The trade volume between South Korea and the European Union increased 3.9 percent on-year over the six months after their bilateral free trade agreement took effect in July, the Trade Ministry said Tuesday.

Korea saw its trade surplus with the world’s largest economic bloc, however, sharply narrow to $740 million from $6.92 billion over the cited period, the ministry said, without disclosing the value of bilateral trade.

According to the ministry, the sharp decline in Seoul’s trade surplus with the EU is largely attributable to weak demand for South Korean goods such as ships and IT goods in the wake of the European debt crisis.

Exports of ships and IT products to the EU dropped by $5.45 billion in the July-December period, it said.

The ministry said the free trade pact will further help boost bilateral trade if the economic bloc’s debt problem is resolved.

Korea’s free trade accord with the EU went into effect on July 1. Under the deal, both sides promised to eliminate or phase out tariffs on 96 percent of EU goods and 99 percent of Korean goods within three years.

A similar free trade deal with the U.S. is also soon set to take effect.

(Yonhap News)