1 Acceleration of Electronics Sectoral Approach in WTO NAMA September 8, 2005 Hong-sik, Kang General Manager International & Environmental Affairs Team Korea Electronics Association (KEA)

2 Background  NAMA addresses not only tariffs but also NTBs - Participation by key WTO members including Japan, Korea, Singapore and the United States in tariff elimination of electronics/electric sector(TN/MA/W/59) - Currently discussing NTBs modalities of vertical approach(TN/MA/W/6/Add.4)  Consensus between developed and developing countries were almost made - Most of developed and developing countries agree to liberalize trade for the global welfare - They support the idea that removing all kinds of trade barriers will enhance their interests  Technology convergence - All-in-one printer/copier/scanner/fax machines - LCD computer monitors used as TVs - Digital Camera and Cellular phone has camcorder recording function  Blurring the lines between conventional and state of the arts products - Outdated rules haven’t kept pace with new technology (classification of tariffs)

3 Why Electronics ?  The structure of electronics industry is well balanced internationally - 26 developed countries account for 61.4% while 25 developing countries account for 38.6% respectively, according to the yearbook of world electronics data( ) - The UN reported that developed countries are responsible for 56.9% of exports while developing countries covers 43.1% of global electronics trade <Electronics' Production Ratios between Developing and Developed Countries> Source: The yearbook of world electronics data, , REED ELECTRONICS RESEARCH(UK). <Electronics' Export Ratios between Developing and Developed Countries> Source: 2001 International Trade Statistics Yearbook, UN.

4 Why Electronics ?  The electronics industry takes up a considerable share in international trade and its’ share is continuously growing - The electronics industry’s exports have shown vigorous growth, registering a growth rate of 41.8% last ten years. - Therefore, the elimination of tariffs and NTBs in this industry will contribute to boost global trade and welfare Reference: 1991~2001 International Trade Statistics Yearbook, UN Total global exports 3,398,6723,721,2633,634,6144,167,8114,925,6685,149,9105,337,0735,339,4945,500,4776,062,7395,814,640 Electronics exports 468,953487,433539,755658,711825,978865,403986,027942,6171,039,0731,318,0991,109,223 Electronics (%)

5 Tariff Elimination & Removal of NTBs  A drastic cut in electronics tariff is expected, whether by formula cut or by sectoral elimination, in DDA tariff negotiations - Tariff elimination on the electronics including the scope of chapters 84, 85 and 90 of the Harmonized system, with some exception for highly sensitive products  Expansion of ITA to cover digital convergence products - The reduction of tariffs is taking place rapidly, given that many ITA items are being introduced into electronics industry  The removal of electronics NTBs will promote free trade and contribute to boost global welfare - According to a recent survey conducted by a Korean International Trade Association, 65% of electronics-related companies pointed out that NTBs had a great impact as a trade barrier than tariff

6 Non-Tariff Barrier (NTB) Practices  Complicated Certification Procedures - Excessive waiting time due to lack of processing capacity and extra costs because of overlapping inspections with other agencies and different standards  Customs clearance - Customs agencies arbitrarily classify digital convergence products imposing higher tariff rates (e.g. monitors equipped with the AV cable)  Discriminatory Import Policy - Operate a quota system for production and sales that favor domestic enterprises over foreign-invested enterprises - Demand 60% local content rate for parts used in production  Pre-shipment inspection (pre-check of a consulate on export items) - Request unnecessary documents and charge excessive examination fees for consulate confirmation

7 How to accelerate electronics sectoral approach?  The critical mass approach is necessary - To bring major traders and producers to the sectors together  Product range should be wide and simple for members to implement - Using broad product coverage to include information technology, electrical equipment and machinery, audio visual products and digital consumers.  Special and differential treatment for developing countries - longer implementation periods - different implementation patterns for different groups or sub-sectors - “zero for x”  NTBs in the electronics field should be addressed actively during NAMA negotiations - Recommend organization of an experts council to identify NTB practices - Induce agreement on action among WTO member nations and to prepare implementation measures - Special treatment and technological support required for developing and least developed countries

8 Thank you very much!!!