e-Trade (Paperless) Korea, Innovation 2007 The Present and Future of Korea’s e-Trade (Paperless Trading) Capacity Building Workshop on Trade Facilitation Implementation for Asia and the Pacific Region March 18, 2005, Kuala Lumpur, Malaysia Dr. Yoon Say Jeong, Secretary General e-Trade Facilitation Center KITA (Korea International Trade Association)

e-Trade (Paperless) Korea, Innovation 2007 Table of Contents 1. Brief History of e-Trade(paperless Trading) in Korea 2. Current Status of Korea’s e-Trade 3. Background of innovating e-Trade strategy in Korea 4. Organization 5. Goal & Strategy 6. To-be Model of e-Trade Service (1/2) 7. To-be Model of e-Trade Service (2/2) 8. Roadmap of 3-year Innovating plan 9. e-Trade Service (Phase 1) – e-L/C System (for Exporter) 10. e-Trade Service (Phase 1) – Conceptual Model 11. Lessons Learned 12. Future work : International Cooperation

e-Trade(Paperless) Korea, Innovation Brief History of e-Trade(paperless Trading) in Korea  In 1989, Korean government initiated “Comprehensive Trade Automation Plan”  In 1991, Korea enacted “Act on Trade Automation” and Ministry of Commerce & Industry (currently MOCIE) made an “Agreement on Trade Automation” with Korean Customs Service  In 1991, Korea Trade Network (KTNET, Capital :US$75 million) was established by the investment of private sector (Korea International Trade Association, 100%)  Korea Customs Service designated KTNET as sole Trade Automation Service Provider Korea realized a 100% electronic customs clearance system through both VAN/EDI and Internet  Major part of Trade Automation System is customs clearance, But it covers LC advice, logistics, finance and payments and other trade related B2B services Samsung Electronics estimates that it has benefited US$800 million through Trade Automation System every year, reducing ordering time from 10 days to 2 days.

e-Trade(Paperless) Korea, Innovation Development stage year Task and statistics computerization process computerization Paperless clearance EDI clearance automation project for 6 years commencement (’92) EDI clearance automation project for 6 years commencement (’92) Trade statistics computerization Trade statistics computerization Export clearance system(1994) Import clearance system(1996) Export cargo system(1997) Import cargo system(1998) Customs duty back system(1997) Export clearance P/L system(1995) Import clearance P/L system(1999) Export automatic clearance system (2000) Electronic fund transfer for duty(1999) Electronic Value added tax receipt (2001) Business Process computerization P/L ㆍ automatic clearance system Diverse Initiatives in Clearance and Cargo Management 1. Brief History of e-Trade(paperless Trading) in Korea

e-Trade(Paperless) Korea, Innovation Current Status of e-Trade in Korea Bonded Warehouse Trader Customs Broker Inspection Co Air Line Other Government Agency Bank KCS KTNET * KCS : Korea Customs Service MFCS : Manifest Consolidation System MFCS 100% of Customs Clearance and Logistics

e-Trade(Paperless) Korea, Innovation Background of Innovating Korea’s e-Trade System Realization of the National Future e-Trade Model The launch of a 3- year e-Trade facilitation plan Realize seamless e- trade service by connecting effectively with government and related organizations Demands for innovation on overall process of trade Give the opportunity to innovate whole trading process with the new IT technology The core task for e-government blueprint Issue guidelines on national e-trade future model

e-Trade(Paperless) Korea, Innovation Organization  Vision : e-Trade Korea, Innovation 2007  Organization : National e-Trade Facilitation Committee, July 2003  e-Trade Process Innovation BPR/ISP : December 2003 ~ June 2004 Private e-Trade Facilitation Committee  e-Trade Service (Phase 1) : December 2004 Private e-Trade Facilitation Committee ~ December 2005 National e-Trade Facilitation Committee Chair : Prime Minister Secretary : Ministry of Commerce, Industry and Energy Platform W/G Finance W/G Logistics /Customs W/G Legal W/G Marketing W/G Global W/G Administrative Committee Chair : Vice Minister of MOCIE Public Private e-Trade Facilitation Center (KITA) Chair : Ex-minister of MOST Private e-Trade Facilitation Committee

e-Trade(Paperless) Korea, Innovation Goal & Strategy Process Innovation Information Strategic Planning Legal StructureGlobal Network   Current Process Analysis & To-be Process Modeling - Marketing - Financial Settlement - License/Certificate - Insurance - Logistics - Trade Declaration   e-Trade Platform Design   Standard   Integration & Interface   Action Plan (2004~2007)   e-Trade Facilitation Center : PMO   Legal System on e-Trade   Institutional Model   Incentive & Community Supporting System   Bilateral/Multilateral Agreement on International Collaboration   International Collaboration   Mutual Recognition on Global e-Trade   APEC, WCO, UN/CEFACT, PAA, EU IST, ASEM, Asia PKI Internet Based National e-Trade Infrastructure Seamless e-Trade Service International Collaboration for Cross Border Paperless Trading Acceleration of e-Trade Community

e-Trade(Paperless) Korea, Innovation To-be Model of e-Trade Service (1/2) Trade Automation (Trade Network) AS-IS ① 1:1 Networking by Wholly Responsible Company, Breaking Online Process Flow ② Submission of Same Document Repeatedly to Several Parties ③ Exchange of Online Document between Trading Partners, but Submission of Offline Paper Document to Third Party... ① ② ③ ② 2 nd Wholly Responsible Company 2 nd Wholly Responsible Company KTNET Customs Service TO-BE ① Seamless e-Trade Service on Single-Window ② One Submission, No Multiple Submission for Same Online Document and provide diverse customs service (EDI, Web) ③ Guarantee of Online Document Originality Exchanged on Central e-Trade Repository under the law ④ Global Networking on National e-Trade Infrastructure ② ④ Global e-Trade (e-Trade Platform) e-Trade Infrastructure ③ e-Trade Service Marketing Financial Settlement License/Certificate Logistics Declaration Mess aging Hub e-Standard Registry e-Doc Repository License/ Certificate Authority Trading Company Bank Trading Company ③ License/ Certificate Authority Customs Service Bank Logistics Company Global Network e-Trade Platform ①

e-Trade(Paperless) Korea, Innovation e-Trade Platform eMarketPlace Credit Evaluation Company Marketing Bank Credit Card KFTC Insurance Company Customs Service National Logistics Single Window Document Standard Trading Company (Including SME) e-Trade Single Window Global e-Trade Hub Global Networking Certified Certificate Authority Financial Settlement License/Certificate Insurance Insurance Company Standardization Agency 7. To-be Model of e-Trade Service (2/2)

e-Trade(Paperless) Korea, Innovation Roadmap of 3-year innovating plan Phase2 (’06) Upgrade Core Infra fulfilling Seamless e- Trade Service Implementation  License/Certificate & Marketing support system Interface with Related Parties Phase1 (‘04-’05) Building Core Infra of e-Trade Platform Standardizing documents  e-Trade document circulation system  ebXML based document standardization Reform related Laws and Systems Upgrade User’s e-Trade System Environment  e-Trade solution for SME Establish Global Network Phase3 (’07)

e-Trade(Paperless) Korea, Innovation e-Trade Service (Phase 1) – e-L/C System (for Exporter) L/C by EDI Goal : Advise L/C by EDI Process :   Advise L/C online (EDI) (75,000 by EDI out of 600,000 SWIFT transaction)   Print out Advised L/C on Beneficiary side   Presentation of Printed Paper L/C for Negotiation   Endorse the Balance on Nego   Circulate Endorsed Paper L/C Goal : No more Paper L/C Presentation Support :   e-L/C Life Cycle Management   e-L/C Negotiation History Management   e-L/C Balance Management Advise, Amend Transfer Nego e-L/C Exporter 2 nd Beneficiary Opening Bank Negotiation Bank Advising Bank e-L/C Consolidation & Circulation System e-L/C Consolidation & Circulation System AS-IS TO-BE KTNET Messaging Hub KTNET Messaging Hub Exporter L/C EDI Print Out Opening Bank 1 st Negotiation Bank 2 nd Negotiation Bank Advising Bank

e-Trade(Paperless) Korea, Innovation e-Trade Service (Phase 1) – Conceptual Model e-L/C Consolidation & Circulation System Trading Company MessagingHub e-RecordsRepository(Pilot) ServicePortal WebServicesWebServices Balance Management Circulation Management KFTC Advising Bank e-Records Circulation e-L/C (Advise, Amend, Transfer, Nego) ebXML on VPN Red : New System by June 2005 Blue : Existing System L/C Opening Bank Negotiating Bank The world’s first e-L/C system - Prevention of Re-key - Certification of Contents - Keeping Transaction history Purpose Systems Repository e-L/C system

e-Trade(Paperless) Korea, Innovation Lessons Learned  Strong leadership is a critical factor in the successful implementation of paperless trading. Close inter-ministry cooperation among regulatory parties is necessary.  Modernization of customs procedure, system is most important step  To hear voices from business community is important because paperless trading is not only technical but also cultural issue to business community.  It is essential that support from international organizations related to e-trade standard/ technology and developed countries should be provided to developing countries for realizing global paperless trading

e-Trade(Paperless) Korea, Innovation  Participate in paperless trade activities such as APEC, ASEM, WTO, and PAA etc. - Korea successfully held the 1 st APEC PPP(Public-Private Partnership) Dialogue under ECSG meeting in SOM I, February Korea has been worked closely with PAA (Pan Asia eCommerce Alliance) member countries to make e-Trade networks in Asia  Korea has experience in building Paperless Trade System since 1991  We would like to share Korea’s 14-year-experience with other countries 12. Future work : international Cooperation

e-Trade(Paperless) Korea, Innovation Dr. Yoon-Say Jeong Dr. Yoon-Say Jeong Secretary General e-Trade Facilitation Center Contact Information   Phone :  Fax : Thank you