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

2006.6.2

Dong-Sup ShimDirector of Investigation Policy

Division

2

Table of ContentsTable 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

ⅠIntroduction ⅠIntroduction

• Recent proliferation of FTAs around the

world

• FTA policies and implementations in

Korea

4

1. Global Proliferation of FTAs 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

Numbe

r of

RTA

YEAR

5

2. Features of Recent FTAs 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) 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 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 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 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

ⅠMain subjectⅠMain 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 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 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 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

• 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 - SingaporeAD

• New Zealand

- Singapore Global

SG

• New Zealand - Singapore

Bilatera

l 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

Bilatera

l 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

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ⅠConclusionⅠConclusion

• 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

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2. Role and Future Direction of the KTC 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

감 사 합 니 다

Thank You!Thank You!