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Korea's Strategy in a Changing Global Economy
 

Korea's Strategy in a Changing Global Economy

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External risks continue to threaten the global economy but Korea’s economic growth will likely improve in the second half of 2011 and free trade agreements are poised to increase expansion ...

External risks continue to threaten the global economy but Korea’s economic growth will likely improve in the second half of 2011 and free trade agreements are poised to increase expansion substantially. Those were among the points made at the Korean Economic Forum, co-hosted by Samsung Economic Research Institute and the Korea JoongAng Daily at the Hotel Shilla on May 25. Among the many distinguished guests were ambassadors, CEOs and foreign correspondents.

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  • 축표시
  • Average annual GDP growth rate: 4.4% (1998~2008)  3.3% (2009~2011) In order to return to the trend prevailing before the global crisis by 2015, Korea needs annual GDP growth of at least 5% between 2012 and 2015 0.2%(’09)  6.2%(’10)  4.3%(’11)  mid 5% (’12~’15)
  • Korea needs to come up with effective strategies to enter the US market Korea and the US can jump into the world market through joint-production or joint-investment
  • Once the Korea-EU FTA is completed, Korea will be in a favorable position to negotiate with China and Japan Foreign companies may try to establish a bridgehead in Korea for exports to the EU by setting up production bases in Korea In order to take advantage of tariff elimination, Korean companies with foreign production bases may return to Korea
  • The Asia-Pacific region could concentrate on creating a Free Trade Area inthe Asia-Pacific (FTAAP) The FTAAP will boost business opportunities and economic growth in Asia This could serve as a catalyst for continuing global trade talks Regional economic blocs such as MECOSUR and ASEAN will also play an important role in the future
  • -The US and the EU are geographically remote from Korea; however, they can become psychologically closer when the FTAs come into effect - Korea can be a hub in the East Asian market for the US and EU to use as a bridgehead into East Asia - The FTAs will act as valuable protection against potential North Korean threats - It will be necessary for Korea’s economy as well to continue carrying out globalization by opening its market

Korea's Strategy in a Changing Global Economy Korea's Strategy in a Changing Global Economy Presentation Transcript

  • Economic Outlook for Second Half 2011 Samsung Economic Research Institute SHIN Changmock May 25, 2011
  • Table of Contents II. Outlook for Second Half 2011 III. Implications I. Current State of the Korean Economy Economic Outlook for Second Half 2011
  • Current State of the Korean Economy Current State of the Korean Economy I. I.
    • Korea’s economy grew 6.2% in 2010, overcoming the global financial crisis
    • Recovery has continued into 2011
      • Export and facilities investment increased 28.3% and 13.0% in 1Q 2011
      • Manufacturing output grew 10.5% in 1Q 2011, and the average capacity utilization ratio was 83.2%
    Steady Recovery Source : Statistics Korea 1Q ‘ 06 -20 -15 -10 -5 0 5 10 15 20 25 30 65 68 71 74 77 80 83 86 (%) 3Q 1Q ‘ 07 3Q 1Q ‘ 08 3Q 1Q ‘ 09 3Q 1Q ‘ 10 3Q 1Q ‘ 11 Major Indicators Source : Bank of Korea (year-on-year, %) Private consumption 4.1 25.0 28.3 6.2 3.6 13.0 29.9 4.1 0 5 10 15 20 25 30 35 2010 1Q 2011 Facilities investment Exports GDP (year-on-year, %) Manufacturing output Manufacturing avg. capacity utilization ratio Manufacturing Output and Avg. Capacity Utilization Ratio
  • Steady Recovery of the US and Chinese Economy
    • US GDP growth: 3.1% (4Q 2010)  1.8% (1Q 2011)
      • Second round of quantitative easing and tax cut extension
    • Chinese GDP growth: 9.8% (4Q 2010)  9.7% (1Q 2011)
      • Despite concerns of a slowdown in domestic demand and economic growth caused by monetary easing
    Source : Bloomberg 2007 ‘08 ‘09 1Q ’10 2Q 3Q 4Q 1Q ‘11 14.2 9.6 9.2 11.9 10.3 9.6 9.8 9.7 10 12 14 16 (%) 0 2 4 6 8 Source : Bloomberg -3.0 1.9 0.0 5.0 3.7 1.7 3.1 1.8 -2.0 -1.0 0.0 1.0 2.0 3.0 4.0 5.0 6.0 (%) -2.6 2007 ‘ 08 ‘ 09 1Q’ 10 2Q 3Q 4Q 1Q’ 11 China’s GDP Growth Rate US GDP Growth Rate
  • Booming Exports and Improved Employment
    • Exports continued their uptrend in 2011
      • Exports in April hit a record-high US$49.15 billion, up 25.1% year-on-year
      • Trade surplus was US$5.14 billion, the 15th consecutive monthly surplus
    Growth in Exports Source : Kita.net Average daily exports (3-month average, left axis) Export growth (3-month average, right axis) 10 12 14 16 18 20 22 -30 -20 -10 0 10 20 30 40 (US$ 100 million) Jan. ’08 May ’08 Sept. ’08 Jan. ’09 May ’09 Sept. ’09 Jan. ’10 May ’10 Sept. ’10 Jan. ’11 (month-on-month,%)
    • Private sector job creation improved the overall job market
      • The number of employed in April grew 379,000
    Growth in the number of employed (left axis, q-o-q, seasonally adjusted) Growth in the number of employed (left axis, y-o-y, seasonally unadjusted) Growth in the Number of Employed (10,000) -20 -10 0 10 20 30 40 50 1Q ‘ 08 2Q 3Q 4Q 1Q ‘ 09 2Q 3Q 4Q 1Q ‘ 10 2Q 3Q 4Q 1Q ‘ 11 Source : Statistics Korea
    • A series of unfavorable events in 2011
      • Unrest in the Middle East, the 2011 Tohoku Earthquake, and the EU fiscal crisis
    Continued Uncertainties (‘Triple Whammy’) MENA Unrest
    • Tunisia’s Jasmine Revolution
    • Ousting of President Hosni Mubarak
    • Libya unrest
    Tohoku Earthquake
    • Catastrophic earthquake and tsunami
    • Number of dead and missing : 28,000
    • Nuclear crisis
    EU Fiscal Crisis
    • Resurfacing fiscal crises
    • A bailout for Portugal in April
    • Scaling up of stabilization funds
  • Outlook for Second Half 2011 Outlook for Second Half 2011 II. II.
  • Economic Growth Rate : 4.3% (1H 3.7%  2H 4.7%)
    • Due to disruptive global events, the first half will see 1.1% growth (compared to 2H 2010)
      • Growth is forecast to reach trough in 2Q
    • 1.5% growth is likely in the 2H as uncertainties subside
      • In 4Q, year-on-year growth is expected to rise to 5.3%
    Jan. 2008 May Sept. Jan.2009 May Sept. Jan. 2010 May Sept. Jan. 2011 88 90 92 94 96 98 100 102 104 106 -6 -4 -2 0 2 4 6 8 10 12 14 (%) Index of Leading Macroeconomic Indicators (year-on-year) Index of Coincident Macroeconomic Indicators (net of trend) Source : Statistics Korea Index of Macroeconomic Indicators
    • Private consumption will increase 3.7% in 2011
      • Improving job conditions and wages will drive the increase
    • Spending growth compared with the previous half-year: 1.0%(1H)  1.1%(2H)
      • Consumer sentiment weakened in 1H due to inflationary pressure
    Private Consumption : 3.7% (1H 3.6%  2H 3.9%) Source : Samsung Economic Research Institute, Statistics Korea 36 38 40 42 44 46 48 50 52 54 56 2006 2007 2008 2009 2010 2011 0.0 1.0 2.0 3.0 4.0 5.0 6.0 Consumer Sentiment Index Consumer Price Change Rate Consumer Prices & Consumer Sentiment
  • Robust Facilities Investment, Sluggish Construction Investment
    • Facilities investment will increase 8.2% in 2011
      • A 0.7% increase in the 1H over the previous half-year: Large-scale facility expansion in 2010, Japanese earthquake, etc.
      • A 4.3% jump in 2H over 1H: External volatility decreases, while companies embark on investment
    Machinery Orders Source : Statistics Korea 1Q. 2008 3Q 4Q 1Q 2009 3Q 4Q 1Q 2010 3Q 4Q 1Q 2011 -80 -60 -40 -20 0 20 40 60 80 All industries combined Manufacturing (Year-on-year, %) Construction Sector Indicators Source : Statistics Korea 1Q 2009 3Q 4Q 1Q 2010 2Q 3Q 4Q 1Q 2011 (Year-on-year, %) -20 -15 -10 -5 0 5 10 15 20 25 30 Complete amount Construction work Civil work
    • Construction investment will continue to be sluggish, falling 0.1% in 2011
      • Less contribution by the public sector and lackluster investment in the private sector
  • Exports: 17.2% (1H 22.5%  2H 12.4%)
    • Strong recovery continues until 1Q (29.9%)
      • Emerging economies maintained growth as developed economies recovered
      • Increased export unit prices and export volume
    Export Growth per Region Source : Korea International Trade Association (%, year-on-year) Emerging economies Developed economies 1Q 2010 2Q 3Q 4Q 1Q 2011 23.1 32.4 20.7 26.9 33.7 41.4 33.3 23.5 22.6 28.3 0 10 20 30 40 (US$ 100 million) 11.0 13.0 13.2 14.9 15.1 17.6 16.7 17.9 19.9 20.6 18.7 20.5 8 10 12 14 16 18 20 Q1 2009 Q2 Q3 Q4 Q1 2010 Q2 Q3 Q4 Q1 2011 Q2(p) Q3(p) Q4(p)
    • Year-on-year growth is expected to slow after 2Q
      • A strong base effect will exert a significant influence
      • Daily average exports are expected to slightly decrease in 3Q and then turn upward in 4Q
    Exports per Workday and Forecast
  • Consumer Prices: 4.1% (1H 4.5%  2H 3.7%)
    • Consumer prices rose 4.5% in 1H largely due to external supply shocks
      • Oil prices surged due to the MENA crisis, and crop prices increased due to the abnormal climate
      • Fears of inflation grew while service prices and core inflation increased
    Source : Bloomberg CRB Index (crops) IMF Commodity Price Index Jan.‘09 Apr. Jul. Jan.‘10 Apr. Jul. 1Q ‘11 Oct. Jan. ‘11 250 300 350 400 450 500 550 600 50 70 90 110 130 150 170 190 210 Global Raw Material and Crop Prices Source : Statistics Korea (YoY, %) Growth of Consumer Prices in Korea 0 1 2 3 4 5 6 2006 `07 `08 `09 `10 2011 Core Inflation Consumer Prices Individual Service Prices
    • Inflation is forecast to slow to 3.7% in 2H
      • Slowdown in raw material price growth, appreciation of the won, and base effects
      • Raw material prices will remain high while wages and service prices rise
  • Won/Dollar Exchange Rate: 1,060 (1,095  1,025)
    • Factors for a stronger won will prevail
      • External factors : yen carry trade, US quantitative easing, yuan appreciation, etc.
      • Internal factors : current account surplus, less intervention in the foreign exchange market, undervaluation of the won, etc.
      • However, US rate hikes and capital controls may temporarily weaken the won and raise volatility
    Real Effective Exchange Rate Foreign exchange crisis in Korea Global financial crisis 60 80 100 120 140 160 180 1990 ‘ 92 ‘ 94 ‘ 96 ‘ 98 2000 ‘ 02 ‘ 04 ‘ 06 ‘ 08 2010 (1993=100) Won/Dollar Exchange Rate 1,000 1,100 1,200 1,300 1,400 1,500 1,600 Jan. Apr. July Oct. Apr. July Oct. Jan. Apr. July Oct. 2009 2010 2011 (’09.3.2) (’10.4.26) (’10.12.21) Decreases Remains unchanged Resumes decrease Jan. Source : Bank of Korea, Samsung Economic Research Institute Source : Samsung Economic Research Institute Under valuation of the won Over valuation of the won
  • 2011 Korean Economic Outlook (Year-on-Year, %) Unit 2010 2011 1H 2H Annual Average Economic Growth (Half-on-Half) % 6.2 3.7 (1.1) 4.7 (1.5) 4.3 Private Consumption % 4.1 3.6 3.9 3.7 Facilities Investment % 25.0 9.3 7.2 8.2 Construction Investment % -1.4 -3.4 2.9 -0.1 Consumer Prices % 2.9 4.5 3.7 4.1 Unemployment Rate % 3.7 3.8 3.4 3.6 Current Account US$100 million 282 92 84 176 Exports US$100 million 4,664 2,711 2,756 5,467 Imports US$100 million 4,252 2,544 2,619 5,163 Won/Dollar Exchange Rate Won 1,156 1,095 1,025 1,060 Corporate Bond Yield % 4.7 4.7 5.8 5.3
  • Implications Implications III. III.
  • Restoring Pre-Crisis Growth Will be Challenging
    • The Korean economy has escaped the crisis with favorable growth
    • However, a return to pre-crisis growth will be challenging
      • In 2011, real GDP will still be below potential GDP by about 4.7 trillion won
      • In 2008-2011, annual average growth stands at 3.6%, below the potential growth rate
    Source : Bank of Korea, Samsung Economic Research Institute Real GDP-Potential GDP Real GDP Growth Potential GDP Growth (trillion won) -8 -6 -4 -2 0 2 4 6 8 10 12 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011(p) -50 -40 -30 -20 -10 0 10 20 30 (%) Real GDP vs. Potential GDP
  • Government: Stimulus Measures Should be Gradually Normalized
    • Even though the Korean economy weathered the crisis, anxiety is rising over prices and fiscal soundness
    • The degree and timing of rate hikes must consider side effects
      • Rate hikes as well as inflation can stifle household consumption
      • Sudden rate hikes are risky considering household debt and insolvency of savings banks
    • The government should be growth-friendly when restoring fiscal soundness
      • The government’s fiscal role should continue to boost job creation and secure new growth engines
  • Companies: Preparing for Future Uncertainties
    • Unfavorable business environment is expected even though companies successfully overcame the global financial crisis
    Fiercer Global Competition Japanese Companies Making a successful turnaround Western companies Overhauling and investing Growing into global leading companies Chinese companies Strengthening Risk Response Systems & Up-front Investment for Future Korean companies Economic Slowdown + Rising Uncertainties Global economic slowdown Increased volatility in oil and commodity prices Continued strengthening of the won
  • The Impact of the KORUS & Korea-EU FTAs and the Future of Korea May 25, 2011 Samsung Economic Research Institute KWAK Soo-Jong
  • Contents II. KORUS & Korea-EU FTAs III. Conclusions: The Future of Korea’s FTAs I. Introduction The Impact of the KORUS & Korea-EU FTAs and the Future of Korea II.1 KORUS FTA II.2 Korea-EU FTA
  • Introduction Introduction I. I.
  • FTA Status Map of Korea Concluded Concluded Chile Singapore EFTA ASEAN India EU Effective in 2004 Effective in 2006 Effective in 2006 Effective in 2007 Effective in 2010 Effective from July 2011 US Peru Canada Mexico GCC Australia New Zealand Columbia Turkey Under Negotiation
    • Even though recovery from the financial crisis has been fast, Korea’s economic growth rate will be stagnant temporarily due to global economic set backs
    • It will be a significant challenge to return to the conditions prevailing before the crisis
    Korea’ Economy May Recede Temporarily GDP drops due to the Crisis (%) -2 0 2 4 6 8 10 12 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 Average GDP: 3.3% 2009~2011 Average GDP: 7.5% 1991~1997 Source : BoK Financial C Great R Average GDP: 4.4% 1998~2008
  • Korea’s FTA Strategy
    • Korea’s Standpoint on FTAs
      • World’s 15th largest economic power
      • Korea has achieved export-centered growth over the past 30 years
      • The global economy is already tied together by Regional Trade Agreements: Currently 294 are in force
      • Korea needs to utilize FTAs to further expand its exports, and timing is an important issue as FTAs are quickly spreading out all over the world
    • Characteristics of FTA Negotiations
      • Utilization of a representative country as a bridgehead to a continent or economic bloc
        • From Chile to S. America, From Singapore to ASEAN, From EFTA to the EU
      • Simultaneous negotiation of FTAs with both advanced and emerging economies
      • Comprehensive FTA deals covering services and investment
  • KORUS FTA KORUS FTA II.1 II.1
  • KORUS FTA
    • Course of the FTA process
    5.2 7.24 2.3 6.5 7 12 1.15 2 11.30 2.10 2005 2006 2007 2010 2011 . . . Current 6th KORUS FTA at Seoul 7th KORUS FTA in Washington D.C. Trade Minister’s meeting at Columbia, Maryland, US Signing and exchange of agreed documents Trade Ministers meeting at OECD Board meeting KTR Kim, Hyunjong visited the US FTA Special Committee in Korea’s Parliament Korea
    • KORUS FTA Launching Address at the US Capitol Building
    • 90 days advance notice filed to the Congress. 120 days of pre-FTA discussions in the Senate’s Financial and House Budget Committee
    USA 1st KORUS meeting in Washington D.C 5th KORUS FTA meeting in Big Sky, Montana
  • Agenda for the KORUS FTA
    • If the KORUS FTA is enacted, the following 5 years will be critical to Korea’s economy
    • US corporations may invest more actively and frequently in the Korean market
    In sum, Korea must utilize the KORUS FTA as an opportunity to boost its economic growth as well as to encourage and promote cooperation among small and medium size companies
    • The majority of export goods consist of chemical products and consumer goods
    • The majority of import goods consist of high-value added machinery and materials
    10 Major Exports & Imports HSK Goods Export ($ mn) Share (%) 1 8517 Telephone Sets 9,163 18.4 2 8703 Motor Cars 6,615 13.3 3 8708 Automotive Parts 3,910 7.8 4 2710 Crude oil 3,460 6.9 5 8473 Office Machinery Parts 2,439 4.9 6 8542 Electronic Integrated Circuits 1,291 2.6 7 4011 New Pneumatic Tires, of rubber 1,181 2.4 8 7306 Tubes, Pipes 948 1.9 9 8418 Refrigeration and Freezing Equipment 908 1.8 10 8803 Aircraft & Parts 818 1.6 Total 49,816 100 HSK Goods Import ($ mn) Share (%) 1 8486 Machines for Semiconductor Manufacturing 3,274 8.1 2 8542 Electronic Integrated Circuits 2,980 7.4 3 8802 Aircraft 1,764 4.4 4 1005 Corn 1,684 4.2 5 7204 Steel 1,202 3.0 6 8411 Turbo-jets & Gas Turbines 805 2.0 7 2707 Refined Petroleum Products 779 1.9 8 8803 Aircraft Parts 750 1.9 9 9031 Measuring and Checking Instruments 600 1.5 10 8479 Medical Devices 553 1.4 Total 40,403 100
  • Impact of the KORUS FTA on Korea’s Economy
    • Since 2000, Korea has had a trade surplus with the US amounting to over $8 billion
    • Overall, lower US tariffs will benefit Korea’s economy
    Trade Balance
      • Lower tariffs lead to an increase in exports
      • Consumers will have access to import goods for a lower price
    Tariff Reductions
    • The increase in Korea’s exports is expected to be much greater than its imports
    • Manufacturing exports will increase by $2.5 billion per annum
    Exports/ Imports
  • Economic Impact of the KORUS FTA on Korea’s Economy Productivity effect = 0 Positive productivity effect Dynamic model 0.42% Real GDP 1.99%  7.75%  Short-term static Welfare 0.61% Short-term static 1.73%  6.99%  85,000 Employment Short-term static 104,000  551,000 
  • Increase in Exports of Main Items Automobile
    • Exports from Korea’s auto industry will increase by $1.1 billion per annum over 15 years
    • In particular, exports of auto parts will increase significantly
    • However, Japanese vehicles manufactured in the US will become more competitive in the Korean market
    Textiles
    • Currently, Korea’s exports of textiles to the US market are gradually declining even though the US textile market is still large
    • Since tariffs in the US textile market are relatively high, the benefit from the elimination of tariffs will be significant
    • Benefits are expected for the wireless device industry through the elimination of tariffs
    • The Korean wireless industry will increase its competitive edge through exports to the US
    Wireless Devices
  • Korea-EU FTA Korea-EU FTA II.2 II.2
  • Korea-EU FTA Session Date Location Details of the Negotiations 1st 5/7-11/2007 Seoul Consists of four areas: Goods, services/investment, other (intellectual property rights, government procurement, competition), settlement of disputes 2nd 7/16-20/2007 Brussels Discussion and planning of exchange for goods, service, and government procurement 3 rd 9/17-20 2007 Brussels Commencement of initial offers 4th 10/15-19/2007 Seoul Consolidated agreements by each section and initial offer for goods 5th 11/19-23/2007 Brussels Four issues major issues were discussed (initial offer for goods, standardization for automotive technology, criteria for origination, open service market) 6th 1/28-2.1 2008 Seoul Advances in other issues but the four Session Term Talk 3/2008 Paris Chief delegate meeting 7th 5/12-15/2008. Brussels Agreement on settlement within the year. Pushed forward all but the major issues Session Term Talk 6/2008-3/ 2009 Brussels Seoul Trade minister meeting 8th 3/23-24/2009 Seoul Tentative agreement on criteria for origination and refund of tariffs Minister Meeting 4/2/2009 London Failure of the final agreement on the issue of refund of tariffs Summit Meeting 5/25/2009 Seoul Urge on finalization of the Korea-EU FTA by the summit meeting Minister Meeting 6/26/2009 Paris Arrival at conclusion regarding the remaining issues Summit Meeting 7/13/2009 Stockholm Declaration of settlement for the Korea-EU FTA
  • Agenda for the Korea-EU FTA
    • The Korea-EU FTA will accelerate the ratification process for the KORUS FTA and will speed up FTA negotiations under consideration with China and Japan
    • Korea can benefit from coordinating with the EU in improving its industrial structure
    • Korea has to utilize the agreement effectively by attracting more foreign direct investment and generating jobs
    • The majority of export goods consist of heavy chemical and consumer goods
    • The majority of import goods consist of machinery and materials
    10 Major Export & Import Goods HSK Goods Export ($ mn) Share (%) 1 8901 Ships 11,765 21.9 2 9013 Liquid Crystal Devices 4,897 9.1 3 8517 Line Telephony 3,682 6.9 4 8703 Cars 3,311 6.2 5 8708 Motor Vehicle Parts 2,948 5.5 6 8529 Television parts 2,151 4.0 7 2710 Crude Oil 2,036 3.8 8 8905 Light Vessels 1,833 3.4 9 8541 Diodes/ Transistors & Semiconductor Devices 1,610 3.0 10 8473 Computers & Office Machine Parts 1,084 2.0 Total 53,609 100 HSK Goods Import ($ mn) Share (%) 1 8486 Machines for Manufacture of Semiconductors 2,543 6.6 2 8703 Cars 1,963 5.1 3 3004 Medicament Mixtures 1,309 3.4 4 8542 Integrated Circuits 1,024 2.6 5 8708 Motor Vehicle Parts 1,008 2.6 6 8479 Machines and Appliances 0,992 2.6 7 8414 Air Vacuum Pumps 0,731 1.9 8 8409 Parts for Motor Engines 0,672 1.7 9 4202 Trunks, Suitcases 0,572 1.5 10 8481 Taps, Cock Valves 520 1.3 Total 38,721 100
  • Impact of the Korea-EU FTA on Korea’s Economy
    • Increase in exports and imports, maintenance of a positive trade balance
    • Since 2004, Korea had a trade surplus from the EU amounting to over $10 billion in total
    • Overall, lower US tariffs will benefit Korea’s economy
    Trade Balance
    • Due to tariff elimination, the effects of increased exports will benefit both economies
    Tariff Down
    • The Korea-EU FTA will increase both imports and exports
    • Since tariff rates in the Korea-EU FTA are higher than those in the KORUS FTA, the effects from the Korea-EU FTA will be greater than from the KORUS FTA
    Exports/ Imports
  • Economic Impact of the Korea-EU FTA on Korea’s Economy Productivity effect = 0 Positive productivity effect Dynamic model 0.10% Real GDP 0.64%  5.62%  Short-term static Welfare 0.18% Short-term static 0.47%  3.84%  29,900 Employment Short-term static 47,800  253,100 
  • Increase in Exports of Main Items Automobiles
    • Korean car makers, who have 4.5% of the EU market, are expected to receive the most benefits
    • However, as Korean auto companies have a tendency to manufacture, locally, benefits might be limited
    Ships & Wireless Devices
    • No direct benefits are expected for the shipping and wireless device industry through the elimination of tariffs
    • However, Korean industry has a competitive edge that is expected to increase exports in the EU market
    • Some items for wireless devices may benefit from tariff elimination
    Agricultural Products & Services
    • Insignificant effects on agricultural products and services
    • In spite of an increase in exports of agricultural products, Korea’s competitiveness in this area is at a standstill
  • Conclusions: The Future of Korea’s FTAs Conclusions: The Future of Korea’s FTAs III. III.
  • The Future of Korea’s FTA-generated trade
    • Korea is behind the world’s average in terms of trade covered by FTAs
    • Once Korea’s FTAs with the EU, US, and Peru come into effect, the share of Korea’s trade covered by FTAs will increase up to 35.1%
    FTA Status of Korea In effect Concluded Under negotiation Chile Singapore EFTA ASEAN EU US Peru Australia Columbia Turkey New Zealand Canada Mexico GCC Share of Trade covered by FTAs
  • Long-term Vision: Strengthening Partnerships
      • The Doha Development Round has been stalled
    • Korea’s economic relations with American countries will be important in completing various international trade agreements
    ASEAN TPP : Nine countries under negotiation including Chile and Peru APEC : negotiating on FTAAP Korea Under Consideration Under Negotiation/Consideration Involvement Involvement FTA FTA
    • Increase in psychological ties with each other
    • Strategic location
    • National security
    • Improved soft power economic security and extended smart power
    Improving Korea’s Economic and Geopolitical Stability
  • Revisiting Korea’s FTA Road Map to the Future GDP: $bn