Trade Policy Review of Trade Policy Review of

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Introductory Presentation Introductory Presentation

October 8, 2008 October 8, 2008

Trade Policy Review of Trade Policy Review of

the Republic of Korea

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Economic Conditions & Performance I

Economic Reform & Liberalization II

Trade Policy Direction III

Conclusion IV

Economic Conditions Economic Conditions

&

Performance

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20042004 20052005 20062006 20072007

GDP Growth Rate(%)

GDP Growth Rate(%) 4.74.7 4.24.2 5.15.1 5.05.0

Gross Fixed Capital Formation Gross Fixed Capital Formation (% change)

(% change) 2.12.1 2.42.4 3.63.6 4.04.0

Unemployment Rate(%)

Unemployment Rate(%) 3.73.7 3.73.7 3.53.5 3.23.2

Consumer Price(% change)

Consumer Price(% change) 3.63.6 2.82.8 2.22.2 2.52.5 Exchange

Exchange Rate(KRWRate(KRW/USD, end of /USD, end of period)

period) 1,043.81,043.8 1,013.01,013.0 929.6929.6 938.2938.2

I. I. Economic Conditions and Performance Economic Conditions and Performance

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Trade in Goods

Trade in Goods Inward & Outward FDI

(US $, Billion)

29.4 23.2 16.1

253.8

284.4

325.5

371.5

224.5

261.2

309.4

356.8

14.6

2004 2005 2006 2007

Sustained Growth Sustained Growth

Export Import

Trade Balance

I. I. Economic Conditions and Performance Economic Conditions and Performance

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Inward & Outward FDI Inward & Outward FDI Trade in Goods

(US $, Billion)

12.5

6.1

11.8 11.2

10.5 6.6

11

20.4

2004 2005 2006 2007

Inward FDI Outward FDI

I. I. Economic Conditions and Performance Economic Conditions and Performance

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Uncertainty in the Global Economy

Domestic Domestic

Demand Demand

Inflation Inflation

Ch alle

nge s!

Ch alle

nge s!

Barriers to Reform and Liberalization

I. I. Economic Conditions and Performance Economic Conditions and Performance

Continue Reforms to

Adapt and Adjust

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Conditions &

Performance

Economic Reform

Economic Reform Economic Reform

&

Liberalization

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Financial Sector Reform Financial Sector Reform

9 Facilitation of the Capital Market 9 Upgrading Legislations

for More Advanced Financial Market

“Financial Investment Services “Financial Investment Services and Capital Market Act

and Capital Market Act””(2007.7)(2007.7)

II. Economic Reform and Liberalization

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Corporate Governance Corporate Governance

2005 Introduction of “Class Action Suits”

(Covering Firms with Assets of at 1.6billion $)

Expansion of the Scope for “Class Action Suits”

(Covering All Listed Firms)

Competition Policy: “Three-year Roadmap for Market Reform”

II. Economic Reform and Liberalization II. Economic Reform and Liberalization

2007

2003-2006

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Deregulation Deregulation

Regulatory Reform Task Force (Aug 2004) Regulatory Reform Task Force (Aug 2004)

9 Reduction or Rearrangement of Unnecessary Regulations 9 Participation of Representatives from Private Sector

9 Suggestion of 1,822 Deregulation Plans in 68 Areas, 1,304 of Which were Completed

II. Economic Reform and Liberalization

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Facilitation of FDI Facilitation of FDI

Inward FDI Outward FDI

Three-year Master Plan

9Improvement of the Location Supporting System

9One-Stop Service for Applications

Deregulation

9Measures to Encourage Overseas Direct

Investment(Jan. 2007)

II. Economic Reform and Liberalization

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Conditions &

Performance

Economic Reform

Trade Policy Direction

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Basic Objectives of Korea

Basic Objectives of Korea’’s Trade Policys Trade Policy

Open and Advanced Economy Open and Advanced Economy Consistent with the rules

Consistent with the rules-based Multilateral Trading -based Multilateral Trading System(MTSSystem(MTS))

Primacy of the MTS

: Faithfully Implement WTO Commitments and ObligationsFaithfully Implement WTO Commitments and Obligations

Regional Cooperation &

Regional Cooperation & FTAsFTAs as complementary to the MTSas complementary to the MTS

III. Trade Policy Direction

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Implementation of WTO Commitments Implementation of WTO Commitments

& Further Liberalization

& Further Liberalization 9 Weighted Average of Applied Tariff Rate

: 4.65% (2004) → 3.88% (2007)

9 Further Decrease in Tariff Expected in 2009 9 Improvement of Access for Agricultural Imports

: $11.2 bil.(2004) → $16.2 bil.(2007)

III. Trade Policy Direction

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9 Public Stockholding System

: To Prevent Distortion in the Rice Market 9 Liberalizing Services Industry

: In Line with GATS Commitments and

Further Regulatory Reforms through “Service PROGRESS*”

III. Trade Policy Direction III. Trade Policy Direction

Implementation of WTO Commitments&

Further

Further Liberalization(con’Liberalization(con’tt))

*: Productivity, Regulatory Reforms, Openness,

Global Standard, Rivalry, Environmental Improvement, Specialization. Scale Economy

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III. Trade Policy Direction III. Trade Policy Direction

9 GPA

: More Open, Transparent and Non-discriminatory Procurement Environment

9 Dispute Settlement System

: 8 cases(direct involvement) / 14cases(Third Party) 9 IPR

: New “Copyright Law” in line with Int’l Treaties Implementation of WTO Commitments Implementation of WTO Commitments

& Further

& Further Liberalization(con’Liberalization(con’tt))

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Cooperation with

Cooperation with LDCsLDCs

9 Increased Unilateral Preferential Access to LDCs

9 $ 1.3 mil. to WTO’s Technical Assistance Activities

III. Trade Policy Direction

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Agriculture

NAMA Services

Balanced Outcome Reflecting Different Tariff Structures

Revised Offer in May 2005.

5 and Improvements

Indicated in the Signaling Conference

Substantial Reduction of Tariffs and Sectoral

Liberalization

DDA Negotiations DDA Negotiations

III. Trade Policy Direction

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APEC APEC

ASEAN+3 ASEAN+3 ASEM ASEM

Regional Regional Cooperation Cooperation

&

& FTAs FTAs

III. Trade Policy Direction III. Trade Policy Direction

FTAs FTAs

Complementary to Multilateral Trading System Complementary to Multilateral Trading System

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(*: Goods & Services) (*: Investment)

Undergoing Undergoing Concluded

Concluded

Bilateral Bilateral

FTAs FTAs

*

III. Trade Policy Direction

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WTO +

WTO + FTAsFTAs

(Primacy) (Complementary) (Primacy) (Complementary)

Liberalization from FTAs

Domestic Reforms

Facilitating Multilateral Trade Liberalization

III. Trade Policy Direction

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Conclusion

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Multilateral Trade Liberalization Multilateral Trade Liberalization

Korea

Korea’’s Economic Growths Economic Growth

9 Firm Commitment to the WTO-based Open Multilateral Trading System

9 Economic Cooperation with LDCs and other Developing Countries

IV. Conclusion

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Trade Policy Review of Trade Policy Review of