Korea’s FTA Policy & Economic Relations with Latin America July 19, 2005 Korea Institute for International Economic Policy Won-Ho Kim, Director, Center for Regional Economic Studies

2 Economic Growth

3

4 Trade

5 Korea has adhered to ‘ multilateralism ’ because its trade relations were diversified. Before the1990s, most FTAs aimed for market access through alleviation and elimination of trade barriers Recent FTAs, which include service, investment, intellectual property rights, and government procurement, aim at being comprehensive FTAs are promoted not between neighboring countries but between countries in other regions Characteristics of recent FTAs

New agreement accumulation Source: WTO CRTA(Committee of Regional Trade Agreement) □ Proliferation of FTAs FTAs expand due to deferred multilateral negotiations and the opportunity cost of non-participation in Regionalism increases FTAs proliferated in the 1990s, 208 FTAs by May 2004, (300 FTAs will be in action by 2005) Recently, East Asian countries are actively promoting FTAs

7 StatusCountryNote ImplementedChile - signed (2003.2) - entered in force (2004.4) Under negotiationJapan - 1st negotiation ( ) - to be completed by end of 2005 Negotiation concludedSingapore - to enter in force 2005 Joint study concludedASEAN, Canada- initiate negotiations in 2005 Joint study concludedEFTA - to be completed by end of 2005 Under joint studyMexico- to be completed by Sept Joint study India, MERCOSUR, CJK - to start soon Status of Korea’s FTAs

8 Consideration for selection of FTA partners StandardsDetails Economic benefitsGDP, Trade Economic costsRestructuring costs Opportunity costs Political and diplomatic motivations National security, diplomac needs Usage of Leverage effect OthersMotivate to improve a domestic system Interests of FTA partners Faithful execution of agreements 9

9 Korea's Exports Markets

10 Korea's Imports Origins

11 Korea's Trade Partners

12 Korea’s (Economic) Relations / LA Trade Dynamic expansion in the 1990s Fluctuation due to respective economic crises Recent stalemate of the trade volume, but improving in > US$18 billion Investment (about US$2.5 billion) Dynamic increase in the mid-1990s Lost momentum since the financial crisis - Recent diversion to China ODA: Credit lines; Grants Korean residents: About 130T (50T in Brazil, 25T in Mexico, 20T in Argentina, 10T in Paraguay … )

13 Financial Cooperation Joining IDB in March 2005 CABEI under study FTA Chile since April 2004 Mexico under joint study MERCOSUR under discussion CACM under consideration Consultation Channels SICA MERCOSUR Rio Group Troika

14 Korea’s Exports Variation

(US$ millions)

17 Korea’s FDIs in Latin America

18 Performance of Korea-Chile FTA *FTA: April 2004~February 2005 **Source: KITA

19 Major Exports to Chile FTA FTA (April 2004~February 2005) US$ mvarUS$ mvarUS$ mvarUS$ mvar Total Exports Automobileimmed Mobile phoneimmed Light oilImmed, Chemical products Immed, Steel & Iron5 yrs Auto partsImmed, Wash machineexcluded Color TVimmed Tire10, 13 yrs Camera, Camimmed Refrigeratorexcluded VCRimmed %/total

20 Major Imports from Chile FTA FTA (April 2004~February 2005 US$ m% % % %var Total imports Copper products(74)Immed, Copper ore(2603)immed Chem Timber Pulpimmed Metil Alcoholimmed Red iron oreimmed Molibden oreimmed Pork10 yrs Grape10,sason Thornback10 yrs Wine5 yrs % of Copper related prod

21  International price of copper *Spot Settlement Price **Source: New York Mercantile Exchange, Inc. ( JUN 2002 DEC 2002 JUN 2003 DEC 2003 JUN 2004 DEC 2004 FEB 2005

22 Thank You