SEOUL, SOUTH KOREA - SENIOR South Korean and European Union officials met on Monday for what is tipped as the last negotiating session before they initial a free trade agreement.

Seoul's chief negotiator Lee Hye-Min and his EU counterpart Ignacio Garcia Bercero were to hold two days of talks. Lee said last week the discussions would be the final negotiating round.

Based on their outcome, trade ministers would meet to finalise and formally declare the deal which could be initialled in late May, he said.

South Korea, Asia's fourth-largest economy, and the EU, the world's single largest economic bloc, began talking in May 2007.

The two sides have agreed to eliminate or phase out tariffs on 96 per cent of EU goods and 99 per cent of South Korean goods within three years, according to Yonhap news agency.

Regarding the sensitive auto trade, they agreed to eliminate tariffs on cars with an engine size of more than 2.5 litres within three years. For less powerful cars they reportedly agreed to scrap tariffs within five years.

South Korea currently imposes an eight per cent import duty on European cars, while the EU imposes a 10 per cent duty on autos from South Korea.

The two sides have also neared agreement on allowing goods made at an inter-Korean industrial complex in North Korea to get duty-free status in the European market, according to Yonhap.

The 27-nation bloc was South Korea's second largest trading partner after China last year, with two-way trade worth more than US$90 billion (S$136 billion).

The European bloc is the largest foreign investor in South Korea, with outstanding investment reaching US$43.40 billion at the end of 2007. -- AFP