Korea and the FTA Dr Sang-Min Woo Trade and Investment Commissioner, Korea
1) KOREA OVERVIEW: AT A GLANCE 1. Geo-strategic location 2. 50 million in population 3. 1/17 of Queensland in size 4. Strong influence of confucian values 5. Use unique Korean-invented alphabet Hangeul 6. Grew 430 times in GDP per capita in the last 5 decades US$60 in 1960 -> US$26,000 in 2014? 2
OFFICIAL SIGNING OF KAFTA on 8 Apr 2014 in SEOUL 3
CURRENT KEY WORDS IN KOREA Growing Consumption Korean Wave (K-Pop, K-Drama, K-Food, K-Music) Ageing Society Zero Fertility Rate Youth Unemployment Chinese Tourists (Medical Tour), Tension with Japan) Sewol Ferry Accident Korea Unification 4
KOREAN ECONOMY IN GLOBAL POSITION 1) National Credit Rating (Moody s, Fitch) AAA B- Korea 2000 2012 AA- A+ Japan 2014 2) Korea s World Leading Industries The World s #1 in Shipbuilding Semiconductor Steel plates Display Broadband access Mobile phones Home electiric appliances Patent productivity The World s #3 in IT manufacturing and skills Petro chemicals Scientific infra Construction The World s #5 in Automobile manufacturing 5
WHY AUSTRALIA Trade Investment Australia is the 6 th largest import source the 12 th largest export market the 3 rd largest investment destination Australia is the 12 th largest investor KOREA Complementary industrial structure Australia s primary industries and services Korea s manufacturing - Korean automobiles hold a 25% market share in Australia 6
QUEENSLAND-KOREA TRADE OPPORTUNITIES QUEENSLAND Natural Resources KOREA 97% import dependent for energy Food and Agriculture 70% import dependent for food & agriculture Education and Tourism High social premium on education Strong in-market demand for English Increasing purchasing power, emphasis on leisure High need for manufacturing, human resources and FDI Refined oil, automobiles, home electric appliance, IT mobiles, trained labors and investment 7
2. Korea and FTAs KOREA S FTA PARTNER COUNTRIES FTA in Effect (2004) (2006) (2006) (2009) (2010) (2011) (2011) (2012) (2013) FTA in Completion FTA in Negotiation FTA in Consideration 8
KOREA S FTA PARTNERS Korea has 48 FTA partner countries including: Chile, Singapore, India, Peru, Turkey, EFTA, EU, US, Colombia (and Australia + Canada) 59% in global economic territories 57% in global GDP 41% in global consumers market (population) 36% in Korea s total trade (26% Australia s total trade) 63% in Korea s IFDI 3.5% export increase 2.2% import increase 9
KOREA S FTA PERCEPTION #1 (1) Global economic focus moving from the Atlantic to Asia/Pacific (2) Active mega FTAs / Regional economic bloc: including RECP, TPP, CJK FTA Linchpin 10
KOREA S FTA PERCEPTION #2 1) FTA utilization 19% in Australian companies 2) FTA used for: 60% 50% 40% 30% 20% 10% 0% 48% Export expansion cost saving 20% Better trade environment 16% Improve awareness 10% Develop new markets customers 6% Others 11
KOREA S FTA PERCEPTION #3 1) Construct FTA hub active participation 2) Expand business opportunities - Summit diplomacy 3) Low FTA use by SMEs -Various standards of certificate of origin (CoO) spaghetti ball effect -Complexity of FTA extra costs involved 12
THE MOST VALUABLE FTAs FOR THE KOREAN ECONOMY COUNTRIES % 1 The United States 41.0 2 European Union 28.8 3 ASEAN 17.6 4 Chile 5.6 5 India 2.2 6 Singapore 2.0 7 EFTA 1.4 8 Turkey 1.2 9 Peru 0.2 13
THE HIGHEST PRIORITY FTAs TO BE SIGNED COUNTRIES % 1 China 44.8 2 Korea-China-Japan 17.4 3 Regional Comprehensive Economic Partnership (RCEP) 11.6 4 Japan 7.6 5 Vietnam 5.0 6 Indonesia 2.9 7 Latin 5 countries 2.3 8 Gulf Cooperation Council (GCC) 2.3 9 Russia 2.0 10 Malaysia 1.4 11 Mercosur 1.2 12 Mexico 0.5 13 Thailand 0.3 14
KOREA-AUSTRALIA FTA GOOD NEWS Seoul Government submitted the ratification bill of KAFTA to the National Assembly of South Korea on 16 September 2014... South Korea and Australia hope to officially announce the ratification of the free trade deal during the Group of 20 summit scheduled for November in Brisbane... prior to Korea-Canada FTA ratification. 15
KAFTA Meaningful FTA TO KOREA TO AUSTRALIA - The first FTA among the Commonwealth Nations in TPP - Australia, NZ and Canada - The first FTA among the 3 key East / North Asian countries - 61% of Australian exports go to Korea, China and Japan - 32% of Australian imports are from Korea, China and Japan A SIGNIFICANT FIRST FOR BOTH COUNTRIES 16
KOREA-AUSTRALIA FTA - COMPARISON KOREA - Has 48 FTA partner countries - Australia s 8 th FTA AUSTRALIA - Has 18 FTA partner countries - Korea s 11 th FTA Australia s 4 th largest trade partner Korea s 6 th largest trade partner Beef issues Australian beef (40%) to elimininate 2.6% a year until 2030 (0%) RCEP / TPP (announced interest in joining on 29 July 2013) ISDS issues 5% tariff on automobiles to be eliminated immediately 5% tariff on home electrical appliances to be elimiated immediately TPP / RCEP BIG MISS: Korea missed the chance to negotiate the use of IELTS for assessing migration eligibility to Australia for Korean migrants ( still require a IELTS score of 6.0 or above) 17
AUSTRALIA S FTA PARTNER COUNTRIES FTA in Effect New Zealand (1966) 1983 Singapore 2003 Thailand 2005 The U.S. 2005 Chile 2009 ASEAN-Aus-NZ 2010 Malaysia 2013 FTA in Completion Korea 2014 April Japan 2014 July FTA in Negotiation - China - India - Indonesia - GCC - RCEP - TPP - Paper Plus 18
KOREA-AUSTRALIA TRADE Korea is Australia s 4 th largest trade (2013) Australia is Korea s 6 th largest trade (2013) 1. China US$122b 2. Japan US$ 69b 3. The U.S US$ 31b 4. Korea US$ 30b 5. Singapore US$ 23b Total US$ 508b (Korea - US$ 257b in Export, US$ 250b in Import) 1. China US$ 229b 2. The U.S. US$ 104b 3. Japan US$ 95b 4. Saudi Arabia US$ 47b 5. Singapore US$ 33b 6. Australia US$ 30.3b 7. Taiwan US$ 30b Total US$ 1,075b (Australia - US$ 9.6b in Export, US$ 29b in Import) 19
KOREA-AUSTRALIA INVESTMENT Korea -> Australia (2013) Australia -> Korea (2013) US$ 2.6B to Australia (9.01%) (Mining, Finance and Insurance) US$ 50M (0.36%) to Korea US$ 29.5B to the world (Manufacturing, Finance and Insurance, Mining, Retail, Property, etc.) US$ 14.2B to the world (Mining, Finance and Insurance) Source: Korea Exim Bank and ASB website 20
KOREAN GOVERNMENT S DOMESTIC COMPENSATORY MEASURES - To compensate industries for losses they suffer directly as a result of FTAs - To help those industries enhance their competitiveness - Compensatory measures: - Direct financial compensation for agricultural firms - Support for business that close - Trade adjustment assistance for manufacturing, services - Enhancing competitiveness to modernise agriculture - Improve distribution channels 21
USEFUL TIPS FOR DOING BUSINESS IN KOREA 1) Do not to wear sunglasses inside or in-front of those who are older of more senior 2) Do not to cross your legs in front of a senior person. 3) When dining with Korean hosts, do not to start eating before the host or those more senior. 4) Do not to pour your own drinks but pour for each other at least for those nearby. 5) Use both hands to give and receive business cards, gifts. Use your right hand for clinking drinking glasses. 6) When Koreans nod their heads in a meeting, it does not mean I agree with what you say but, in many cases, it means I hear what you are saying (in English). 22
FOR MORE INFORMATION Trade and Investment Queensland (TIQ) Korea Office Dr SangMin Woo Commissioner for Korea Phone: +82 2 2112 2390 Fax: +82 2 2112 2394 sangmin.woo@tiq.qld.gov.au 23
THANK YOU 감사합니다 24