Korea-Denmark - Kromann Reumert

Korea-Denmark
“Inspiring & Inspired”
- Korea-EU FTA -
Ambassador HYE MIN LEE
Kromann Reumert, Copenhagen
November 29, 2012

Contents
I. What is FTA ?
II.
III.
IV.
Global Expansion of FTAs
Overview of Korea’s FTA Policy
Korea-EU FTA
V. Major Issues of the Korea-EU FTA
VI.
Impact of the Korea-EU FTA
VII. FTA & Multilateral trading system

I. What is FTA ?
WTO
Principle of non-discrimination
Most-Favored-Nation (MFN)
FTA
An exception to the MFN principle
shall cover “substantially all the trade”
shall carry out liberalization within “reasonable length of
time”
1

II. Global Expansion of FTAs
Until March 2012
World Trade Share under FTA
Effective FTAs 330 More than 50%
Factors for the proliferation of FTAs
* Regional economic integration : EU, NAFTA
* Uncertain prospect of the DDA negotiations
* Pressure from locally based businesses
2

III. Overview of Korea’s FTA Policy
FTA roadmap in 2003
Key objectives
- To increase global market access
- To enhance the efficiency of the Korean economy
8 FTAs with 46 countries (as of March 2012)
- Chile (2004), Singapore (2006), EFTA (2006), ASEAN (2009), India (2010),
EU (2011. 7.1), Peru (2011. 8.1), US (2012.3.15)
Korea trade share under the FTAs : 34.2% of Korea’s total trade
- Korea aims to increase the trade share up to 80%
3

IV. Korea-EU FTA
Korea is the EU’s 4 th largest trading partner outside of Europe
EU is Korea’s 3 rd largest trading partner
- Bilateral trade volume : 103 billion US$, 2011
- EU is the largest foreign investor in Korea (64.7 billion US$, 2011)
[ For EU ] A flagship of the Global Europe FTAs
* Launch of the Korea-US FTA in 2006
* Sluggish progress of the Doha Round of WTO
[ For Korea ] A way to achieve access to the world largest market
2007.5.6
Launched
2009.7.13
2009.10.15
2010.10.6
2011.7.1
(shortly after
Korea-US FTA)
Concluded
Initialed
Officially
Signed
Provisional
Application
4

V. Major Issues of the Korea-EU FTA (1)
Industrial Tariffs
- “High-LEVEL” trade deal
Staging
Category
Entry into
force
Number of
tariff lines
(%)
90.7
3 years 5.1
5 years 3.7
7 years 0.5
KOREA
Items
auto parts, TV,
refrigerator
medium & large-sized
cars,
small-sized cars,
cosmetics
woolen fabric,
plywood
Number
of tariff
lines (%)
97.3
2.1
0.6
Total 100.0 100.0
-
EU
Items
auto parts, airconditioner
medium & largesized
cars
small-sized cars,
TV
5

V. Major Issues of the Korea-EU FTA (2)
Automobiles
3-5years
- EU : 10%
- Korea : 8%
Duty Drawback
Safeguard mechanism
Services
Agricultural products
Rules of Origin
Basically same as
Korea-US FTA
Generally same as
Korea-US FTA
CTC or VAR
* CTC : Change in Tariff Classification
* VAR : Value Added Rule
VAR criteria
* A ceiling on the non-originating
material used
6

V. Major Issues of the Korea-EU FTA (3)
Geographical Indication
Protection by the list
- 64 for Korea
- 162 for EU
Mediation in NTBs
Rapid resolution
- Non-biding
Dispute Settlement
WTO Dispute Settlement
- Fast track for Auto
& Duty drawback
Cultural Cooperation
Cultural Framework
- Audio-visual works
- Animation
7

VI. Impact of the Korea-EU FTA (1)
Privileged market access
[During the first 14 months]
Korea’s exports to EU : decreased by 11.1%
Korea’s imports from EU : increased by 11.0%
[Utilization rate]
Korean exporters : 81%
Assess the full benefits
Upon the full recovery of the European economy
8

VI. Impact of the Korea-EU FTA (2)
Strengthened predictability & transparency
Provide legal stability for foreign investors
Promote the foreign direct investment
Improve business environment
Develop domestic market more competitive
9

VII. FTA & Multilateral trading system
Contribute to enhancing market liberalization
Facilitate the multilateral trade liberalization efforts
Set liberalizing benchmarks through “WTO plus”
Complement the multilateral trading system
10