Wonsok Yun. Director General & Chief Trade Commissioner, KOTRA Los Angeles

Transcription

1 Wonsok Yun Director General & Chief Trade Commissioner, KOTRA Los Angeles

2 Economy of Korea at a Glance Area: 100,000km 2 (108 th ) - Slightly larger than Indiana State Population: 50 million (24 th ) - Very large middle class (53% of pop) GDP (nominal): $1.16 trillion* (15 th ) - Per Capita: $23,749* (32 nd ) GDP Growth Rate: 3.6% (2011) Trade (2011): Export $555BN Import $524BN Foreign Exchange Reserves: $316 billion (Feb. 2012) 25% of Global GDP Inflation (CPI): 3.1% (Feb. 2012) Unemployment: 4.2% (Feb. 2012) Fiscal Balance (2010): 1.1% of GDP (excluding social security fund)

3 Korea, $1 trillion Trading Country In 2011, Korea became the ninth country in the world to have its trade volume exceed $1 trillion. (the U.S., Germany, China, Japan, France, the U.K., the Netherlands, and Italy) The trade rose ten-thousand-fold from $100 million in 1962 to $1 trillion in just 50 years.

4 Strengths of Korea

5 Strengths of Korea Automotive Steel Shipbuilding Displays K-Pop Chemicals Construction Semiconductor

6 Strengths of Korea [22] [55] [82] [161] [171] [220] [238] [271] [321] [333] [440] [489] [492] [498]

7 Korea will conclude FTAs with 2/3 of the world markets or almost 1/2 the world s population. Entered into force Concluded Underway USA, Chile, Singapore, EFTA, ASEAN, India, EU, Peru Source: Ministry of Foreign Affairs and Trade Turkey Canada, Mexico, GCC, Australia, New Zealand, Columbia On the agenda/ Joint Study Japan, China, Korea-China-Japan, MERCOSUR, Russia, Israel, Vietnam, Mongolia, SACU, Central America, Indonesia, Malaysia

8 8 Goods Trade with Korea Korea is US s 7 th Largest Trading Partner Two-way trade volume reached over 100 billion USD in , ,000 US$ million Korea Export US Export 100,141 80,000 60,000 28,783 30,586 33,654 37,219 38,365 28,612 38,846 43,505 40,000 20,000 42,849 41,343 43,184 45,766 46,377 39,216 48,875 56, Korea = 5th largest market for U.S. agricultural goods Korea = 10th largest market for U.S. information technology Source: World Trade Atlas

9 Services Trade with Korea Korea = 2nd largest market for U.S. services in Asia U.S. exports of private services to Korea totaled $17.0 billion, resulting in a surplus of $6.0 billion in Exports Imports Korean market offers areas of opportunity for U.S. exporters in travel, tourism, education, legal, insurance, technology, audiovisual, distribution, express delivery, environmental, professional, and financial services Source: U.S. International Services, Bureau of Economic Analysis, U.S. Department of Commerce.

10 Regional Trade Ties California - Korea Trade California is Korea s #1 trading partner among U.S. States California exports to Korea were over $5.9 billion (2009) Korea is California s 5th largest international market Los Angeles - Korea Trade LACD is Korea s #1 trading partner among U.S. customs districts LACD s exports to Korea were $11.0 billion (25% of U.S. total, 2011) Korea is LACD s 3rd largest trading partner *LACD: Los Angeles Customs Districts

11 FDI Relations US is the Second Largest Investment Destination of South Korea. The total stock of FDI from Korea stood at $16.6 billion at the end of 2010, making it among the Largest Sources of FDI in the Asia-Pacific region. Source: Select USA US is the Largest Single Country Investor in Korea - US accounts for 24.6% of the whole FDI made into Korea as of Higher Returns than any other countries since 1998 Source: Ministry of Knowledge Economy

12 KORUS FTA in force Launch of the KORUS FTA negotiation 8 rounds of the KORUS FTA negotiation Signed the KORUS FTA U.S. Agreement Renegotiation, signed Legal Texts in Feb U.S. U.S. Congress passed KORUS FTA Korea National Assembly passed KORUS FTA KORUS FTA went into full effect KORUS FTA is the Biggest free trade agreement since NAFTA in 1994 promotes Global U.S. and Korean Competiveness strengthens U.S. and Korean economies and Geo-strategic alliance KOREA is the first Asian country that has signed FTA with both EU and US

13 Economic effect of KORUS FTA $66.1B for 10 yrs Source: USTR(September 2007) Source: KIEP (August 2011) Note: The shown figures are not definite but approximated from given sources.

14 KORUS FTA Overview & Key Provisions Trade in Goods Both governments agreed to eliminate tariffs on all non-agricultural goods. By # of products, the U.S. will eliminate 92.1% and Korea 94.1% within 3 yrs. Concession Schedule Immediate Korea Auto parts(3-8), airplane engine(3), fiber optic cable(8), digital TV projection(8) 3 yrs Toothpaste(8), perfume(8), golf club(8) 5 yrs 10 yrs Passenger cars(8), razor(8), hair conditioner(8), lobster(20) Cosmetics(8), ball bearing(9), contact lens(8) USA Auto parts( ), LCD monitor(5), camcorder(2.1), polystyrene(6.5) Digital TV(5), chandelier(3.9), golf items(4.9), color TV(5) Passenger cars(2.5), tire(5), leather apparel(6), polyether(6.5) Microwave(2), washing machine(1.4), polyester resin(6.5), trucks(25) Over 10 yrs Pollock(30), mackerel(10) Special shoes( )

15 KORUS FTA Overview & Key Provisions Agriculture Two-thirds of U.S. agricultural exports to Korea become duty-free on entry into force. More than half ($1.6 billion) of U.S. farm exports to Korea will become duty-free immediately, including wine, wheat, feed corn, soybeans for crushing, hides and skins, and cotton. Rice: Totally excluded from opening Oranges: No change in the current tariff rate (50%) during harvest period (Sep. through Feb.) of Korean tangerine (Seasonal Tariff) Beef: The current tariff rate (40%) will be phased out for 15 years. Others: Avocado 30% (2 yrs), Wine 15% (Immediately) Special Safeguard : Impose a higher tariff rate in case of any sudden increase in imports of beef, pork, apples, garlic, hot pepper, ginseng, barley, etc.

16 KORUS FTA Overview & Key Provisions Services Legal Services - Allow U.S. law firms to provide legal consulting services on foreign laws and to open their offices in Korea - Over time permit U.S. law firms to enter into cooperative agreements with local firms, to establish joint ventures, and to hire local lawyers Accounting Services - Allow U.S.-registered CPAs or accounting corporations constituted under U.S. law to establish offices to provide consultancy services on U.S. and international accounting laws and standards - Allow U.S. CPAs to work for Korean accounting corporations - Within 5 years, permit U.S. CPAs to invest in Korean accounting corporations

17 KORUS FTA Overview & Key Provisions Investment Improvement of foreign investment systems and transparency on investor policies * Investor-State Disputes (ISD): Foreign investors can bring claims to the international arbitration mechanism (ICSID: International Centre for Settlement of Investment Disputes or UNCITRAL: UN Commission on International Trade Law) against a member s government for an alleged breach of the investment chapter. Government Procurement & Others Expanded access to Korean and U.S. government procurement contracts Strengthen protections for intellectual property Shorten Customs Clearance Process (within 48 hrs, especially 4 hrs for FEDEX) TBT(Technical Barriers to Trade) Trade Remedies, etc.

18 Major Beneficiaries From U.S. to Korea Products Tariff(%) Elimination Schedule Semiconductor Manufacturing Equipment Source: Department of Commerce, International Trade Administration(ITA) 0-8% Immediately Electrical Equipment 0-13% 96% immediately, remainder over 3 years Chemicals 0-50% Over 50% immediately, remainder over 3 to 10 years Agriculture (Beef) 0-40% 66% immediately, remainder over 10 years Medical Equipment 0-50% 43% immediately, remainder over 3 years Aerospace 0-8% Over 92% immediately, remainder over 3 years

19 Major Beneficiaries From Korea to U.S. Industry Products Tariff(%) Elimination Schedule AUTO PARTS Brake Pads 2.5 Immediately Cold Forging Parts Immediately Bolts/Nuts Immediately Textile Polyester Fiber 4.3 Immediately Car Mats 6.7 Immediately MACHINERY Ball Bearing 9.0 Elimination in ten equal annual stages Pumps 2.5 Immediately ELECTRONICS Touchscreen Monitor 2.7 Immediately PETROCHEMICALS Epoxy Resin 6.1 Immediately GOVERNMENT PROCUREMENT Lithium Battery 2.7 Immediately Source: KOTRA

20 Expected Benefits of KORUS FTA Nature Sungrown Foods, San Rafael, exports sausages and other meat products to Korea. The KORUS FTA eliminates Korea's 18.0 percent to 30.0 percent duties on these products within five years, or by A. P. Esteve Sales, Inc., Lodi, exports walnuts to Korea, facing 30.0 percent tariffs. The KORUS FTA eliminates those duties over six years. Guardian Industries Corp., Kingsburg, exports glass to Korea. The KORUS FTA immediately eliminates Korea s 8.0 percent duty on these exports. Postmark Inc., San Luis Obispo, imports AC motors from Korea, paying U.S. duties ranging from 3.3 percent to 4.0 percent immediately. The KORUS FTA eliminates these duties immediately. Cresset Powers, Pasadena, exports polysulfides and polysulfones to Korea. The KORUS FTA eliminates immediately Korea's 6.5 percent duty on these products. National Steel and Shipbuilding Co., San Diego, imports pipe or tube fittings paying U.S. duties of up to 3.7 percent. The KORUS FTA eliminates these duties immediately. Source : Businessroundtable.org

21 Success Stories of Korean Companies Company Segos ASIA Spacelink Products (Tariff Schedule) Refrigerator drawer slider (3.9%, A) Automotive wire/connector (2.5%, A) Hand Dryer (2.3%, A) Success Stories Due to 10% higher distribution margin compared to Chinese or Taiwanese products, company G's Korean sourcing was low before the KORUS FTA. Segos strongly appealed to company G regarding the 3.9% tariff elimination under the KORUS FTA and was able to achieve a new contract of $3 million. Currently supplying to GM and 2.5% duty has been eliminated under the KORUS FTA. Due to tariff elimination, ASIA is estimating sales increase from $1.8 million to $3.4 million. ASIA is planning to hire more employees to meet the demand. Spacelink supplied hand dryers, a sample order, to U.S. Navy through a vender and received a satisfactory feedback. The U.S. Vendor, company H, ordered additional 100 units with the news of KORUS FTA taking effect. Company H has received additional sourcing inquiries from General Service Administration, Federal Prison and the U.S. Department of Veterans Affairs.

22 Rules of Origin ROOs are used to define which products may qualify for preferential tariff rates under a trade agreement. - As a general matter, the importer is responsible for claiming preferential treatment from the importing country s customs authority. - Tariff Shift Rule, Regional Value Content(build-up/build-down Method) * Yarn-Forward Rule for Apparel Certificate of Origin can be issued by manufacturer, importer, and exporter. Five basic steps to ascertain whether your export may qualify for the FTA-negotiated preferential tariff rate (FTA rate) under KORUS: - Determine your product s tariff classification - Determine whether there is an advantage to claiming preferential treatment - Identify the Rule of Origin under KORUS - Document origin - Keep records (5 years) Kaesung Industrial Complex (KIC) - KORUS FTA adopts provisions to establish the Committee on Outward Processing Zone (OPZ) on the Korean Peninsula to allow products made in certain areas to be recognized as Korean me.

23 Helpful Resources Office of the U.S. Trade Representative: KORUS-FTA FTA Tariff Tool: amain.aspx US Customs and Borders Protection: U.S. Korea Connect: Korean Customs Service: Korean Manufacturer Inquiry: Buy Korea Trade Shows Inquiry in Korea: Global Exhibition Portal Korea Trade and Investment Inquiry: KOTRA Los Angeles

24 KORUS FTA HELPDESK Get Help from an Expert! KOTRA s KORUS FTA Help Desk provides latest information about the agreement and industrial benefits of FTA with further in depth business counseling. Industry experts at KOTRA Los Angeles and external business professional counselors are available to help you with all types of related inquiries. Telephone : (1-855-FTA-DESK) ftahelp@kotrala.com Homepage :

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