Ministry of Trade, Industry and Energy

Korea’s 2014 ICT Product Exports Begin with Stable Figures

date2014-02-11

Local Automakers and Importers Subject to Penalty if Fuel Efficiency Standards Not Met

As of February 6th, the “Energy Use Rationalization Act” is being enforced, following its amendment. In a bid to toughen the government’s energy demand management, the act stipulates that local automakers and importers of foreign vehicles that fail to meet the target fuel efficiency standards for automobiles and violate the Energy Consumption Efficiency Grade Indication System will be subject to the imposition of a penalty surcharge. In addition, to foster the utilization of date2014-02-06

Export and Import Trends in January 2014

○ 2011 - Lunar New Year Holidays : Feb 2 (Wed) to 4 (Fri) - January Export Growth (%) : 44.7 ○ 2012 - Lunar New Year Holidays : Jan 22 (Sun) to 24 (Tue) - January Export Growth (%) : -7.3 ○ 2013 - Lunar New Year Holidays : Feb 9 (Sat) to 11 (Mon) - January Export Growth (%) : 10.9 ○ 2014 - Lunar New Year Holidays : Jan 30 (Thurs) to Feb 1 (Sat) - January Export Growth (%) : -0.2       In terms of detailed export trends, exports to EU countries increased significantly consistent with their economic recovery, while exports to Asian countries and China also increased thanks to the solid sales of IT products. However, exports to Japan continued to decrease commensurate to the weak Yen and exports to Latin American countries. - Export growth by Nation (%): EU 24.7, ASEAN 9.9, China 0.8, USA -2.0, Latin America - 13.6, Japan -19.8 - Growth of exports to Japan (%): 2013 2Q -13.6 → 3Q -10.2 → 4Q -8.9 → January 2014 - 19.8 By item, exports of IT products increased thanks to strong sales of semiconductor products (continuing strong memory chip prices) and wireless communication devices (expanded market dominance), while exports in the automotive industry (decrease in operating days), LCD industry (decrease in panel prices), petroleum products (decrease in unit prices of export products) and shipbuilding industry (delays in delivery) decreased. In terms of detailed import trends, imports of gas increased due to an increase in demand for fuels used for power generation and heating, and imports of steel and petroleum products also increased, while the total amount of imports decreased due to reduced imports of crude oil as a result of a drop in the import volume. - Import growth in 5 major items (5): Steel 20.7, petroleum products 20.7, gas 17.8, coal 7.0, crude oil -4.4 - Import Growth by Use (January 1 to 20, % compared to the same period in the previous year): Raw materials 6.2, Capital goods 2.8, Consumer goods 0.5 - Crude Oil Import Price and Volume date2014-02-04

MOTIE Enhances Economic Cooperation with Central European Countries

The Ministry of Trade, Industry and Energy (Minister: Yoon Sang-jik) selected Hungary and Rumania as its first target countries in the emerging markets in which its market development activities for 2014 will be implemented, and dispatched an economic mission headed by Vice Minister Kim Jae-hong to these countries from January 25 to 29. The economic mission includes government agencies like the Ministry of Trade, Industry and Energy (MOTIE), the Small and Medium Business Administration and the Defense Acquisition Program Administration, and support institutions such as the Korea Chamber of Commerce & Industry, KEPCO, Korea Institute of Industrial Technology, Korea Trade Insurance Corporation and Korea Line Corporation. Hungary is Korea‟s 10th biggest trading partner among the EU countries and is one of the key trade bases from which Korean companies can advance into the Western European and the Balkan markets. Currently, major Korean companies like Samsung Electronics and Hankook Tire are expanding their investments in Hungary, which has included the installation of new factories. In addition, Hungary exited from the Excessive Deficit Procedure (EDP*) in 2013 after 9 years of the EU's budget scrutiny program, and has been focusing on its new “Look East” policy to enhance its economic partnerships with Asian countries. * A country subject to EDP is a member state that has breached or is in risk of breaching the deficit threshold of 3% of GDP, and as such is subject to restrictions on budgeting and EU funds. The economic mission held the first „Korea-Hungary Joint Economic Committee‟ on January 27 and discussed issues related to national cooperation between Korea and Hungary in various fields, including trade investment, creative economy, national defense and SME promotion. * Chief of Delegation:Minister of Trade, Industry and Energy (Korea) , Minister of Economy (Hungary) The parties entered into an MOU in 4 areas, which were establishing a cooperative network for SMEs, specialized nuclear human resource development, cooperation for technical innovation and ECA agreement, and they agreed to cooperate in a comprehensive manner for Korean exports of electronic trading systems and technology in the field of the defense industry. * MOU: KEPCO, KNA - Hungary Budapest University of Technology (nuclear specialist development), Small and Medium Business Administration – Hungary‟s Ministry of Economy (support for SMBs), Korea Institute of Industrial Technology – Hungary‟s National Innovation Agency (technical innovation), Korea Trade Insurance Corporation – Hungary‟s ECA (trade insurance) As well, 2014 marks the 25th anniversary of the establishment of diplomatic relations between Korea and Hungary, and the Chambers of Commerce & Industry of both countries jointly held an economic cooperation forum in which major companies of both countries participated. During his congratulatory address, Vice Minister of Trade, Industry and Energy Kim Jae-hong discussed Korea‟s new creative economy policy and proposed that the two countries pay more attention to promoting world-leading innovative companies through joint research and development and industrial innovation activities using the EU fund. The economic mission is scheduled to visit Rumania and hold a Korea-Rumania industrial cooperation committee to discuss cooperation between the two countries. In this committee, Vice Minister Kim Jae-hong is planning to ask the Rumanian government for cooperation in resolving difficulties* experienced by Korean companies in Rumania. * Difficulties in investment due to the reduction of renewable energy incentives (Samsung C&T Corporation), Rumanian government‟s non-fulfillment of public waters dredging (Daewoo Mangalia shipyard) * (Main agenda of Korea-Rumania date2014-01-29

2013 Foreign Direct Investment (FDI) Trends

The Foreign Direct Investment (FDI) trend in Korea shows a positive growth compared to the trends of the last five years. The FDIs fell slightly in 2013 from a year earlier due to a decrease in investments from Japan following the weaker Yen and other factors. The amount of FDI on a report basis was 14.55 billion USD, down by 10.7% from 16.29 billion USD compared to the same period in the previous year, but up 9.9% compared to the 5-year average, which is 13.24 billion USD. The amount of FDI on an arrival basis was 9.68 billion USD, down by 9.4% from 10.69 billion USD compared to the same period last year, but up 27.9% compared to the 5-year average of 7.57 billion USD. FDI trends by sector on a report basis are as follows: - (By nation) Investments from the USA (3.53 billion USD, down 4.1%) and Japan (2.69 billion USD, down 40.8%) decreased, while investments from European countries (4.8 billion USD, up 76.9%) increased. - (By industry) Investments in the service sector (9.85 billion USD, up 2.6%) increased, while those in manufacturing sector (4.65 billion USD, down 23.8%) decreased. - (By type) Mergers and acquisitions (4.98 billion USD, up 32.8%) increased, while greenfield investments (9.57 billion USD, down 23.7%) decreased. Deputy Director Wi Seung-bok, Foreign Investment Promotion Division(☎ 044-203-4082) date2014-01-29

3rd Regional Comprehensive Economic Partnership (RCEP)

The 3rd RCEP (Regional Comprehensive Economic Partnership) negotiations were held from January 20 (Mon) to 24 (Fri), 2014 in Kuala Lumpur, Malaysia. At the negotiations, the Chief Negotiator for Trade of the Ministry of Trade, Industry & Energy Woo Tae-hee attended as the Head of the Korean delegation, joining representatives from a total of 16 countries including the 10 ASEAN countries* and 6 AFP countries (Korea, China, Japan, Australia, New Zealand, India) that signed FTAs with ASEAN. ※ 10 ASEAN countries: The Philippines, Malaysia, Singapore, Indonesia, Thailand, Brunei, Vietnam, Lao PDR, Myanmar, Cambodia At the third round of negotiations, discussions were held on the methods for liberalizing goods, services and investments, as well as cooperation in the area of standards (competition, intellectual property rights, dispute settlement, economic & technical cooperation, etc.). The details are as follows: - Negotiations were carried out focusing on modalities (negotiation method, negotiation goal, etc.) proposed by various countries in the Trade in Goods Working Group. Also, in the Sub-Working Groups of Rules of Origin (ROO) and Customs Procedures & Trade facilitation, discussions were focused on what to be included in these areas - Working Group meetings were also held for the service and investment sector, respectively, and member countries exchanged opinions regarding liberalization method & elements to be covered in the text In addition to the goods, services and investments sectors, discussions were also held on the standards and fields of cooperation. At these negotiations, the participating countries agreed to establish four Working Groups for competition, intellectual property rights, dispute settlement, and economic & technical cooperation, respectively. In the rules area, Korea’s interested areas, such as Competition & Intellectual Property Rights, were included, thus providing us with the basis to reflect our national interests. Furthermore, it is expected that the negotiations will eventually develop into a comprehensive RCEP, covering a wide range of areas. ※ Our delegates led the discussions in the competition and dispute settlement areas by circulating proposals and making presentations. It was agreed that the next meeting (4th RCEP Negotiations) would be held in China in April. Currently, the RCEP is holding discussions, with the goal of reaching an agreement by 2015, and is scheduled to have four rounds of negotiations this year. 3rd Regional Comprehensive Economic Partnership (RCEP) Negotiations Contact Information East Asia FTA Planning Team, Director Cho Su-jeong (☎ 010-4603-9624) date2014-01-28

Sales Trend of Major Distributors for December 2013

Non-Food Sectors ○ Electronics & Culture - Year-on-Year : -3.3 - Month-on-Month : 10.7 ○ Apparel - Year-on-Year : -10.3 - Month-on-Month : -4.7 ○ Living - Year-on-Year : -5.2 - Month-on-Month : 2.8 ○ Sports - Year-on-Year : -3.7 - Month-on-Month : 2.5 ○ General Merchandise - Year-on-Year : -11.3 - Month-on-Month : 14.4 ○ Sub Total - Year-on-Year : -6.2 - Month-on-Month : 4.2       ○ Foods - Year-on-Year : -4.8 - Month-on-Month : 10.0   ○ Total - Year-on-Year : -5.7 - Month-on-Month : 8.3       Non-Food Sectors ○ General Merchandise - Year-on-Year : -3.2 - Month-on-Month : 11.5 ○ Ladies’ Formal Wear - Year-on-Year : -5.8 - Month-on-Month : -8.5 ○ Women’s Casual Wear - Year-on-Year : -2.9 - Month-on-Month : -8.7 ○ Men’s Wear - Year-on-Year : -5.7 - Month-on-Month : -8.7 ○ Children & Sports - Year-on-Year : 3.9 - Month-on-Month : -14.1 ○ Living - Year-on-Year : 2.2 - Month-on-Month : -13.8 ○ Global Brands - Year-on-Year : 8.7 - Month-on-Month : 9.5 ○ Sub Total - Year-on-Year : -0.6 - Month-on-Month : -4.1     ○ Foods - Year-on-Year : 1.1 - Month-on-Month : 12.0 ○ Total - Year-on-Year : -0.3 - Month-on-Month : -0.1         Non-Food Sectors ○ Living - Year-on-Year : 4.8 - Month-on-Month : -8.4 ○ General Merchandise - Year-on-Year : 2.1 - Month-on-Month : 10.0 ○ Tobacco, etc. - Year-on-Year : 7.3 - Month-on-Month : 0.9 ○ Sub Total - Year-on-Year : 6.6 - Month-on-Month : 0.9     Foods ○ Beverages and Processed Goods - Year-on-Year : 12.2 - Month-on-Month : -4.3 ○ Instant foods (including some perishable goods) - Year-on-Year : 12.0 - Month-on-Month : -3.2 ○ Sub Total - Year-on-Year : 12.2 - Month-on-Month : -4.1     ○ Total - Year-on-Year : 9.6 - Month-on-Month : -1.9         The revenues of all items of the so-called Super Supermarkets, or SSM, operated by large retailers, including foods, declined date2014-01-23

2013 Car Industry Trends

○ 2011 - Production : 4,657,094 - Export : 3,151,708 - Amount (USD 0.1 billion) : 453.1 - Domestic Sales : 1,579,674 - Cars Made in Korea : 1,474,637 - Imported Cars : 105,037   ○ 2011 Rate of Change - Production : 9.0 - Export : 13.7 - Amount (USD 0.1 billion) : 28.0 - Domestic Sales : 1.5 - Cars Made in Korea : 0.6 - Imported Cars : 16.0   ○ 2012 - Production : 4,561,766 - Export : 3,170,634 - Amount (USD 0.1 billion) : 472.0 - Domestic Sales : 1,541,715 - Cars Made in Korea : 1,410,857 - Imported Cars : 130,858   ○ 2012 Rate of Change - Production : -2.0 - Export : 0.6 - Amount (USD 0.1 billion) : 4.2 - Domestic Sales : -2.4 - Cars Made in Korea : -4.3 - Imported Cars : 24.6 ○ 2013 (Preliminary) - Production : 4,521,638 - Export : 3,086,394 - Amount (USD 0.1 billion) : 486.5 - Domestic Sales : 1,537,590 - Cars Made in Korea : 1,381,091 - Imported Cars : 156,497 ○ 2013 (Preliminary) Rate of Change - Production : -0.9 - Export : -2.7 - Amount (USD 0.1 billion) : 3.1 - Domestic Sales : -0.3 - Cars Made in Korea : -2.1 - Imported Cars : 19.6   * Source: Korea Automobiles Manufacturers Association and Korea Automobile Importers and Distributers Association       The export volume for 2013 was 3,086,394 units, a year-on-year decrease of 2.7%, and recorded a decline for the first time in four years since 2009 due to the high won and low yen trend, expanded global uncertainties and supply problems of major manufacturers. Nevertheless, the export amount of finished cars (based on MTI 741) reached a record-high level of USD 48.7 billion with a year-on-year increase of 3.1%, thanks to growth in the market share of large passenger vehicles and RVs. By region, exports of Korean cars were robust in the US market, which has shown a stable economic recovery, and grew in the EU and in Asia, reflecting the economic growth. However, exports declined in Latin America and Eastern Europe due to expanding local production. In China, which accounts for half of all exports to Asia, exports grew by 13.2%, prompted by growing demand caused by the urbanization of inland regions. ○ 2010 - Total : 2,772 - North America : 678 - US : 511 - EU : 298 - Eastern Europe : 241 - Middle East : 587 - Latin America : 447 - Africa : 172 - Pacific : 180 - Asia : 169 - China : 88 ○ 2010 Change - Total : 29.0 - North America : 11.4 - US : 13.7 - EU : -1.3 - Eastern Europe : 144.9 - Middle East : 39.8 - Latin America : 57.3 - Africa : -1.2 - Pacific : 22.2 - Asia : 48.2 - China : 74.2   ○ 2011 - Total : 3,152 - North America : 771 - US : 588 - EU : 426 - Eastern Europe : 268 - Middle East : 626 - Latin America : 495 - Africa : 180 - Pacific : 161 - Asia : 225 - China : 129 ○ 2011 Change - Total : 13.7 - North America : 13.7 - US : 15.1 - EU : 42.8 - Eastern Europe : 11.0 - Middle East : 6.7 - Latin America : 10.9 - Africa : 5.0 - Pacific : -11.0 - Asia : 32.6 - China : 45.7   ○ 2012 - Total : 3,171 - North America : 905 - US : 694 - EU : 398 - Eastern Europe : 284 - Middle East : 614 - Latin America : 433 - Africa : 1 date2014-01-15

2013 (December & Full-Year) Trends and 2014 Outlook for Exports and Imports

Export & Import Trends in December 2013 Total exports were USD 48.1 billion in December, showing year-on-year growth of 7.1%, while imports were USD 44.4 billion with year-on-year growth of 3.0%. The trade surplus was USD 3.7 billion. Exports grew significantly year-on-year in December, fueled by the global economic recovery and the higher number of working days (1.5 days). Imports as well as exports are growing, and a trade surplus has been recorded for 23 consecutive months. * Export growth rate by region (%): US 13.2%, China 8.4%, EU 2.0%, Japan -11.6% and ASEAN -11.9% * Export growth rate by item (%): Ships 50.3%, semiconductors 20.0%, cars 13.2%, petrochemical 7.5%, general machinery 3.1%, steel -0.1%, mobile devices -3.1%, LCD -16.9% and petroleum products -21.0% Of five major import items, petroleum products and steel imports grew, while crude oil and gas imports decreased. Looking at imports by use category, imports of raw materials, capital goods and consumption goods all grew. * Import growth rate of five items (%): Petroleum products 21.7%, steel 16.5%, coal 3.4%, gas -7.7% and crude oil -10.1% * Import growth rate by use (As of December 1 to 20, 2012, compared to the same period of the previous year, %): Raw materials 11.7%, capital goods 8.4% and consumption goods 8.6%. Korea recorded a trade surplus of USD 44.2 billion in 2013, thanks to exports of USD 559.7 billion that showed year-on-year growth of 2.2% and imports of USD 515.5 billion that showed a year-on-year decrease of 0.8%. <2013 Export & Import Results (Estimated based on customs data)> (Unit: USD 0.1 billion, %) 2012 ○ 1H - Export (Rate of Increase/ Decrease) : 2,750(0.5) - Import (Rate of Increase/ Decrease) : 2,641(2.3) - Trade Balance : 109 ○ 2H - Export (Rate of Increase/ Decrease) : 2,729 (-3.1) - Import (Rate of Increase/ Decrease) : 2,555 (-4.0) - Trade Balance : 174 ○ Annual - Export (Rate of Increase/ Decrease) : 5,479 (-1.3) - Import (Rate of Increase/ Decrease) : 5,196 (-0.9) - Trade Balance : 283     2013 ○ 1H - Export (Rate of Increase/ Decrease) : 2,765(0.6) - Import (Rate of Increase/ Decrease) : 2,565 (-2.9) - Trade Balance : 200 ○ 2H - Export (Rate of Increase/ Decrease) : 2,832(3.8) - Import (Rate of Increase/ Decrease) : 2,591(1.4) - Trade Balance : 241 ○ Annual - Export (Rate of Increase/ Decrease) : 5,597(2.2) - Import (Rate of Increase/ Decrease) : 5,155 (-0.8) - Trade Balance : 442           Exports to China have been robust, while exports to the US and the EU have been improved thanks to the economic recovery. However, Exports to ASEAN countries including Indonesia are decreasing. <Five Export Items and Their Percentages in 2013> (Unit: USD 1 million, %) ○ 2012 Amount and Percentage of Exports - Petroleum date2014-01-14

Minister Welcomes Asian Energy Ministers

Minister of Trade, Energy and Industry Yoon Sang-jick delivers welcoming remarks on the occasion of the 5th Asian Ministerial Energy Roundtable on September 11 in Seoul. The event, aimed at establishing a cooperation network between oil producing nations and consumers, was attended by 31 energy ministers and around 150 industry leaders. date2013-09-13