IPE-K <Lecture Note 4> 2013.03.29
IPE-K: Trends in Trade and FDI
*Some parts of this note are borrowed from references for
teaching purpose only.
Semester: Spring 2013
Time: Friday 9:00~12:00 am
Class Room: No. 322
Professor: Yoo Soo Hong
Office Hour: By appointment
Mobile: 010-4001-8060
E-mail: yshong123@gmail.com
Home P.: //yoosoohong.weebly.com
1
Trade
2
Major Economic Indicator
2006
2007
2008
2009e
2010f
GDP (100 million dollar)
9,518
10,492
9,314
8,325
10,124
GDP per capita (dollar)
19,530
21,420
18,930
16,860
20,450
Economic growth (%)
5.2
5.
2.3
0.2
5.9
Unemployment rate (%)





Consumer price inflation (%)
2.2
2.5
4.7
2.8
3.1
Exchange rate (W/dollar)
945
929.3
1,102.0
1,276.9
1,129.6
Current account balance
(million dollar)
5,385
5,876
-5,778
42,668
35,253
Export (million dollar)
331,842
379,045 432,922 373,585 459,803
Import (million dollar)
303,938
350,877 427,254 317,457 415,024
Foreign reserve (million dollar)
238,882
262,150 201,145 269,933
Debt balance/GDP (%)
27.5
36.2
41.0
Source: Korea Eximbank Overseas Economic Research Institute. 2010. 2010 World Country Review
42.3

36.1
The Korean Economy: past and present
YEAR
1961(a)
2008(b)
(b)/(a)
$ 2.3 Billion
$ 928.7 B
403
GNI P/C
$ 87
$ 19,231
221
Export
$ 55 Million
$ 422.0 B
7,672
Import
$ 390 M
$ 435.3 B
1,116
GDP
4
Industrial Power of Korea
Product
World market share
% (Rank)
Semiconductors
49 (1)
TFT-LCDs
46.5 (1)
Automobiles
9.8 (4)
80.0 (1)
LNG carriers
Petrochemical
products
45 (1)
Large diesel
engines for ships
Refrigerators
Air-conditioners
59.6 (1)
14.3 (1)
22.3 (1)
Company
Samsung Electronics,
Hynix Semiconductor
Samsung Electronics,
LG.Philips LCD
Hyundai-Kia Motors,
GM Daewoo
Hyundai Heavy Industries,
Samsung Heavy Industries,
Daewoo Shipbuilding &
Marine Engineering Co.
LG Chem, SK
Hyundai Heavy Industries,
Doosan Engine Co.,
STX Heavy Industries
Samsung Electronics,
LG Electronics.
LG Electronics,
Samsung Electronics
5
Developments in Korea’s Trade Liberalization Policy
 Five measures of trade liberalization
-
Reduction of tariff barriers
Elimination of quantitative restrictions
Major items: live cattle and beef products
Prohibition of trade-related subsidies
Enhancement of transparency in import certification procedures
Customs services, IT-based clearance system, a new audit system
Establishment of FTAs
6
Trends in Trade
Export
Value
Import
Inc. Rate
Value
Balance
Inc. Rate
Value
2002
162,470,528
8.0
152,126,153
7.8
10,344,375
2003
193,817,443
19.3
178,826,657
17.6
14,990,786
2004
253,844,672
31.0
224,462,687
25.5
29,381,985
2005
284,418,743
12.0
261,238,264
16.4
23,180,479
2006
325,464,848
14.4
309,382,632
18.4
16,082,216
2007
371,489,086
14.1
356,845,733
15.3
14,643,352
2008
422,007,328
13.6
435,274,737
22.0
-13,267,409
2009
363,533,561
-13.9
323,084,521
-25.8
40,449,040
2010
(Jan~Sep)
338,628,512
30.5
309,574,057
34.5
29,054,455
7
Trends in Exports and Imports of Korea
(billion $)
Source: KITA (Korea International Trade Association).
Korea’s Trade Volume
Million USD
Korea’s per capita Export Volume:
$5,287
- larger than Japan($4,712)
and the US($2,824)
9
Export Similarity Index
Jap an
Ko rea
Taiwan
Ho ng Ko ng
wit h EA r egion: 2000- 04
China
wit h EA r egion: 1990- 94
Thailand
Sing ap o re
Philip p ines
M alaysia
Ind o nesia
0 .0
0 .2
0 .4
0 .6
0 .8
1.0
av er age c or r elat ion c oef f ic ient of ex por t c omposit ion
10
Foreign Reserves (As of June 2007)
China
Japan
Taiwan
Korea
Russian Federation
India
Foreign Reserves
US Treasuries held
Singapore
Hong Kong
United States
United Kingdom
Oil Exporters
Offshore
0
200
400
600
800
1000
1200
1400
US $, Billions
Source: US Department of the Treasury/Federal Reserve Board
Foreign Reserves are as of July 2007, US Treasuries held are as of June 2007.
Offshore holdings include UK, Carib banking, and Luxembourg
11
Top Ten Trading Partners (2008)
Exports
Imports
Country
Value
($ Mil.)
Share to
Total
(%)
Rank
Country
Value
($ Mil.)
Share to
Total
(%)
1
China
91,389
21.7
1
China
76,930
17.7
2
USA
46,389
11.0
2
Japan
60,956
14.0
3
Japan
28,252
6.7
3
USA
38,365
8.8
4
Hong Kong
19,772
4.7
4
Saudi
Arabia
33,781
7.8
5
Taiwan
16,293
3.9
5
Germany
19,248
4.4
6
Singapore
11,462
2.7
6
Australia
18,000
4.1
7
Germany
10,523
2.5
7
UAE
14,769
3.4
8
Russia
9,748
2.3
8
Taiwan
14,375
3.3
9
Mexico
9,090
2.2
9
Indonesia
12,129
2.8
10
UK
8,977
2.1
10
Kuwait
11,320
2.6
Rank
Source: Korea International Trade Association
12
Top Ten Export Items & Top Five Markets (2008) ($ Mil., %)
Value
Top Five Markets(Component Ratio)
No.1
No.2
No.3
No.4
No.5
Vessel, Ocean Structure
and Part of Vessel
43,157
Panama
Marshalls
Singapore
Germany
Liberia
Articles of Petroleum
37,573
China
Singapore
Japan
Netherlands
Hong Kong
Wireless Communication
Apparatus
35,713
USA
China
Hong Kong
Finland
France
Automobile
35,032
USA
Russia
Canada
Saudi Arabia
Brazil
Semiconductors
32,793
China
Hong Kong
Taiwan
Singapore
Japan
Flat Display and Sensor
18,732
China
Mexico
Slovak
Japan
USA
Steel Flate-rolled Products
15,948
China
Japan
USA
India
Thailand
Synthetic Resin
14,909
China
Hong Kong
Japan
Russia
Vietnam
Part of Automobile
13,950
USA
China
India
Russia
Slovak
Computer
10,697
China
USA
Hong Kong
Germany
Japan
Source: Korea International Trade Association
13
Top Ten Import Items & Top Five Markets (2008) ($ Mil., %)
Value
Top Five Markets(Component Ratio)
No.1
No.2
No.3
No.4
No.5
Crude Petroleum
85,855
Saudi
Arabia
UAE
Kuwait
Iran
Qatar
Semiconductors
32,018
China
Japan
Singapore
Taiwan
USA
Natural Gas
19,806
Qatar
Oman
Malaysia
Indonesia
Guinea
Articles of Petroleum
17,534
India
Saudi
Arabia
UAE
Kuwait
Indonesia
Steel Flate-rolled
Products
17,203
China
Japan
Taiwan
France
Sweden
Coal
12,810
Australia
China
Indonesia
Canada
Russia
Computer
9,723
China
Taiwan
Japan
USA
Singapore
Alloy Iron, Pig Iron or
Scrap Iron
7,960
Japan
USA
Russia
China
South Africa
Fine Chemical
Material
6,879
China
Japan
USA
Belgium
Germany
Articles of Copper
6,228
Chile
Japan
Philippines
China
USA
Source: Korea International Trade Association
14
Geographical Location
Located on the trade route connecting
Europe, Asia, North America
Located at the center of NEA
between China and Japan
Starting and Ending Point of
trans-continental railway
광양만권경제자유구역청
15
Accessibility to the NEA Market
NEA is emerging as a major
economic bloc alongside EU and
KOREA
North America
JAPAN
•Thirdargest economy in GDP
China
• World’s largest manufacturing base
• Second largest economy and fastest growing consumer market in the world
-25% of World Population
-20% of World GDP
16
-30% of World Cargo
Volume
광양만권경제자유구역청
World Trade Environment and Direction
 Global Economic Environment
- Profound Change in the Elements that Constitute Value and
Competitiveness
 20th century
- Value: Productivity Based on Input of Labor
- Competitive Elements: Material Capital
 21st century
- Value: Productivity Based on Promoting
- Creativity and Quality of Labor
- Competitive Elements: information and Knowledge
17
 “The Era of Borderless Competition”
- Policies are standardized
- Most debated economic issues: Globalization vs. Regional Economic Blocs
 Digitalized & Knowledge-Based Economy
- Knowledge becomes the major source of added value
- Change in industrial structure from manufacturing to new industries such as
IT
About KITA
 Unique Identity
– Over 66,000 trading companies as members
– Function in close relations with MKE (Government)
 History
– Established in 1946
 Role
– International Trade & Investment Promotion
– Research in Korea’s Trade policy
& Strategy
– Exhibition & Convention
– e-Trade Promotion
– IT/Trade Education
– Hub of Northeast Asian Logistics
Characteristics of Recent FTAs
 Korea has adhered to ‘multilateralism’ because its trade relations were
diversified.
 Before the1990s, most FTAs aimed for market access through alleviation and
elimination of trade barriers.
 Recent FTAs, which include service, investment, intellectual property rights,
and government procurement, aim at being comprehensive.
 FTAs are promoted not between neighboring countries but between countries
in other regions.
20
ConsiderationKorea's
for Selection
of FTA
Partners
Exports
Markets
Standards
Details
Economic benefits
GDP, Trade
Economic costs
Restructuring costs
Opportunity costs
Political and diplomatic
motivations
National security, diplomatic needs
Others
Motivate to improve a domestic system
Usage of Leverage effect
Interests of FTA partners
Faithful execution of agreements
Source: KIEP
21
FDI
22
Overview of FDI in Korea
 Korea’s Development Model before Asian Financial Crisis
- Foreign loan-based financing for investment requirements far greater
than domestic saving
- Little reliance on FDI and foreign licensing to cultivate indigenous capability
through reverse engineering of imported capital, parts, and finished goods,
etc.
- Sharp contrast to FDI-led industrialization models as in case of Malaysia
and other developing nations
- One of the lowest in the world in terms of FDI/GDP ratio
- Why Korea was reluctant to invite FDI?
23
International Comparison of Inbound FDI
Inflow of FDI/Total Fixed
Capital Formation ( %)
Inward Stock of FDI as a
Percentage of GDP
2004
2005
2006
2004
2005
2006
Developed Economies
6.6
9.3
11.8
8.2
16.4
24.2
Developing
Economies
12.9
12.6
13.8
9.6
25.6
26.7
EU
8.1
18.2
18.1
10.5
26.0
38.0
UK
16.1
52.9
33.9
20.6
30.4
47.8
US
6.2
4.9
6.8
6.8
12.8
13.5
Netherlands
1.8
34.1
3.3
22.4
63.1
68.2
Africa
12.6
17.8
19.6
11.7
25.5
29.5
Asia
10.3
11.3
12.9
9.1
26.5
24.9
Latin America
17.0
15.3
12.9
9.1
21.1
26.6
China
8.0
8.8
8.0
5.4
17.9
11.1
Hong Kong
96.4
90.4
103.9
58.6
269.9
405.7
Malaysia
19.1
15.2
20.1
23.4
58.4
36.0
Korea
4.5
3.0
1.9
2.0
7.4
8.0
Singapore
77.5
57.6
79.5
82.6
121.5
159.0
Thailand
14.0
17.5
16.5
9.7
24.4
33.0
24
Source: UNCTAD, World Investment Report 2007
Recent Inflows of Foreign Direct Investment to Korea
(Unit: million US dollar)
Source: Statistics Korea. 2011.
Foreign Direct Investment by Country
($ Mil.)
Total
Japan
USA
EU
Others
2000
15,250
2,452
2,921
4,423
5,454
2001
11,286
776
3,886
3,052
3,572
2002
9,093
1,404
4,491
1,680
1,518
2003
6,469
540
1,242
3,046
1,623
2004
12,792
2,258
4,718
3,009
1,807
2005
11,563
1,879
2,690
4,781
2,214
2006
11,233
2,108
1,701
4,977
2,447
2007
10,514
990
2,340
4,332
2,852
2008
11,705
1,423
1,328
6,333
2,621
Source: Ministry of Knowledge Economy
26
Korea’s Shift to Proactive FDI Regime
 The Asian financial crisis provided "strong motivation" to attract FDI
- Asian financial crisis in 1997/8 has enforced Korea to switch to
proactive inducement of to overcome foreign exchange crisis under
IMF conditionality
 Actively joining WTO regime and FTA
 To enable Korea as a regional business hub from the perspectives
of logistics, finance and R&D
27
Korea’s FDI Inducement
 Industrializing Period
-
Korea emphasized the promotion of absorptive capacity and the
indigenization of foreign technology, while restricting both FDI
and foreign licensing.
-
Korean firms assimilated imported embodied technology rapidly
and achieved subsequent expansion while upgrading industrial
structure to emerge as global brands (e.g. Samsung, Hyundai, and
LG) from an agrarian economy in just three decades.
-
Korea relied heavily on foreign borrowing to finance its investment
requirements and thus Korea’s FDI played only a marginal role in its
rapid industrialization process. One of the lowest in the world even after
adopting a more proactive FDI regime.
28
 After the Asian Financial Crisis in 1997/98
-
Korea was forced to pursue FDI-friendly policy initiatives in order to fulfill the
conditionality of the IMF in exchange for standby credit.
-
Korean policy makers have acclimated to the global economy by welcoming
greenfield investment and M&As to promote investment activities leading to the
development of a more competitive economy.
-
Domestic investment sharply declined in 2000s while outbound FDI exceeded
inbound FDI as pervasive globalization affecting the world economy.
-
Policy direction shifted from conventional loan-based borrowing to an FDIbased development strategy → necessary to establish a system capable of
inducing new FDI and providing effective aftercare services.
-
Korea has been active in attracting foreign investment by setting up
comprehensive service institutions to provide one-stop services.
-
However, still the record of F야 into Korea is not impressive.
29
FDI Incentive Track in Korea
30
 Results of Korea’s Aggressive FDI Inducement Policy
- Inbound FDI notifications for 2007 recorded US$10.5 billion (marked
the 4th consecutive year in which notifications reached or exceeded the
US$10 billion).
- As Korea’s inbound FDI increases during the decade since the
Asian financial crisis, outbound FDI has also risen sharply as
Korean companies take advantage of rapid globalization and
subsequent supply chain expansion.
Korea’s Overall Inbound FDI Trends
31
- Recently, the EU has been the largest source of Korean inbound
FDI, contributing more than 40% of total arrived FDI.
Korea’s Inward FDI by Country of Origin
32
FDI-Friendly Regime: Actions and Challenges
 Minimizing Negative Sentiment
-
Korea needs to recognize that many foreign companies have
pointed out as some of Korea’s most serious negative factors the
unlawful and occasionally militant labor movements in addition to
the already comparatively high wage levels amongst Asian
countries.
-
It also needs to supplement its FDI policy to function in a liberalized
global trade environment.
 Improving Absorptive Capacity
-
Changing the investment environment should be to improve domestic
economic absorptive capacity for FDI in order to select and attract
transnational companies that can significantly help Korea remain
competitive in a global market place. Needs to upgrade its overall
FDI-friendly economic environment.
33
 FSA and CSA
-
Korea should realize that inward and outward FDI is closely related
through the dynamic process of MNCs upgrading CSA (Country
Specific Advantage) and FSA (Firm-Specific Advantage) by
accelerating production fragmentation and supply chains.
-
Thus, the Korean government needs to design policy measures
effective for attracting foreign MNCs with FSAs of high quality.
Application of Rugman’s FSA-CSA Matrix
34
 Increasing Transparency of Laws and Systems
-
Korea must increase transparency of laws and systems in relation to
FDI. Industrial clustering as contained in the Korea’s business hub
strategy is a highly effective way to attract desired and selective FDI.
-
Making central and local government agencies’ incentive system
more consistent to achieve global standards by doing away with tax
and non-tax barriers is important.
-
Considering how to improve communication channels between the
government and transnational companies is also crucial.
35
Investment Liberalization and Promotion
 Inward Investment Liberalization Policy





- After the financial crisis of 1997, extensive government liberalization of FDI.
Full liberalization of the real estate sector
Allowance of hostile M&As by foreign companies
Simplification of the FDI approval process
-Procedures revised from a process of report and approval to notification.
Simplification of administrative procedures
-Establishment of INVEST KOREA (IK), a one-stop agency for foreign
investors, and the Office of the Investment Ombudsman
Expanding the range of incentives available to foreign investors
-Tax exemptions and reductions, reduction of rental fees on governmentowned factory sites and a range of subsidies
36
FEZ : Free Economic Zone
FTZ : Free Trade Zone
Concepts of the FEZ and FTZ
Free Economic Zone (FEZ)
Free Trade Zone (FTZ)
Industrial
Park
A
…
PORT
Distripark
Industrial
Park
B
Support
Functions
…
Industrial
Park
N
광양만권경제자유구역청
37
Locations of FEZs and FTZs
Incheon FEZ
Incheon International Airport
Incheon Port
Free Economic Zone
Free Trade Zone
Gunsan
Iksan
Busan-Jinhae FEZ
Masan
Gwangyang Bay Area FEZ
Gwangyang Port
광양만권경제자유구역청
38
Development Plans of the FEZs
Incheon FEZ
Songdo
IT, BT, international business
Yeongjong
air logistics, tourism, IBC
Cheongna
leisure, int’l finance
Incheon
Busan-Jinhae FEZ
Gwangyang FEZ
Busan
• NEA maritime transshipment hub
• Industrial clusters for oil and steel businesses
Gwangyang
광양만권경제자유구역청
• maritime logistics hub
• manufacturing & industrial parks, R&D
39
ODI
40
Outward FDI (ODI)
- Korea has become one of the main providers of FDI in Asia
- Big investor in China
- There are diverse motives for Korea’s outward FDI
- Market access, export base, natural resources, low production
cost, etc.
- Asia (in particular, Southeast Asia) received more Korea’s FDI
compared to other region.
- Most of the investment has been in manufacturing.
- Large enterprises led continuously Korea’s FDI outflow in most of
the industries. SMEs and individuals come second and third,
respectively
41
Pattern of Korean FDI in Abroad
Korea’s ODI Trends
amount (million)
12,000,000
6,000
10,000,000
5,000
8,000,000
4,000
6,000,000
3,000
4,000,000
2,000
2,000,000
1,000
0
y ear
Source: Korea Export-Import Bank. 2007
42
2006 2004 2002 2000 1998 1996 1994 1992 1990 1988 1986 1984 1982 1980 0
amount
projects
Pattern of Korean FDI in Abroad
FDI by Region
7,000
6,000
5,000
4,000
2002
2003
3,000
2004
2,000
2005
1,000
2006
0
A sia
N orth A m erica
E urope
Source: Korea Export-Import Bank. 2007
43
Latin A m erica
M iddle E ast
Pattern of Korean FDI in Abroad
FDI by Industry
($Million)
6000
5000
manufacturing
4000
wholesale&retail
3000
real estate
2000
construction
mining
1000
0
2003
44
2004
2005
2006
Pattern of Korean FDI in Abroad
FDI by Company Size
100%
80%
60%
Individuals
40%
SMEs
20%
Large
Enterprises
0%
2003
2004
2005
Source: Korea Export-Import Bank. 2007
45
2006
Trends in Overseas Investment
Source: Korea Eximbank. Overseas Investment statistics . 2012.
Trends in Overseas Investment
(Unit: US dollar)
Source: Korea Eximbank. Foreign Investment statistics. 2012.
Korea’s Overseas Investment by Region (2012)
(Unit: 1000 US dollar)
250,000
200,000
150,000
100,000
50,000
0
Source: Korea Eximbank. Overseas Investment statistics. 2012.
Korea’s Overseas Investment by Country (2012)
(Unit: 1000 US dollar)
45,000
40,000
35,000
30,000
25,000
20,000
15,000
10,000
5,000
0
Source: Korea Eximbank. Overseas Investment statistics. 2012.
Korea’s Overseas Investment by Industry (2012)
(Unit: 1000 US dollar)
Professional, scientific and technical activities
Real estate activities and renting and leasing
Financial and insurance activities
Information and communications
Accommodation and food service activities
Transportation
Wholesale and retail trade
Construction
Sewerage, waste management, materials recovery and…
Electricity, gas, steam and water supply
Manufacturing
Mining and quarrying
Agriculture, forestry and fishing
0
40,000
Source: Korea Eximbank. Overseas Investment statistics. 2012.
80,000
Korea’s ODI in ASIA
Trend of Korea’s ODI in Asia
7,000,000
4,000
6,000,000
3,500
3,000
amountt
5,000,000
2,500
4,000,000
2,000
3,000,000
1,500
2,000,000
1,000
1,000,000
year
Source: Korea Export-Import Bank. 2007
51
2006 2004 2002 2000 1998 1996 1994 1992 1990 1988 1986 1984 1982 1980 0
500
0
amount
projects
Korea’s ODI in ASIA
ODI by Major Destination in the World
2003
projects
2004
amount
projects
2005
amount
projects
2006
amount
projects
amount
China
1,679
1,666
2,142
2,298
2,240
2,647
2,300
3,310
(ratio)
(59.8)
(41.0)
(56.9)
(38.4)
(51.0)
(40.4)
(44.4)
(30.8)
(change)
(21.2)
(62.1)
(27.6)
(37.9)
(4.6)
(15.1)
(2.7)
(25.0)
526
1,051
828
1,339
1,070
1,243
1,257
1,754
(ratio)
(18.7)
(25.9)
(22.0)
(22.4)
(24.4)
(19.0)
(24.2)
(16.3)
(change)
(17.4)
(84.8)
(57.4)
(27.3)
(29.2)
(-7.2)
(17.5)
(41.1)
ASEAN
234
545
282
513
424
650
708
1,349
(ratio)
(8.3)
(13.4)
(7.5)
(8.6)
(9.7)
(9.9)
(13.7)
(12.6)
(-12.7)
(55.4)
(20.5)
(-5.8)
(50.4)
(26.6)
(67.0)
(107.7)
50
194
79
674
110
556
128
1,051
(ratio)
(1.8)
(4.8)
(2.1)
(11.3)
(2.5)
(8.5)
(2.5)
(9.8)
(change)
(-7.4)
(-78.9)
(58.0)
(248.3)
(39.2)
(-17.5)
(16.4)
(89.0)
total
2,809
4,062
3,764
5,989
4,389
6,557
5,185
10,731
(ratio)
(100.0)
(100.0)
(100.0)
(100.0)
(100.0)
(100.0)
(100.0)
(100.0)
(change)
(12.8)
(9.9)
(34.0)
(47.4)
(16.6)
(9.5)
(18.1)
(63.7)
US
(change)
EU
52
Motivation of Korea’s ODI in Asia
Motivation of Korean ODI by period
(percent)
1968~1993
1994 ~1996
1997~2001
After 2002
Securing or developing local or
third-country markets
28.9
50.2
52.4
47.1
Utilizing local labor costs
14.7
37.2
30.3
38.5
Avoiding trade barriers
1.7
2.5
2.3
3.1
Securing raw materials
3.8
4.8
3.9
4.4
Acquiring advanced technology or
management know-how
1.1
2.6
7.7
4.1
Developing natural resources
49.9
2.7
3.3
2.8
Source: The Export-Import Bank of Korea (2004). Lee, S.B. (2006)
53
54
- On per project basis, Singapore leads Korea’s outward FDI
55
56
57
Outward FDI Policy
 Loan programs
- Loan program under the Export-Import Bank of Korea to finance OFDI: up
to 80% of the total OFDI amount
- Loan program under the International Economic Cooperation Fund initiated
by the Korean government: applicable to OFDI in developing countries with
long-term return periods
 Information provisions
- Agencies: Export-Import Bank of Korea and the Korea Trade and
Investment Promotion Agency
 Reduction of non-commercial risks
-
Korean Export Insurance Corporation offers export insurance to investors
to reduce non-commercial risks, such as losses from war, nationalization,
etc.
Korean government signed Investment Protection Agreements with more
than 80 countries, and tax treaties with more than 70 countries
58
US Assessment of KOR-US FTA
The long anticipated Korea-U.S. Free Trade Agreement (KORUS-FTA) will be
implemented on March 15, 2012 becoming our nation’s largest FTA since NAFTA.
The agreement has the potential to increase U.S. exports to Korea by
approximately USD 10-12 billion, and it will be especially beneficial for U.S. SMEs.
In 2009, nearly 18,000 SMEs exported some USD 8.4 billion worth of merchandise
to Korea.
Total 2011 U.S.-Korea trade exceeded USD 100 billion for the first time ever. U.S.
exports reached an all time high of USD 43.505 billion. U.S. exports increased 12%
over 2010 levels.
Korea is the United States’ seventh largest trading partner. The U.S. is the third
largest exporter to Korea with a 9 percent market share. Key competitors include
China with 16.8 percent, Japan with 15.3 percent, and the EU’s 27 nations with 10%.
With the EU having already implemented its FTA with Korea, U.S. firms will now
again be in a stronger competitive situation following KORUS implementation.
(China’s trade reflects significant re-export activity.)
- US Commercial Service
59
References
Lee, Seong-Bong. 2007. Korea’s New Trade and Outward FDI Policies:
Facilitating the Presence of Korean SMEs in Regional and Global Markets.
Korea Institute for International Economic Policy.
Ahn, Choong Yong. 2008. “New Direction Of Korea’s Foreign Direct
Investment Policy In The Multi-track FTA Era: Inducement And Aftercare
Services”. OECD Global Forum on International Investment.
Ernst & Young. 2012.”South korea Highlights”. (PDF. Google).
Korea International Logistics Council. Recent Year. “Invest in Korea as the
Gateway to northeast Asia”. (PPT. Google).
KOTRA. 2012. “US-Korea FTA: Unlocking Opportunities in Korea”. (PPT.
Google).
US Commercial Service. 2012. “Doing Business in Korea”. (PDF. Google).
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