The Effect of FTAs on Korean Trade Remedy System and Its Future Direction The Effect of FTAs on Korean Trade Remedy System and Its Future Direction Dong-Sup Shim Director of Investigation Policy Division

2 Table of Contents Introduction Recent proliferation of FTAs around the world FTA policies and implementations in Korea. Main subject Legal framework of FTAs under the WTO system Trade remedy modifications in the FTAs Examples of trade remedy features and their policies Conclusion Trade remedy suggestions for improving the current FTA structure Role and future direction of the Korea Trade Commission in a FTA system.

3 Ⅰ Introduction Recent proliferation of FTAs around the world FTA policies and implementations in Korea

4 1. Global Proliferation of FTAs Sharp Increase in RTAs Worldwide A total of 193 RTAs in effect as of March 2006 Only 50 RTAs under the GATT, 143 RTAs since the creation of the WTO Annual Increase in RTAs Number of RTA YEAR

5 2. Features of Recent FTAs First Only in Europe and Latin America but Now Global Japan, Singapore, India, and Australia have started to actively pursue FTAs In particular, many East Asian countries are belatedly competing to sign FTAs Simultaneously Pursuing 'Expansion' and 'Integration’ FTAs are recently being signed between cross regional nations Continent-wide FTAs covering a large bloc

6 2. Features of Recent FTAs (continued) Greater Liberalization than WTO Multilateral Agreements Coverage of FTAs are extending to include liberalization of service and investment Trying to cover new sectors such as competition, labor and environment ‘WTO Plus’ Trade Remedies To ensure transparency in operating trade remedies To restrict the overuse of trade remedies and excessive trade remedy actions

7 3. The Call for FTAs Improving the competency of Korean industries through more openness FTAs are regarded as important reform measures in the trade sector Foreign Investment Appeal Example of Mexico since the conclusion of NAFTA FTAs as a countermeasures for non-FTA members against disadvantages Exclusion from the worldwide FTA network Disadvantages caused by trade diversion effects

8 4. Korea's FTA Policies FTAs: Central to Korea's Economic Policies Strategies for Pursuing FTAs Pursuing Multiple FTAs Simulatenously Pursuing Comprehensive FTA Coverages Pursuing FTAs with Large Economic Blocs

9 5. Korea's current status in pursuing FTAs Actively implementing FTA policies since 2003 FTAs concluded with : Chile, Singapore, EFTA and ASEAN Current ongoing FTAs negotiations : U.S, Japan, Canada, India, Mexico FTAs under consideration with : China, Mercosur

10 Ⅰ Main subject Legal framework of FTAs under the WTO system Trade remedy modifications in the FTAs Examples of trade remedy features and their policies

11 1. Legal Framework of FTA under the WTO system FTAs : WTO Recognized Regional Agreements Article 24 of the 1994 GATT states forms of regionalism * customs union, FTA and preliminary agreement to establish a regional agreement WTO Exemptions for FTAs "all commercial barriers between member states should be abolished" "all commercial barriers between member & non-member states should not be higher” ⇒ If such conditions are met, the FTA exempt from rules of GATT and the WTO

12 2. Trade Remedy Features in FTAs Specific Trade Remedies per Specific FTAs Tailored FTA Trade Remedies Existing Trade Remedies Not applying trade remedies to both sides Strengthening or easing trade remedies compared to the WTO rules Applying trade remedies stated in the WTO rules

13 3. Examples of trade remedy features and their policies Analysis of Foreign FTA Trade Remedies New Zealand - Singapore NAFTA USA-Singapore EFTA-Singapore Japan- Singapore Chile-Mexico EC-Mexico Strengtened compared to WTO New Zealand - Singapore EFTA-Singapore Japan-Singapore EC-Mexico Japan-Singapore EC-Mexico Japan-Singapore EFTA-Singapore Applying WTO NAFTA USA- Singapore Chile-Mexico NAFTA USA-Singapore Chile-Mexico NAFTA USA- Singapore Chile-Mexico EC-Mexico Eased compared to WTO CVD EFTA - Singapore AD New Zealand - Singapore Global SG New Zealand - Singapore Bilateral SG Exemption of WTO ←← Excercise of Actions(Difficult) Excercise of Actions(Easy) →→ ←← Level of Actions(Low) Level of Actions(High) →→ Section SG

14 3. Examples of trade remedy features and their policies (continued) 3. Examples of trade remedy features and their policies (continued) Analysis of Korean Trade Remedy System Korea-Singapore Korea-EFTA Korea- Singapore Korea-EFTA Korea-ASEAN Strengtened compared to WTO Korea-Chile Korea-Singapore Korea-EFTA Korea-ASEAN Korea-Chile Korea-ASEAN Korea-Chile Korea-Singapore Korea-EFTA Korea-ASEAN Applying WTO Korea-Chile Eased compared to WTO CVD AD Global SG Bilateral SG Exemption of WTO ←← Excercise of Actions(Difficult) Excercise of Actions(Easy) →→ ←← Level of Actions(Low) Level of Actions(High) →→ Section SG

15 3. Examples of trade remedy features and their policies (continued) 3. Examples of trade remedy features and their policies (continued) Characteristics of Korea's trade remedy system in FTAs Most of bilateral SGs are stricter than that of WTO Agreements Global SG : None of exemption of mutual application AD : Adheres to WTO or puts more reinforced CVD : Only Adhere to WTO

16 Ⅰ Conclusion Trade remedy suggestions for improving the current FTA structure Role of the Korea Trade Commission in a FTA system

17 1. Trade remedy suggestions for improving the current FTA structure 1. Trade remedy suggestions for improving the current FTA structure Factors in Determining Trade Remedy Systems Competitive advantage over general industries and major trade items Bridging Differing Trade Remedy Policies Comparative disadvantage in terms of general industries and major items ⇒ Promote utilization of trade remedy system and introduce a system same as that of the WTO or a less strict version Comparative advantage in terms of general industries and major items ⇒ Restrict utilization of trade remedy system Similar level of competitiveness but many industries to compete with ⇒ Maintain a neutral trade remedy system Similar level of competitiveness but few industries to compete with ⇒ Restrict utilization of trade remedy system

18 2. Role and Future Direction of the KTC About KTC Representative government agency taking trade remedies against injury to the domestic industry and unfair trade actions Chief responsible body in creating a new trade remedy system in the Era of FTAs Future Direction of the KTC Role of the KTC becoming increasingly important Maximizing potential through expanding its organization and hiring more experts Building a comprehensive trade remedy databases in linkage with the current portal web-site for trade remedy Closer ties with international global trade remedy agencies

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