1. Nov. 2013 Ministry of Trade, Industry and Energy Republic of Korea

2. Contents The World Trade Environment & Korea’s FTA Strategy ⅠⅡ ASEAN-Korea FTA Effect Ⅲ Utilization Efforts for ASEAN-Korea FTA Ⅳ Main Aspects of ASEAN-Korea FTA

4. 1. The World Trade Environment & FTA

5. 2. Status of Korea’s FTAs

6. 3. Wider Economic Territory through FTA

7. 7 When combined, Korea’s FTA partners account for 57.3% of global GDP - Korea has the 3 rd largest economic territory in the world 2010 GDP % 4. Global GDP Ratio of FTA Partner Countries

8. 5. Korea’s Vision through FTA

10. Twenty five rounds of negotiation(Nov. 2004~Apr. 2009) Aug. 2006: Trade in goods agreement signed (Entry into Force in June 2007 ) * Korea’s Trade in goods with all ASEAN economies are now covered under the FTA as the trade in goods agreement with Thailand went into effect in January 2010 Nov. 2007: Trade in services agreement signed (Entry into Force in May 2009) : June 2009: Investment agreement signed (Entry into Force in Sep. 2009) Seven rounds of implementation committee meetings (Dec. 2009~Oct. 2013) - 2011: A protocol adopted to amend the trade in goods agreement 1. ASEAN-Korea FTA : History

11. Agreement on Trade in Services Schedule of Concessions Agreement on Trade in Goods Annex 1 Normal Track Annex 2 Sensitive Track Annex 3 Rules of Origin Agreement on Investment Reservations List Framework Agreement Annex Economic Cooperation Agreement on Dispute Settlement Mechanism Signed in 2005 Signed in 2006 Signed in 2007 Signed in 2009 2. ASEAN-Korea FTA : Structure

12. Tariff line: at least 90% Volume: at least 90% Reduced to 0% by 2010 (With flexibility on a maximum of 5% tariff lines, which was eliminated January 2012.) Normal Track(NT) Tariff line: 6-7% Volume: 7% Reduced to 20% by 2012 Reduced to 0-5% by 2016. Sensitive List Tariff line: 200 items(HS 6) less than 3%(HS 10) Volume: less than 3% A. 50% rate capping B. Reduced by 20% C. Reduced by 50% D. Subjected to TRQs E.Exemption(40 items) Highly Sensitive List * Tariffs of A, B, and C items on the highly sensitive list shall be reduced by Jan. 1, 2016 3. Goods : Tariff Reduction Schedule KOREA, ASEAN Tariff Reduction Schedule Sensitive Track(ST)

13. Origin Criteria (Simpler than other FTAs) - Wholly obtained or produced goods - RVC is less than 40% of the FOB value or the goods have undergone a change in tariff classification at 4 digit level Product Specific Rules (PSR) - 471 Products (HS 6 digit) subjected to PSR include automobile, textile, and chemicals Preferential Treatment for Gae-seong Industrial Complex - Each country grants preferential treatment to 100 Gae-seong products - Requirements : originating material not less than 60% + non- originating material not exceeding 40% 4. Rules of Origin

14. Services: 2009.5.1 Entry into force Most ASEAN countries opened sectors of our interest, including computer, IT, marine transportation, construction, finance, resulting higher liberalization than WTO(GATS) 5. Trade in Services & Investment Agreement Fair and equal treatment / full protection and security Dispute Settlement (ISD) between a Party and an investor of any other Party Schedules of Reservations to be discussed 5 years from entry into force Investment: 2009.9.1 Entry into force

15. ASEAN-Korea FTA Implementation Committee 소위원회 관세 원산지 Sub- committee Tariff Origin Working Group Economic Cooperation Working Group TBT/SP S Implementation Committee of ASEAN-Korea FTA Function  To oversee the FTA implementaion  To settle disputes between parties  To conduct periodical feedback and offer feedback on the impact of the FTA  To explore additional areas for liberalization Composition  Implementation Committee  Sub-committee  Working Group 6. Implementation of ASEAN-Korea FTA

16. Progress so far 7. Korea-Indonesia CEPA so far 5 times of official rounds took place since the 1 st round of negotiation(2012.10) Negotiations so far (Feb. 2011) Trade Ministers agreed on “Common Study” (May~Oct. 2011) Three times of “Common Study” (Mar. 2012) Announced to launch CEPA negotiations Both sides are to conclude negotiations as soon as possible

18. Trade Environment Improvement Investment Expansion Productivity Increase Price Stability Choice Diversification Higher GDP Enhanced Consumer Benefits  Elimination of tariff and non-tariff barriers  Creation of conducive marketing conditions  Elimination of tariff and non-tariff barriers  Creation of conducive marketing conditions Improvement of investment conditions- > expanded FDI Rise in domestic investment Improvement of investment conditions- > expanded FDI Rise in domestic investment Facilitation of competition and advancement of system Introduction of new technology and management technique Facilitation of competition and advancement of system Introduction of new technology and management technique Price plunge of imported products Price competition among domestic manufacturers Price plunge of imported products Price competition among domestic manufacturers More product variety Provision of differentiated services More product variety Provision of differentiated services 1. FTA’s Implications – Economic Impact

19. (Unit: USD Million,%) 2. Trade Improvement of ASEAN-Korea classification 2006200720082009201020112012 Export32,066 38,74 9 49,28340,97953,19571,80179,145 Import29,74333,11040,91734,05344,09953,12151,977 Trade61,809 71,85 9 90,20075,03297,294124,922131,122 Balance2,3235,6398,3656,9269,09618,68127,168 ▶ ASEAN-Korea trade volume increased by 112% after ASEAN-Korea FTA - Exports to ASEAN: 147% increase - Import from ASEAN: 75% increase

20. 3. Trade Improvement of Korea-Indonesia(1) (Unit: USD Million) classification 2006200720082009201020112012 Export4,8745,7717,9346,0008,89713,56313,955 Import8,8499,11411,3209,26413,98617,21615,676 Trade13,723 14,88 5 19,25415,26422,88330,77929,631 Balance-3,975-3,343-3,386-3,264-5,089-3,653-1,721 ▶ Indonesia is Korea’s 8 th largest trade partner - Exports 8 th, imports 11 th

21. 3. Trade Improvement of Korea-Indonesia(2) (Unit: USD Million) Rank ExportImport ItemAmountRatioItemAmountRatio 1 Petrochemical product 2,61030.3%Natural gas3,02030.2% 2 Iron plate7298.4%Coal2,02120.2% 3 Synthetic resin4855.6%Crude Oil9359.3% 4 Woven fabric4655.4% Chemical products 5835.8% 5 Synthetic rubber 2112.4% Forest by products 3163.2%

22. 4. Expanding Investment of ASEAN-Korea (Unit: USD Million,%,) Classification 2006200720082009201020112012 Korea → ASEAN 3,5926,47310,4936,2537,0716,3244,453 ASEAN→ Korea 7035959865761,6367421,681 ▶ ASEAN’s Investment on Korea after ASEAN-Korea FTA expanded by 2.4 times(increased by 239%)

23. 5. Expanding Investment of Korea-Vietnam (Unit: USD Million, number) Classification2006200720082009201020112012total Korea→ Vietnam number572839826643763723737 6,794 volume 1,7932,7801,9139642,1471,511913 15,308 Vietnam →Korea number5791315 14 97 volume0.40.50.41.00.85.01.7 11.8 ▶ Korea is Vietnam’s 4 th largest investor(Japan-Taiwan-Singapore-Korea) ▶ Vietnam is Korea’s 4th largest investing country and the largest among ASEAN members

24. 98.2 % 33.4 % Chile→ Korea Turkey ← Korea Utilization rate of Korea’s FTAs 6. Utilization of ASEAN-Korea FTA 79.3 % Chile← Korea 79.7 % 38.7% 42.8% 81.2% 91.5 % 77.5 % EFTA← Korea ASEAN← Korea India← Korea EU← Korea Peru← Korea us← Korea 73.9 % EFTA→ Korea ASEAN→ Korea 63.8 % India→ Korea 67.6 % EU→ Korea 71.4 % Peru→ Korea 67.3 % us→ Korea 41.6 % 71.1 % Turkey→ Korea Oct.2013

26. 1. Support for The Utilization The FTA

27. 2. Korea’s Policy for Utilization of FTA Experts such as customs house brokers, accountants etc. visit the sites of small-medium sized enterprises to perform consultations Diagnose in advance the capability of the buisness to better utilize FTA and provide consulting on country of origin management Train experts in country of origin and consultants for the utilization of FTA Operate FTA school for educate businesspeople relate FTA Open establishment of FTA courses at universities /post graduate schools and nuture FTA experts among retired executives of large enterprises ma

28. 2. Korea’s Policy for Utilization of FTA Under governmental guidance, supply origin of management system (FTA- PASS, FTA-KOREA) to small-medium sized businesses Hold information sessions for domestic small-medium sized enterprises and for foreign buyers from nations with FTA agreements (USA, EU, ASEAN) FTA web-network to provide all the FTA information

29. 2. Korea’s Policy for Utilization of FTA