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Weekly Korea Economy Digest 1St Week of Nov, 2012

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Weekly Korea Economy Digest 1St Week of Nov, 2012 Weekly Korea Economic Digest_ March 2014 Weekly Korea Economic Digest 8 - 14 March, 2014 Office of Commercial Affairs, Seoul Korea, Vietnam to hold new round of FTA negotiations <Korea Herald 11 March, 2014> South Korea and Vietnam will hold a fresh round of negotiations for a bilateral free trade agreement this week, the South Korean government said Tuesday. The fourth round of FTA negotiations between the two countries will be held in Ho Chi Minh City from Wednesday to Friday, according to the Ministry of Trade, Industry and Energy. “At the upcoming fourth round of negotiations, the two countries plan to hold in-depth discussions on various areas, such as products, service, investment, country of origin, customs and cooperation,” the ministry said in a press release. Negotiations for the Korea-Vietnam FTA were launched in September 2012 with the latest round held in South Korea’s port city of Busan in October 2013. Vietnam is South Korea’s sixth-largest trading partner, purchasing $21.09 billion worth of products from South Korea last year, according to the ministry. South Korea is Vietnam’s 16th-largest trading partner, with its imports from Vietnam surging 25.4 percent on-year to $7.17 billion in 2013. Vietnam is part of the 10-member Association of Southeast Asian Nations, with which South Korea signed an FTA in 2009. The Korea-ASEAN FTA went into effect in 2010. Office of Commercial Affairs, Seoul Page 1 Weekly Korea Economic Digest_ March 2014 ROK, Canada conclude free trade deal <The Korea Times 11 March, 2014> South Korea and Canada on Tuesday concluded their negotiations for a bilateral free trade agreement (FTA) that, once implemented, is expected to help significantly boost their bilateral trade. The conclusion of negotiations came at the two nations' trade ministers' talks held in Seoul earlier in the day, according to the Ministry of Trade, Industry and Energy here. "At the trade ministers' talks, the sides confirmed that an agreement has been reached for the Korea-Canada FTA after all remaining issues have been addressed," it said in a press release. The FTA will undergo a series of legal review by each side before it is initialed as early as in June. The negotiations for the Korea-Canada FTA resumed late last year after a five-year hiatus. They were first launched in July 2007. Canada has signed FTAs with nine other countries, but Korea is the first Asian country to sign an FTA with the North American nation. "The FTA with Canada, which has not signed an FTA with any major countries since the North American Free Trade Agreement, will greatly help our companies secure a competitive edge in the Canadian market as the country will also be the first Asian country to sign an FTA with Canada," the ministry said in a press release. Once the agreement is initialed, it can be officially signed after translations and additional legal reviews, according to Deputy Trade Minister Choi Kyong-lim. Choi said the automobile industries will likely to be the biggest winners of the newly concluded South Korea-Canada FTA, while the sensitive agricultural market will get a needed cushion from the pact. Under the proposed FTA, South Korea will completely remove its 8 percent import tariffs on all automobiles and auto parts from Canada as soon as the bilateral trade pact goes into effect. Office of Commercial Affairs, Seoul Page 2 Weekly Korea Economic Digest_ March 2014 Canada will reduce its current 6.1 percent import tariffs on South Korean automobiles and parts to about 4 percent within 24 months of the implementation. The two-year gap between the two countries stems largely from an existing bilateral trade imbalance, the ministry official said. In 2013, South Korea shipped over 130,000 vehicles worth some US$2.23 billion to Canada while importing approximately $92 million worth of vehicles and parts. "The FTA is expected to help South Korean firms secure an edge over their Japanese and European competitors in the Canadian market, as it will completely remove Canada's import tariffs on automobiles that currently account for more than 40 percent of South Korea's total exports to Canada within 24 months following its implementation," Choi told reporters. Canada is already the world's fifth-largest market for South Korean automakers, also importing about 90,000 cars per year from South Korean manufacturers in the United States, according to the trade ministry. The textile industry is also expected to benefit from the bilateral deal. Under the FTA, Canada will remove most of its import tariffs on clothing and other textile products, which currently stand at a maximum of 18 percent, within two years of the FTA implementation. Other products will become tariff-free immediately, such as South Korean washing machines that will lose their 8 percent import duties in Canada. "It is a comprehensive FTA that addresses all aspects of a market from products, customs, service, investment, communications and finance to e-trade, government procurement, intellectual properties, competition, labor and environment," the ministry said. The South Korea-Canada FTA is also a high-level deal that completely removes the two countries' import tariffs on 97.5 percent of products traded between them within 10 years from the day of implementation, it said. Yet, the agreement, as it is currently written, better protects South Korea's agriculture industry than the country's previous FTAs with other major economies, including the U.S., government officials said. Office of Commercial Affairs, Seoul Page 3 Weekly Korea Economic Digest_ March 2014 Under the latest FTA, 18.8 percent of all farm products, or 282 items, will be either exempt from market opening or be given a grace period of more than 10 years. The figure compares with 12.3 percent under the Korea-U.S. FTA, implemented in March 2012, and 14.7 percent under the FTA with the European Union, which went into effect in July 2011. Of the 282 items, 211 products, including rice, will be permanently exempt from market liberalization, according to the ministry. Rice is often considered one of the most sensitive items in South Korea's FTA negotiations. South Korea will gradually remove its tariffs on beef imports -- another sensitive item for local farmers -- from Canada over a span of 15 years. Canadian beef accounted for less than 1 percent of South Korea's total imports in 2013, and Choi said the FTA will be an opportunity for Canadian exporters to expand their combined market share here. "Canada is a member of Group of Eight nations and also the world's 11th-largest economy. But bilateral trade volume between South Korea and Canada currently stands at about $10 billion," he said. "The FTA will be a chance for the two countries to significantly expand their bilateral trade that already has great potential." SKorea-Canada FTA Likely to Have Most Impact on Pork Farmers <The Korea Economic Daily 12 March, 2014> As the Korea-Canada free trade agreement is concluded after almost nine years of negotiations, keen attention is now paid to whether and how much the agreement would have negative effect on agriculture and fishery sectors. In particular, it is forecast that pork farmers, rather than cattle ranchers, will bear the brunt of the impact. According to Korea Agro-Fisheries Trade Corp. on March 11, the total 2012 volume of imports from Canada in agricultural, forestry, and fishery areas was US$1,182 million. This is about 40 percent of Australian primary goods imports in the same year. As for beef imports, the figure for last year was only $10.9 million although this is the segment that attracted most media attention before the agreement's conclusion. The countries Office of Commercial Affairs, Seoul Page 4 Weekly Korea Economic Digest_ March 2014 from which Korea imported beef last year was Australia (55.6%), the United States (34.7%), New Zealand (8.8%), Canada (0.6%), Chile, Uruguay, and Mexico. In 2013, the top import items from Canada were pulp ($291 million) and coniferous lumber ($151 million), both of which are already imported duty-free. When it comes to wheat, the No. 3 import item, whose 2013 Canada-originated import volume was $84 million, there is little domestic production to speak of. Unlike the beef industry which is likely to be harmed little from Canadian competition, domestic pork producers have much to be worried about. The import volume of pork from Canada last year was 43,398 tons (valued at $79.76 million), the second highest after the United States (112,000 tons), but the fourth highest in value terms after the United States ($910 million), Germany ($313 million), and Chile ($120 million). To minimize the harm, the government will lower the duties on pork imports gradually for the next 13 years, instead of repealing the duties immediatel S. Korea unveils measures to boost regional economy <The Korea Herald 12 March, 2014> South Korea said Wednesday that it will ease regulations on the use of areas freed from "green belt" development restrictions, a move intended to bolster regional economies through brisk investment. The government also designated dozens of regional development blocks and said it will provide support for business projects led by regional governments so that they can boost their growth engines. The moves were decided at a trade-investment promotion committee chaired by President Park Geun-hye to spur development of regional economy. "So far, the central government has unilaterally pushed for one-size-fits-all regional (development) measures, which led to low level of satisfaction and were limited in creating jobs and inducing corporate investment," the government said.
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