification: Hyundai Steel is piloting hydrogen-based direct reduced iron (DRI) in Korea. Germany’s Salzgitter and Sweden’s SSAB are deploying similar models. An EU–ROK alli ance could standardize clean steel certification, and de velop a joint EU–ROK‘Green Steel Label’ to certify hy drogen-based DRI and expand market access. The two sides could Introduce shared demand-generation mech anisms— such as preferential procurement in EU public tenders and Korea’s industrial supply chains. 2. Securing Critical Raw Materials and Industrial Supply Chains The EU imports 98% of its rare earth elements from China, while the EU’s Critical Raw Materials Act(CRMA) limits de pendency on any single country(notably China) to less than 65%. Korea sources over 60% of key battery materials from China. Both regions rely on fragile chokepoints. Proposals • Create an EU–Korea Critical Raw Materials Partnership (CRMP), modeled on the US-led Minerals Security Part nership(MSP). ▶ Joint Environmental, Social, and Governance(ESG) Certification Scheme: Introduce a co-developed EU–Ko rea ESG standard for certified minerals to strengthen 1  Korea Mine Rehabilitation and Mineral Resources Corporation. It is Korea’s public agency for mineral resource development and mine rehabilitation. Toward a Strategic Economic Partnership 3

global market access; Integrated Early Warning System by connecting Korea’s KOMIR 1 system with the EU’s Raw Materials Information System(RMIS) platform to enable real-time risk monitoring; Small and Medi um-sized Enterprises(SME) Resilience Module to build support mechanisms for small and medium enterprises, such as financing tools, tech transfers, and risk hedging policies. • Co-invest in lithium and cobalt mining and refining in Argentina, Namibia, and Indonesia. ▶ Create Joint ESG Due Diligence Protocols by co-con ducting ESG and sustainability assessments for over seas mining projects; Trilateral Cooperation Frameworks to establish EU–Korea–host-country platforms for joint investment, tech sharing, and talent development; Bi lateral R&D Centers to set up local research institutes focused on extraction innovation and local value crea tion; POSCO and France’s Eramet have explored joint ventures in nickel refining in Indonesia. A trilateral framework involving EU, ROK, and Indonesia could en sure ESG compliance and reduce Chinese dependency. • Launch a joint Strategic Stockpile Mechanism for rare earths and battery precursors. ▶ Co-managed Stockpile Infrastructure in order to de velop standards for joint procurement, storage proto cols, and release mechanisms; ESG-linked Procurement Policy for ensuring that all stockpiled resources are sourced from ESG-certified suppliers; Circular Economy Integration to include recovered critical materials from battery recycling in joint reserves. (AI): link Korea’s AI Ethics Charter with the EU AI Act to promote shared standards for trustworthy AI. This in cludes joint work on risk classification, transparency ob ligations, and oversight mechanisms. • Explore adequacy status under General Data Protection Regulation(GDPR) to allow free data flows. The two sides should now establish a joint monitoring mecha nism to maintain adequacy alignment. The two sides promote interoperability of data governance frame works, including onward transfer protocols and redress mechanisms. • International cooperative initiatives: Estonia and Korea have both developed advanced e-government plat forms. A Korea–Baltic Digital Innovation Hub could fa cilitate co-development of GovTech solutions, including digital identity, e-residency, and citizen services, ad vance joint cybersecurity tools and AI-powered public sector applications, and support talent exchange and startup incubation in digital public infrastructure. 4. Co-Innovation in Strategic Technologies Korea ranks#1 in the Bloomberg Innovation Index, while the EU boasts five of the top ten countries in R&D intensi ty, reflecting a shared commitment to technological leader ship. The EU’s flagship research program, Horizon Europe (2021–2027), allocates€95.5 billion to science and innova tion, with Korea participating as a third country associate under Pillar II from 2025. This opens new avenues for joint research consortia, co-funding mechanisms, and cross-bor der innovation ecosystems. 3. Digital Sovereignty, AI Governance, and Data Flow Agreements The digital economy represents approximately 35% of Ko rea’s GDP and over 20% of the EU’s, underscoring its cen trality to both regions’ economic competitiveness. Despite this, Korea and the EU do not yet have a comprehensive digital trade agreement, and cross-border data flows re main constrained due to regulatory divergence and privacy concerns. Proposals • A Korea–EU Digital Governance Dialogue: The two sides could launch a structured, high-level dialogue to align digital policy frameworks, building on the existing ROK–EU Digital Partnership Council and expanding its scope to include digital trade, platform regulation, and emerging technologies • Collaborate on safe and ethical Artificial Intelligence Proposals • Prioritize collaborative research(joint R&D) in quantum computing, next- generation semiconductors, and green mobility, leveraging Korea’s strengths in advanced man ufacturing and the EU’s excellence in foundational sci ence. ▶ Build on the EU–Korea Quantum Research Forum and the Korea-Europe Quantum Science Technology Cooperation Center in Brussels; Align with the EU Chips Joint Undertaking and Korea’s national semiconductor strategy • Establish an EU–Korea Innovation Fund for Deep Tech Startups: The two sides could create a co-financing mechanism to support early-stage ventures in AI, bio tech, quantum, and clean energy, with matched contri butions from Horizon Europe and Korea’s National Re search Foundation. This project could include mobility schemes, incubation support, and access to testbeds across both regions. The two sides could promote joint Toward a Strategic Economic Partnership 4

Intellectual Property(IP) commercialization and scaleup pathways for global markets. • Expand Joint Calls under Horizon Europe in Climate Tech and Health Tech: The two sides could utilize Ko rea’s new association status to increase joint calls in areas of mutual strategic interest such as Climate Tech and Health Tech. Climate Tech includes battery innova tion, hydrogen ecosystems, carbon capture, and circular economy solutions, while Health Tech encompasses digital therapeutics, AI-enabled diagnostics, and pan demic preparedness. Balanced participation from EU and Korean entities needs to be encouraged with shared leadership and funding access. • IMEC–ETRI Collaboration on Next-Gen Chip Architec ture: Belgium’s Interuniversity Microelectronics Centre (IMEC), a global leader in nano-electronics, and Korea’s Electronics and Telecommunications Research Institute (ETRI) are jointly developing reconfigurable chip archi tectures for AI and neuromorphic computing. This part nership integrates modular supercell design, 3D stack ing, and energy- efficient AI hardware, addressing the scalability and sustainability challenges of future com puting. The model demonstrates how cross-border R&D can accelerate innovation while safeguarding techno logical sovereignty. ▶ Scaling the Model Replicate the IMEC–ETRI frame work across other strategic domains such as quantum sensing and communication, green mobility platforms and battery ecosystems, AI-powered health diagnostics and bioinformatics, and cybersecurity and trusted digi tal infrastructure 5. Climate-Aligned Trade and Industrial Policy Harmonization The EU’s Carbon Border Adjustment Mechanism(CBAM) entered its transitional phase in 2023, requiring quarterly emissions reporting for key sectors. Korea’s K- ETS(Emis sions Trading System), one of Asia’s most advanced carbon markets, offers a robust MRV(Measurement, Reporting, Verification) infrastructure. However, exporters still face compliance uncertainty due to methodological gaps and lack of mutual recognition. Linking the EU ETS and Korea’s K-ETS could enable credit recognition and reduce trade friction. Proposals • Set up a CBAM–K-ETS Joint Committee to align MRV standards, in the areas of product-level emissions ac counting and third-party verification protocols. • Provide joint technical assistance and capacity-building to ASEAN exporters, especially SMEs, to meet CBAMaligned green trade requirements. • Develop a mutual recognition mechanism for car bon-adjusted product labeling, enabling low-carbon products to be certified and traded across jurisdictions. • Launch bilateral pilot programs for low-carbon verifica tion in steel facilities operated by POSCO and Arce lorMittal, with EU-Korea co-validation of embedded emissions data. • Explore Article 6-compatible carbon credit exchanges between Korea and the EU, leveraging digital MRV plat forms and blockchain-based registries to ensure trans parency and traceability. • Promote regional carbon market interoperability through ASEAN+3 dialogues, aligning methodologies with the ASEAN Common Carbon Framework and sup porting registry integration. 6. Mobility, Talent, and Demographic Resilience Korea’s working-age population is projected to decline by 35% by 2050, posing long-term risks to productivity and fis cal sustainability. Meanwhile, the EU faces acute labor shortages in healthcare, digital, and green sectors, exacer bated by demographic aging and skills mismatches. In this context, cross-border talent mobility offers a strategic lever to enhance workforce resilience, accelerate green and digi tal transitions, and foster inclusive growth. By aligning migration pathways with labor market needs and educational standards, Korea and the EU can jointly address demographic headwinds while enhancing competi tiveness. Circular migration models reduce brain drain risks and promote knowledge transfer. Mutual recognition and joint training initiatives lower barriers to mobility and fos ter trust between institutions. Proposals • Sign a Korea–EU Skills Mobility Partnership, modeled on the EU’s Talent Partnerships framework, to enable structured pathways for skilled migration, training, and return mobility. • Establish a mutual recognition mechanism for profes sional degrees and certifications in engineering, Infor mation and Communication Technology(ICT), and green technologies, aligned with EU Directive 2005/36/ EC and Korea’s licensure standards Toward a Strategic Economic Partnership 5

• Co-develop green and digital training curricula, leverag ing the Korea–EU Digital Partnership Council and Eras mus+ mobility programs. • Link Germany’s“Make it in Germany” and Korea’s “K-Move” programs to facilitate circular migration of young professionals, enabling skill acquisition abroad and reintegration at home. • Launch pilot exchange programs in priority sectors(e.g. renewable energy, cybersecurity, eldercare), with joint funding and industry participation. • Create a Korea–EU Talent Pool Platform, allowing em ployers to access verified candidate profiles and enabling transparent matching of skills to labor market needs. 7. EU–Korea GENOME 2.0 Alliance: Accelerating Healthy Longevity through AI-Integrated Multi-Omics 2 With aging populations across both the EU and Korea, the need for innovations in healthy longevity has become ur gent. Korea offers extensive Korean reference multi-omics datasets, including over 10,000 pangenomes and advanced AI-driven bioinformatics platforms. The EU contributes world-leading biobanks(e.g., UK Biobank, FinnGen), a strong regulatory framework in ethical AI, and deep public health expertise. Proposals • Launch a Korea–EU GENOME 2.0 Alliance to integrate multi-omics(genomics, transcriptomics, proteomics, metabolomics, epigenomics) with AI to identify aging biomarkers and therapeutic pathways. • Build privacy-sensitive data-sharing mechanisms for cross-population analysis, inspired by Finland’s FinGen model. • Explore joint application of Clustered Regularly Inter spaced Short Palindromic Repeats(CRISPR) and omics profiling in stem cell lines with researchers in Lithuania. • Collaborate on mental health biomarker discovery, lev eraging Korea and Lithuania’s shared challenge of high suicide rates through AI-powered multi- omics research. • Include Hungary and Estonia as partners with linguistic and cultural ties to Korea and rising genomic invest ments. Case Study : Korea’s Ulsan National Institute of Science and Technology(UNIST) and Lithuania’s Life Sciences Center are positioned to jointly pilot comparative suicide genomics research, establishing a cross-continental mental health multi-omics cohort. Hungary’s National Laboratory of Health Security and Estonia’s personalized medicine ini tiatives provide scalable genomic platforms. Collaboration Pillars 1. Establish an EU–Korea AI–Genomics Joint Research Institute for data sharing, algorithm development, and talent exchange. 2. Launch a public–private partnership model where governments define vision and the private sector and academia execute. 3. Create a Global GENOME 2.0 Consortium including Finland, Estonia, Lithuania, Latvia, Hungary, Germa ny, and the UK. 4. Joint deliverables include: ○ An AI-powered cross-population Geroscience bio marker atlas ○ Harmonized EU–Korea multi-omics data stand ards and pipelines ○ Joint funding proposals under Horizon Europe and Korean R&D programs ○ Regular scientific events, researcher mobility, and bilateral exchanges Next Steps(2025–2026): • Form a Korea–EU GENOME 2.0 Task Force • Hold an inaugural EU–Korea AI–Genomics Workshop in Seoul or Brussels • Draft and sign a Memorandum of Understanding (MoU) for a joint institute and roadmap for consortium expansion 2  This section is based on the insights and recommendations provided by Professor Jonghwa Park of UNIST. For correspondence: jong.bhak@gmail.com Toward a Strategic Economic Partnership 6

8. Trilateral and Multilateral Cooperation Platforms a Joint Investment Screening Platform. The EU and Korea are among the most active development • Promote global governance reforms at WTO, G20, partners in Africa and Southeast Asia, with shared commit and International Monetary Fund(IMF) through joint ments to inclusive infrastructure, digital connectivity, and advocacy, focusing on green trade facilitation and climate-aligned finance. Both actors emphasize rulescarbon-adjusted product standards, debt sustainabili based multilateralism, and increasingly seek to align their ty frameworks and climate finance access for vulneraexternal strategies—such as the EU’s Global Gateway and ble countries, and digital governance norms, includ Korea’s Global South Strategy— to support sustainable de ing AI ethics and cross-border data flows. velopment and regional stability. Proposals • The EU’s Team Europe and Korea’s K-New Deal Glob al Strategy 3 could jointly fund solar electrification projects in East Africa, targeting off-grid communities and health facilities. This could be scaled through a • Launch Korea–EU–ASEAN digital and infrastructure Korea–EU– Africa trilateral platform, integrating local partnership(modeled after Global Gateway), to co-fi capacity-building and workforce training, joint pro nance high-impact projects in smart infrastructure, curement and technology transfer for solar mini-grids, digital public goods, and green energy systems. This and monitoring frameworks aligned with SDG 7 and could include joint support for AI-enabled public ser climate adaptation goals. vices, cross-border fiber networks, and climate-resil ient transport corridors. The initiative would comple• Establish a Korea–EU Multilateral Cooperation Fo ment Korea’s Digital Innovation Flagship Project with rum, convening annually to align development priori ASEAN and the EU’s Indo-Pacific Strategy. ties across Africa, ASEAN, and the Indo-Pacific. • Coordinate funding via European Investment Bank • Co-host regional stakeholder dialogues with civil soci (EIB) and Export-Import Bank of Kore(Eximbank), ety, Mitglieder des Bundestags(MDBs), and private leveraging their respective instruments such as the sector actors to ensure inclusive project design and EIB’s Global Climate Facility and Korea’s Economic implementation. Development Cooperation Fund(EDCF). Joint financ ing could target energy access, urban resilience, and • Explore co-financing with other likeminded partners, clean mobility in emerging economies. A shared pipe such as Canada, Japan, Australia, and the Nordic line of bankable projects could be developed through countries, to expand the reach of trilateral initiatives. III. Conclusion: A Strategic Partnership for the 21st Century The future of EU–Korea economic cooperation must tran scend transactional ties and evolve into a truly strategic partnership. Built upon shared democratic values, sus tained through joint innovation, and projected globally via trilateral engagements in the Indo-Pacific, Africa, and Latin America, this relationship holds profound potential to shape a more resilient and inclusive global economy. Establishing an annual Korea–EU Strategic Economic Dia logue at the ministerial level would provide an enduring in stitutional anchor—enabling policy alignment, trust-build ing, and long-term agenda setting across sectors. In an era defined by volatility and systemic transformation, Korea and the EU stand poised to demonstrate that open, human-centric, and climate-conscious economic govern ance is not only viable, but visionary. The moment demands boldness—and together, we must lead. 3  Korea’s K-New Deal Global Strategy was introduced under President Moon Jae-in’s administration in 2020 as an international extension of the domestic Green and Digital New Deal. It promotes sustainable development and digital transformation by expanding Korea’s climate action, innovation capacity, and inclusive growth through global cooperation. While the strategy originated with Moon’s government, its objectives remain relevant under subsequent administrations, including efforts to align Korea’s en ergy, technology, and development diplomacy with evolving global standards such as the EU’s Green Deal and digital partnerships. Toward a Strategic Economic Partnership 7

Author KIM Heungchong He is a Professor at the Graduate School of International Studies, Ko rea University, by special appointment, as well as an Adjunct Senior Fellow at the Asan Institute for Policy Studies. He is a former Presi dent of the Korea Institute for International Economic Policy. Imprint Publisher Friedrich-Ebert-Stiftung Korea Office 5F, 49, Donhwamun-ro, Jongno-gu, Seoul 03133, South Korea Info.korea@fes.de Image credit Page 1 top: Friedrich-Ebert-Stiftung Brand Library, Sunsi Design The views expressed in this publication are not necessarily those of the Friedrich-Ebert-Stiftung e.V.(FES). Commercial use of the media published by the FES is not permitted without the written consent of the FES. FES publications may not be used for elec tion campaign purposes. August 2025 © Friedrich-Ebert-Stiftung e. V. Further publications of the Friedrich-Ebert-Stiftung can be found here: ↗ korea.fes.de/publications Toward a Strategic Economic Partnership 8