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THE SIXTH WTO TRADE POLICY REVIEW OF THE REPUBLIC OF KOREA
CLOSING STATEMENT BY AMBASSADOR SI-HYUNG LEE
DEPUTY MINISTER FOR TRADE, MINISTRY OF FOREIGN AFFAIRS &
TRADE
21 SEPTEMBER 2012
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Muchas gracias, Señor Presidente,
1. Me gustaría agradecer al Sr. Presidente, el Embajadór Eduardo Muñoz, y nuestro ponente, el Embajadór Joakim Reiter, por sus reflexivas y exhaustivas observaciones del miércoles.
2. También me gustaría agradecer a los 31 miembros quienes hicieron observaciones. Ha sido muy útil escuchar las opiniones de los miembros sobre las políticas y prácticas comerciales de Corea, y voy a tomar en cuenta estos comentarios y sugerencias, de regreso a Seúl para una nueva deliberación. Corea ya ha proporcionado respuestas a algunas de las preguntas presentadas por escrito esta semana, y proporcionará el resto de respuestas en el tiempo oportuno. Este día, quisiera abordar algunas observaciones y preguntas formuladas oralmente el día miércoles.
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3. Como jefe de la delegación de Corea, fue muy alentador escuchar el día miércoles todos los comentarios positivos sobre el desarrollo económico, y políticas comerciales de Corea. Aprecio especialmente, que un buen número de miembros, hayan reconocido los esfuerzos de Corea, para superar la crisis financiera global de 2008, por medio de prudentes medidas macroeconómicas y liberalización del mercado, sin recurrir a medidas comerciales restrictivas. Corea continuará sus esfuerzos para mantener a raya el protecciónismo tanto a nivel nacional como mundial.
Mr. Chairman,
4. A number of Members noted that Korea's FDI inflow is the 3rd lowest among OECD member countries. The Korean government has put forth every effort to encourage inward FDI. The outcome, however, has up to this point, not always been reflective of those efforts. It has been pointed out that Korea's low FDI inflow is due to the cost of doing business in areas, such as labor and land, burdensome regulations, as well as the ceiling on foreign participation in some of services sectors. We will continuously strive to strengthen initiatives to work on these points,
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in order to improve the investment environment.
5. The Korean government has implemented a series of investor- friendly programs to address such concerns as I just mentioned, especially through the removal of market entry barriers, the relaxation of burdensome regulations, and the creation of a business-friendly environment. In 2011, the government embarked on a second three-year plan on the tails of the previous initiative to enhance the investment climate in Korea. This plan contains measures to improve the overall business and living environment in Korea for foreign investors, such as ensuring stronger protection of their intellectual property rights, and supplying land for business use at lower costs.
6. Noting particularly low FDI inflow to the services sector as well as the sector's low productivity, the Korean government embarked on various plans since 2008 to assist and raise productivity of the services industry, including R&D assistance.
7. Meanwhile, Korea has conducted further liberalization in the services sector through several FTAs with the hope that it will facilitate
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the necessary reform and deregulation and lead to increased competitiveness. Through these FTAs, Korea has liberalized business services, removed "some" of the foreign equity participation ceilings in telecommunications and broadcasting services, and gotten rid of most of limitations in financial services. This services liberalization is extended to Korea's specific FTA partners on the basis of the reciprocity principle.
As it is clear that the overall services trade regime is becoming more liberalized, it is also understood that these efforts would ultimately benefit other trading partners. Korea would consistently push forward further services market reform.
8. On trade facilitation, I appreciate Members' recognition that Korea has continued to make wide-ranging efforts and remains a world leader in this area. Along these lines, Korea will continue its efforts to further streamline its already efficient customs procedure as well as to move forward trade facilitation discussion in the WTO context by sharing its experiences in customs reform and best practice.
9. With regard to FTAs, I was pleased to find out that all of Korea's FTA partners agreed with Korea's assessment of FTAs' positive results.
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As Korea benefits from the more advanced and more liberalized trade environment, Korea's FTA strategy will highlight such benefits of free trade and contribute to creating an increasingly favorable environment for multilateral trade liberalization.
10. On tariffs, a number of Members raised concerns that the overall simple average applied MFN tariff rate has increased from 12.8% in 2008 to 13.3% in 2012. As is already described in the Report by the Secretariat, this supposed increase is caused by the fact that the classification of agricultural products, which are generally subject to higher tariff rates, became more detailed as a result of the introduction of the 2012 version of the Harmonized System of Tariff Classification.
This re-classification was purely technical and did not result in any increase in actual tariff rates.
11. Several Members also raised issues concerning the complexity of Korea's tariff system. To the degree that Korea's tariff system is perceived as complex, this is, for the most part, centered in the agricultural sector, due to TRQs and their relatively high out-of-quota rates, specific tariffs, and flexible tariffs. All of these elements reflect
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the particularly vulnerable situation of Korea’s agricultural sector. Since the last Review, Korea's farming household income has shown stagnation and, in some cases, even decline. Low labor productivity in agriculture, which is attributable to an aging farming population and small-scale farming traditions, coupled with an increase in agricultural imports, are considered to be factors that suppress farming household incomes.
Given such state of Korea’s agricultural sector, this pattern would not change dramatically for the time being.
12. Concerning flexible tariffs, several Members raised concerns that these alter conditions of import and reduce predictability. The flexible tariffs are set, taking into consideration the domestic and international market conditions, to cope with import surges or price hikes. These tariffs are within the range of Korea's WTO commitments. They are predictable since the rates are established mostly on a yearly basis, and are defined in Presidential decrees publicly available one month prior to entry into force. Flexible tariffs are being applied in a manner that the number of goods subject to the imposition is continually reduced and the rates are gradually lowered in order to facilitate trade.
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13. With regard to the low average fill rate of TRQs, most items with a large amount of imports have high TRQ fill rates. Meanwhile, cocoon, raw silk, silkworm eggs, powdered bones, and sesame oil cake have low fill rates due to outbreak of animal diseases or low domestic demand as a result of change in industrial structure. The Korean government keeps monitoring TRQ fill rates and the administrative system, in an effort to enhance transparency, fairness and efficiency in TRQ administration that includes TRQ allocation standards and procedures.
14. On technical standards, many Members raised concerns that the share of non-harmonized standards has increased considerably.
However, I would like to clarify that these results stem from miscommunication with the Secretariat. In fact, Korea’s harmonization rate has not decreased, but remains the same since the last Review.
15. With respect to the SPS-related issues, I would like to confirm that Korea's SPS rules and practices are in line with the provisions of the WTO SPS Agreement, and are founded on a scientific basis. Several Members asked if the import risk assessment process could be expedited for agricultural products. I understand Members' concerns. However,
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we have very limited human and logistic resources in this area to satisfy all the applicants' wishes. Despite this restraint, Korea has been doing its best to keep the process moving as smoothly as possible while applying the principle on an equal basis without discrimination.
16. On government procurement, some Members voiced their concerns over the declining share of foreign suppliers in Korea's government procurement market. I would like to reassure you that Korea's government procurement system has been in line with its obligations under the WTO Agreement on Government Procurement and FTAs with provisions on government procurement. Moreover, Korea expects that once the Revised GPA enters into force, the Agreement will offer more access to Korea's government procurement market, as Korea has expanded its coverage.
17. Mr. Chairman, distinguished delegates! Through our TPR exercise including the preparation during the last several months, Korea has made its best efforts to provide with all the data and material available, and diligently answer the questions of the Members. I hope our efforts and answers have served well your inquiries and concerns, in most cases,
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if not all. We will duly take into account the comments and recommendations made by Members in formulating our future trade policies.
18. Korea's presidential election is less than 3 months away from today.
The next administration may recalibrate the trade policies and practices, along with overall other policies, as any new government would do.
However, I am confident that Korea's overall trade policy direction will remain mostly unchanged as has been witnessed during the last several decades with various political parties at the helm of the Korean government. Korea has always aimed to enhance economic efficiency and competitiveness through liberalization and reform based on the multilateral trading system. I thank you for your interest and participation in Korea's Sixth Trade Policy Review and hope this meeting helped you better understand Korea's trade policies and practices.
19. In closing, Mr. Chairman, Korea hopes that the currently stalled DDA negotiations will soon bear fruit and affirm our collective efforts over the past ten years. Korea expects that the Ninth WTO Ministerial Conference to be held in Bali next year will serve as an important
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milestone for strengthening the multilateral trading system. Korea will do its due part to help move the negotiations forward and reinforce the multilateral trading system and the WTO in close cooperation with other Members.
Once again, I appreciate your active participation.
Thank you.
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