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FTA/Economic Cooperation
Evaluation of the Korea-US FTA after Two Years
Korea-US trade volume rose by 4.1% ($197.4B→$205.4B) following the implementation of the KORUS FTA. In the second year of the FTA, the trade volume of products that benefited under the pact rose by 13.0% ($41.7B→$47.1B), but the trade volume of products that were excluded from the agreement was down by 8.6% ($62.6B→$57.2B). Since the FTA took effect, Korea's exports to the US have grown faster than total exports, which has meant that the agreement has served as a sustaining pillar for exporters. Exports of products included in the FTA grew for two consecutive years (1st year 1.6%→2nd year 5.4%), with continuous growth in automobile parts (11.5→8.3%) and petroleum products (36.1→5.9%*). However, the growth rate in those sectors dropped sharply due to falling export prices and the extension of overseas oil refinery facilities. Exports of excluded items decreased (-3.5%) during the first year of the FTA, but went up in the second year (5.7%). Exports of wireless communication devices plunged during the first year of the FTA (-34.1%) only to go up again during the second year (31.3%), thanks largely to a boom in the LTE market. Exports of automobiles rose (16.5→14.7%) over the two years, due to improved quality and brand awareness. Exports of Korean agricultural products and food grew by 21.4% during the second year of the FTA, and by 9.5% during the first year. (Mar 2013~Feb 2014) It also rose in all sectors, including processed food, fruits • vegetables, livestock products, and forest products. In particular, exports of processed food (e.g., tobacc date2014-03-18
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FTA/Economic Cooperation
Korea, China Hold 10th Round of FTA Negotiations
The two parties will continue talks in the areas of goods, services, investment, regulations, and fields for cooperation. Items on the agenda for each sector include: - Goods: Hold concession negotiation for each product category along with drafting consolidated text in the areas of goods, product origin, customs procedure, sanitary and phytosanitary (SPS), technical barriers to trade (TBT), and trade remedies - Services & investment: Discuss methodologies of liberalization and agreed documentation in service & investment - Regulations & cooperation: Discuss agreed documentation in the areas of intellectual property rights, competition, E-commerce, transparency, environmental & economic cooperation date2014-03-17
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Energy
Northeast Asian Oil Hub Development Plan
As oil trade should be activated first, after which traders should be attracted and the financial infrastructure expanded to successfully develop the Oil Hub, this Plan focuses on the measures to solve the issues of and improve the current system, which has disturbed the activation of oil trade. First, oil refining facilities will be turned into bonded factories to streamline taxation and tax refund procedures, and the regulations on the processing and transportation of bonded cargo will be eased. In addition, regulations on blending or other activities will be eased so that oil products can be mixed or processed into high value-added products with additives. In addition, measures to develop the oil and logistics hub into a financial hub are also included to the plan, including improvement of the financial infrastructure and tax incentives geared toward attracting oil traders to Korea based on future activation of trade. Types of oil trade include direct trade for consumption, brokered trade through traders and the trading of derivatives through financial organizations. Direct trade refers to transactions in which a consumer directly purchases a volume of oil from a crude oil producer or an oil product manufacturer for actual consumption. A brokered trade is a transaction made through an oil trader to gain margin by taking advantage of oil price gaps, between oil types or between regions. A trade of derivatives is a transaction that does not involve logistical transactions. The oil to be supplied in the future or the right (option) to purchase or sell oil under a specific condition are traded. The period and the background of development varies, but the US Gulf Coast, ARA in Europe and Singapore are recognized as three major oil hubs. The US Gulf Coast and ARA, Europe, have been naturally developed over the long term, with large-sized oil production sites and storage facilities built adjacent to locations of consumers as centers. Meanwhile, Singapore has rapidly emerged as an oil hub of Asia in a relatively short period of time, thanks to the government’s clear vision and strategic setting of targets. As Singapore has lost its power due to the rapid growth of oil trade volumes in Northeast Asia, the demand for a new oil hub in Northeast Asia has been constantly increasing. Korea is most favorably situated to be an oil hub of Northeast Asia, considering its geopolitical location, the world-class refinery plants, its deep sea and its ideal port conditions. Ulsan, as the world’s No. 4 liquid terminal following Houston (US), ARA (Europe) and Singapore, has already secured the ideal conditions to grow into an oil hub. Accordingly, Korea will activate oil trade by easing regulations, and t date2014-03-13
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Trade/Investment
Korea’s trade surplus in ICT is on the rise thanks to advanced · emerging economies’ increase in ICT product exports
Korea’s ICT product exports in February 2014 were recorded as USD 12.84 billion, up by 8.4% compared to the same period in the previous year. Korea’s ICT product exports increased evenly in the advanced and emerging countries based on export restoration in the U.S., European countries and Japan, as well as export expansion to ASEAN 〮 Latin American countries. By region, ITC product exports to the U.S. increased to USD 1.12 billion, up by 7.9%, while those to EU countries, Japan, ASEAN countries, and Latin American countries were recorded as USD 1.34 billion (up 1.9%), USD 0.53 billion (up by 19.7%), USD 1.65 billion (up 5.4%), and USD 0.76 billion (up 8.3%), respectively. By item, mobile phones (USD 2.05 billion, up 37.7%), semiconductors (USD 4.47 billion, up 14.6%) and D-TVs (USD 0.53 billion, up 8.6%) all continued to lead the increase in exports. Korea's ICT industry was in the black, recording a surplus of USD 6.63 billion, which served as a driving force to reach the nation’s trade surplus of USD 0.93 billion for the month. ICT product export performance and trade balance in February in recent years are shown in the figure below. By region, imports from most countries such as China (including Hong Kong, USD 2.16 billion, up 15.6%), ASEAN countries (USD 1.01 billion, up 27.2%), the U.S. (USD 0.6 billion, up by 5.4%) and EU countries (USD 0.46, up by 9.7%) increased. As well, it is expected that ICT product exports will remain strong mainly with restoration in the world ICT markets and growth of major items such as Smartphones, and semiconductors. date2014-03-12
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FTA/Economic Cooperation
The Results of the 4th Korea-China-Japan FTA Negotiation
The 5th round of negotiations will be held in China in July, but the specific schedule still needs to be agreed upon among the three countries. In order to lay the foundation for the economic integration of East Asia, the government will actively participate in the Korea- China-Japan FTA negotiation; and work on the negotiation in consideration of the need for consistency among the Korea-China FTA, the Korea-China-Japan FTA and RCEP*. * RCEP: Regional Comprehensive Economic Partnership (participated in by ASEAN, Korea, China, Japan, Australia, New Zealand and India) date2014-03-10
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Energy
Korea and UAE Conclude MOU for Cooperation in the Energy Sector
Minister of Industry, Trade and Energy Sang-Jik Yoon took part in a ceremony to sign the Korea-UAE MOU for Energy Cooperation with the UAE’s Minister of Energy Suhail bin Mohammed Al- Mazrouei at the Government Building in Seoul in Sejong-no, Jongno-gu, Seoul, at 10:00, February 28, 2014 (Fri). H. H. Sheikh Mohamed bin Zayed Al Nahyan of Abu Dhabi and Prime Minister Hong-Won Jeong attended the ceremony for the signing of the MOU, which aims to foster experts in energy and promote cooperation for joint advancements into the energy markets of third countries. date2014-03-05
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Trade/Investment
MOTIE Holds the First Council to Support Export Investment in 2014
- Company A : ㅇ Ships are classified as foreign ships once they pass the export customs. Workers must report to the authorities every time they go onboard to finish jobs. ⇒ Difficult to react swiftly to emergencies, and can cause delayed delivery - Company B : ㅇ Insurance policy of Ksure (mid/long term export insurance, financial insurance on overseas business, etc.) is not approved as official collateral for domestic banks (unlike global banks) when loans for overseas PJT are needed ⇒ Companies under stress due to additional interest rate (0.7~1.5%) - Company C : ㅇ Agencies that provide export support rarely share information on trade statistics (local autonomous bodies, trade associations, KOTRA, etc.) ⇒Makes it difficult for relevant agencies to implement support policies catering to each company - Company D : ㅇ Sight protective spectacles and contact lens are classified as items for medical purposes and are banned from being sold in online shopping malls ⇒ Overseas consumers can purchase them in global online shopping malls, but cannot in domestic online malls Actually, the issues considered to be a “thorn in the side” of these companies that were raised at the 2nd meeting to promote trade investment (last July) were recently completely resolved. For instance, in the past, companies that exported services such as software had to issue confirmation of export/import and export result certificate from relevant associations (Korea International Trade Association, Korea Shipowners’ Association, etc.) and foreign exchange banks, respectively, in order to receive trade financing. But the law (Regulations governing international trade) was revised last September, enabling one-stop issuance of the certificates as of March 1st. In addition, the meeting also discussed detailed measures to achieve “Creation of new growth engine for export,” the implementation direction of which was proposed at the 2014 MOTIE report on Feb. 24th. Facilitation measures such as dev date2014-03-05
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FTA/Economic Cooperation
Korea and Australia Initialize FTA.
Woo Tae-hee, Assistant Minister for Trade and Chief Negotiator for FTAs of the Ministry of Trade, Industry and Energy and Assistant Secretary Jan Adams of the Department of Foreign Affairs and Trade, the chief representatives of both countries, initialized the Korea-Australia FTA and signed the Joint Statement of confirmation at the Department of Foreign Affairs and Trade in Canberra, Australia, on February 10, 2014 (Mon). date2014-03-04
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Trade/Investment
Export and Import Trends in February 2014
More specifically, exports of wireless communication devices increased thanks to growing demand in emerging markets, exports of semiconductors increased thanks to strong memory prices, and exports of IT devices and automobiles increased thanks to the product competitiveness and improved brand recognition enjoyed by Korean companies. On the other hand, exports of petroleum products and LCD devices were down due to the continued decline in the price of panels related to instability in supply and demand, as well as exports of ships due to delays in delivery. - Export growth by item (%): wireless communication devices 34.5, semiconductors 14.5, automotive products 9.1, steel 0.4, general machinery -2.4, petrochemicals -6.8, ships -7.0, LCD -11.1, petroleum products -15.4 By nation, exports to the EU (expansion of exports of wireless communication devices and consumer electronics), the ASEAN countries (growing exports of ships), and China (strong sales in capital goods such as general machinery) all increased. However, the sharp drop in ship exports resulted in a temporary decrease of exports to the US and Latin America. In addition, the weak Yen continues to drive down exports to Japan. In terms of the F5 nations, exports to Turkey and Brazil picked up, while exports to South Africa and Indonesia suffered. - Export growth by nation (%): ASEAN 15.1, EU 10.6, China 3.8, US -6.7, Latin America - 11.9, Turkey 29.3, Brazil 24.5, India 1.4, Indonesia -34.9, South Africa -69.1 date2014-03-04
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Industry
Sales Trend of Major Distributors for January 2014
Non-Food Sectors ○ Electronics & Culture - Year-on-Year : 19.6 - Month-on-Month : -12.5 ○ Apparel - Year-on-Year : 6.0 - Month-on-Month : -32.6 ○ Living - Year-on-Year : 11.8 - Month-on-Month : 13.1 ○ Sports - Year-on-Year : 1.8 - Month-on-Month : -25.3 ○ General Merchandise - Year-on-Year : 10.3 - Month-on-Month : 19.3 ○ Sub Total - Year-on-Year : 11.8 - Month-on-Month : -4.7 ○ Foods - Year-on-Year : 25.3 - Month-on-Month : 41.8 ○ Total - Year-on-Year : 18.6 - Month-on-Month : 16.2 Non-Food Sectors ○ General Merchandise - Year-on-Year : 2.8 - Month-on-Month : -19.1 ○ Ladies’ Formal Wear - Year-on-Year : -9.9 - Month-on-Month : -13.4 ○ Women’s Casual Wear - Year-on-Year : -0.6 - Month-on-Month : -28.0 ○ Men’s Wear - Year-on-Year : -3.3 - Month-on-Month : -9.0 ○ Children & Sports - Year-on-Year : 3.7 - Month-on-Month : -29.0 ○ Living - Year-on-Year : 4.6 - Month-on-Month : 0.6 ○ Global Brands - Year-on-Year : 11.3 - Month-on-Month : -23.3 ○ Sub Total - Year-on-Year : 1.1 - Month-on-Month : -19.6 ○ Foods - Year-on-Year : 37.7 - Month-on-Month : 45.3 ○ Total - Year-on-Year : 6.8 - Month-on-Month : -13.4 Meanwhile, the revenues of convenience stores grew by 9.7% year-on-year, fueled by robust sales of liquor and gift sets during the holiday seasons. However, the revenues declined by 2.3% month-on-month due to a revenue decrease in tobacco, as the number of smokers tends to decrease at the start of the year. Non-Food Sectors ○ Living - Year-on-Year : 17.9 - Month-on-Month : 0.4 - Percentage in sales(‘14.1) : 3.6 ○ General Merchandise* - Year-on-Year : 16.1 - Month-on-Month : 15.9 - Percentage in sales(‘14.1) : 4.7 ○ Tobacco, etc. - Year-on-Year : 3.5 - Month-on-Month : -4.1 - Percentage in sales(‘14.1) : 37.6 ○ Sub Total - Year-on-Year : 5.7 - Month-on-Month : -2.0 - Percentage in sales(‘14.1) : 45.9 Foods ○ Beverages and Processed Goods - Year-on-Year : 13.8 - Month-on-Month : -2.2 - Percentage in sales(‘14.1) : 47.0 ○ Instant foods (including some perishable goods) - Year-on-Year : 10.3 - Month-on-Month : -4.5 - Percentage in sales(‘14.1) : 7.1 ○ Sub Total - Year-on-Year : 13.3 - Month-on-Month : -2.5 - Percentage in sales(‘14.1) : 54.1 ○ Total - Year-on-Year : 9.7 - Month-on-Month : -2.3 - Percentage in sales(‘14.1) : 100 * Books, magazines, lottery, and gift certificates The revenue of SSM (Super Supermarkets) also increased by 3.7% year-on-year and by 17.7% month-on-month thanks to robust sales in agricultural and fisheries and general merchandise, prompted by the growing demand during the holiday season. [Revenue Growt date2014-02-27