ABSTRACT
As East Asia's third largest national economy, Korea has an important part to play in the EU's economic relations with East Asia. European attentions to Korea have been heightened by frequendy heard prophesies regarding the country's supposed destiny as 'the next Japan'. There are certainly many similarities that can be drawn between them, as this chapter alludes. For some time, EU-Korea economic relations were almost exclusively preoccupied with resolving many ongoing trade disputes. However, the surge of Korean direct investment into Europe during the 1990s in particular made the EU more aware of Korea's potential significance as an economic partner in the twenty-first century. As a consequence of this and other developments, there has been a discernible shift from conflict to co-operation in EU-Korea economic relations. Nevertheless, these relations continue to be hampered by persisting trade friction in key sectors and certain cross-sector issues. Furthermore, Korea's 1997-8 financial crisis brought a new complexion to the economic relationship, and therein various challenges to EU businesses and policymakers. These are the main themes that are considered by this chapter. Following the pattern of previous chapters, we first analyse different aspects of the Korean economy to provide an important background context to our discussions.
