Korea’s FTA Policy &
Economic Relations with
Latin America
July 19, 2005
[email protected]
Korea Institute for International Economic Policy
Won-Ho Kim, Director, Center for Regional Economic Studies
Economic Growth
<GDP & GDP Growth Rate>
800
15.0
700
10.0
600
500
5.0
GDP(US $ billion)
400
0.0
300
Real GDP Growth Rate(%)
200
-5.0
100
0
-10.0
2004
2002
2000
1998
1996
1994
1992
1990
1988
1986
1984
1982
1980
1978
1976
1974
1972
1970
2
<GDP Per Capita, US$>
16,000
14,000
12,000
10,000
8,000
6,000
4,000
2,000
0
2004
2002
2000
1998
1996
1994
1992
1990
1988
1986
1984
1982
1980
1978
1976
1974
1972
1970
3
Trade
300
50
250
40
30
200
20
150
10
100
Balance(US $ billion)
Export(US $ billion)
Import(US $ billion)
0
50
-10
0
-20
2003
2000
1997
1994
1991
1988
1985
1982
1979
1976
1973
1970
4
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
5
□ Proliferation of FTAs
• FTAs proliferated in the 1990s, 208 FTAs by May 2004, (300 FTAs
will be in action by 2005)
• Recently, East Asian countries are actively promoting FTAs
• FTAs expand due to deferred multilateral negotiations and the
opportunity cost of non-participation in Regionalism increases
2001-
1955-1970
1971-1980
1981-1990
1991-1995
1996-2000
New agreement
6
14
10
49
76
53
accumulation
6
20
30
79
155
208
2004.5
Source: WTO CRTA(Committee of Regional Trade Agreement)
6
Status of Korea’s FTAs
Status
Country
Implemented
Chile
Under negotiation
Japan
Negotiation concluded
Singapore
Joint study concluded
ASEAN, Canada
Joint study concluded
EFTA
Under joint study
Joint study
Mexico
India,
MERCOSUR, CJK
Note
-
signed (2003.2)
-
entered in force (2004.4)
-
1st negotiation (2003.12)
-
to be completed by end of 2005
-
to enter in force 2005
- initiate negotiations in 2005
-
to be completed by end of 2005
- to be completed by Sept. 2005
-
to start soon
7
Consideration for selection of FTA partners
Standards
Details
Economic benefits
GDP, Trade
Economic costs
Restructuring costs
Opportunity costs
Political and diplomatic
motivations
National security, diplomac needs
Others
Motivate to improve a domestic system
Usage of Leverage effect
Interests of FTA partners
Faithful execution of agreements
9
8
Korea's Exports Markets
2004 2005(JAN~MAY)
11,005,758
4,820,063 Middle East
11,562,623
5,705,191 LatAm
44,592,658
21,192,288 Europe
5,633,121
3,191,728
Africa
129,525,186
57,241,489
Asia
49,763,175
23,673,680
China
46,232,267
42,849,193
4,923,889
620,181
369,170
253,844,672
18,235,341
North
America
16,773,356
US
2,337,066 Oceania
256,111 New Zealand
163,497 Others
112,815,918
Total
2000
4.4
5.4
16.3
1.3
47.1
10.7
2001
4.7
6.5
15.9
2.0
46.5
12.1
2002 2003
4.6
4.4
5.5
4.5
16.6 16.5
1.8
1.6
47.6 51.3
14.6 18.1
2004 2005(JAN~MAY)
4.3
4.3
4.6
5.1
17.6
18.8
2.2
2.8
51.0
50.7
19.6
21.0
23.2
22.1
21.6
19.1
18.2
16.2
21.8
2.0
0.2
0.2
100.0
20.7
2.2
0.2
0.1
100.0
20.2 17.7
2.2
2.5
0.2
0.2
0.1
0.1
100.0 100.2
16.9
1.9
0.2
0.1
100.0
14.9
2.1
0.2
0.1
100.0
9
Korea's Imports Origins
2004 2005(JAN~MAY)
33,665,305
17,241,571 Middle East
6,651,153
2,689,745 Latin America
30,535,455
13,618,687
Europe
2,847,276
1,131,210
Africa
111,246,531
50,303,442
Asia
29,584,874
15,537,486
China
30,971,458
28,782,652
8,498,005
879,269
47,504
224,462,687
13,562,454
North
America
12,583,755
US
4,210,538 Oceania
371,556 New Zealand
27,030
Others
102,847,787
Total
2000
16.1
2.0
12.5
1.8
43.8
8.0
2001
16.6
2.4
13.4
1.2
44.7
9.4
2002
13.7
2.5
14.3
1.1
47.5
11.4
2003 2004 2005(JAN~MAY)
15.1
15.0
16.8
2.6
3.0
2.6
13.8
13.6
13.2
1.1
1.3
1.1
48.7
49.6
48.9
12.3 13.2
15.1
19.5
17.1
16.3
14.9
13.8
13.2
18.2
4.3
0.4
0.0
100.0
15.9
4.5
0.5
0.0
100.0
15.1 13.9
4.5
3.8
0.5
0.4
0.0
0.0
100.0 100.0
12.8
3.8
0.4
0.0
100.0
12.2
4.1
0.4
0.0
100.0
10
Korea's Trade Partners
2004 2005(JAN~MAY)
44,671,063
22,061,634 Middle East
18,213,776
8,394,936 Latin America
75,128,113
34,810,975
Europe
8,480,397
4,322,938
Africa
240,771,717
107,544,931
Asia
79,348,049
39,211,166
China
77,203,725
71,631,845
13,421,894
1,499,450
416,674
478,307,359
31,797,795
North
America
29,357,111
US
6,547,604 Oceania
627,667 New Zealand
190,527
Others
215,663,705
Total
2000
10.0
3.8
14.5
1.5
45.5
9.4
2001
10.5
4.5
14.7
1.6
45.6
10.8
2002
9.0
4.0
15.5
1.4
47.6
13.1
2003 2004 2005(JAN~MAY)
9.5
9.3
10.2
3.6
3.8
3.9
15.2
15.7
16.1
1.4
1.8
2.0
50.0
50.3
49.9
15.3 16.6
18.2
21.5
19.7
19.1
17.1
16.1
14.7
20.1
3.1
0.3
0.1
100.0
18.4
3.3
0.3
0.1
100.0
17.7 15.8
3.3
3.1
0.3
0.3
0.1
0.1
100.0 100.0
15.0
2.8
0.3
0.1
100.0
13.6
3.0
0.3
0.1
100.0
11
Korea’s (Economic) Relations / LA
•Trade
•Dynamic
expansion in the 1990s
•Fluctuation
due to respective economic crises
•Recent
stalemate of the trade volume, but improving in 2004 ->
US$18 billion
•Investment
(about US$2.5 billion)
•Dynamic
•Lost
increase in the mid-1990s
momentum since the financial crisis
-Recent
•ODA:
diversion to China
Credit lines; Grants
•Korean
residents: About 130T (50T in Brazil, 25T in Mexico,
20T in Argentina, 10T in Paraguay…)
12
•
•
•
Financial Cooperation
• Joining IDB in March 2005
• CABEI under study
FTA
• Chile since April 2004
• Mexico under joint study
• MERCOSUR under discussion
• CACM under consideration
Consultation Channels
• SICA
• MERCOSUR
• Rio Group Troika
13
Korea’s Exports Variation
Total
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
Jan-Mar 2005
4.2
10.5
6.6
7.3
16.8
30.3
3.7
5
-2.8
8.6
19.9
-12.7
8
19.3
31
12.8
Asia
Europe
3.2
15.6
15.6
17.5
18
35
6.8
4.2
-16
14.4
23.2
-13.8
10.6
28.4
30.4
8.1
28
6.6
-7.6
4.3
12.5
50.3
2.6
16
15.8
-9.2
7.9
-14.9
12.7
18.1
39.8
22.2
North America
Latin America
Middle EastOceania Africa
-6.4
20.9
13.3
-6.1
-1.6
-4.1
36.1
26.4
0.9
172.2
-2.6
73.5
5.7
9.9
-26.5
-0.9
-0.8
5.8
4.3
-18.1
12.5
30.7
4.4
7.4
71.2
18.1
14.6
26.1
25.7
-11
-11.8
21.6
17.2
28.3
1
1.2
-3.3
-10.7
10.4
35.5
5.3
2.3
29
20
-7.5
27.7
-2.5
-2.8
-5
-16.8
28.7
8.4
18.6
15
-4.6
-17
3.8
-5.9
-6.4
32.4
5.6
-8.9
5
10.5
-3.3
5.1
-0.7
14.6
34.7
8.8
25.3
31.4
28.1
0.4
80.6
10.5
25.4
18.7
27.6
22.1
14
<Figure 3> Asia's Export to Latin America (1992, 2002)
1992
2002
(US$ millions)
16000
12000
8000
4000
d
an
Ze
al
w
Ne
Th
ail
an
d
a
ali
str
Au
ia
ys
ala
M
ga
po
re
Sin
Ch
ina
ng
Ko
Ho
ng
Ko
rea
Jap
an
0
<Figure 4> Trend of Asia's Exports to Latin America
Share (%)
7
KOR
JPN
6
HK
5
CHI
4
SIN
3
MAL
2
AUS
1
THI
0
1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002
NZ
Korea’s FDIs in Latin America
(US$million)
La t i n A me r i c a
6 ,0 0 0
300
5 ,0 0 0
250
4 ,0 0 0
200
3 ,0 0 0
150
W orld
2 ,0 0 0
100
1 ,0 0 0
50
0
0
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
1992
1991
1990
1989
1988
1987
1986
1985
1984
1983
1982
1981
1980
17
Performance of Korea-Chile FTA
US$ million
2500
2000
1500
1000
500
0
-500
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
FTA
-1000
Ex ports
Imports
Balance
-1500
*FTA: April 2004~February 2005
**Source: KITA
18
Major Exports to Chile
2002
FTA
US$ m
Total Exports
2003
var
US$ m
FTA (April
2004~February 2005)
2004
var
US$ m
var
US$ m
var
-
454.0
-20.7
517.2
13.9
708.3
36.9
734.8
58.6
Automobile
immed
11.3
347.0
162.3
1340.5
250.1
54.0
261.1
59.0
Mobile phone
immed
31.0
-64.0
23.1
-25.4
57.2
147.2
70.9
225.7
Light oil
Immed, 5
44.7 -
81.6
82.6
66.5
-18.5
68.5
60.7
Chemical
products
Immed, 5
33.4
-9.2
46.8
40.1
59.2
26.4
67.9
61.8
Steel & Iron
5 yrs
28.3
-13.5
28.6
1.2
27.7
-3.2
28.6
6.1
Auto parts
Immed, 5
1.3
-20.3
18.9
1303.0
23.0
21.6
22.1
30.3
Wash machine
excluded
20.2
-10.2
15.3
-24.3
19.1
24.8
17.1
36.1
Color TV
immed
13.9
43.2
7.5
-46.4
13.3
78.1
14.8
96.8
Tire
10, 13 yrs
9.2
-15.6
10.4
13.2
13.9
33.5
13.5
29.3
Camera, Cam
immed
2.5
23.0
3.6
45.8
9.8
169.2
9.9
100.8
Refrigerator
excluded
7.8
-5.2
5.7
-27.6
7.1
24.5
6.7
15.3
VCR
immed
2.8
85.2
2.9
3.3
3.4
17.1
3.3
53.3
%/total
45.5
78.7
77.7
79.5
19
Major Imports from Chile
FTA
2002
2003
FTA (April 2004~February
2005
2004
US$ m
%
US$ m
%
US$ m
%
753.9
100.0
1057.
7
100.0
1933.
5
100.0
1752.8
100.0
54.3
Immed, 7
429.3
56.9
513.1
48.5
954.2
49.3
862.3
49.2
63.8
Copper ore(2603)
immed
120.6
16.0
219.1
20.7
513.1
26.5
442.2
25.2
58.3
Chem Timber Pulp
immed
69.5
9.2
81.8
7.7
94.6
4.9
89.9
5.1
14.9
Metil Alcohol
immed
0.1
0.0
82.9
7.8
86.0
4.4
69.4
4.0
-32.6
Red iron ore
immed
39.6
5.2
15.3
1.5
37.6
1.9
37.3
2.1
132.4
Molibden ore
immed
4.3
0.6
10.3
1.0
47.7
2.5
60.9
3.5
463.5
Pork
10 yrs
3.9
0.5
23.1
2.2
42.9
2.2
41.6
2.4
58.4
10,sason
8.7
1.2
13.7
1.3
13.1
0.7
10.9
0.6
-2.2
Thornback
10 yrs
5.7
0.8
10.0
0.9
8.5
0.4
6.7
0.4
-31.2
Wine
5 yrs
0.9
0.1
2.4
0.2
6.8
0.4
7.6
0.4
169.7
Total imports
Copper products(74)
Grape
% of Copper related prod
-
-
72.9
69.2
75.9
US$ m
%
var
74.4
20

International price of copper
160
148.7
150
140
120.5
120
104.3
100
80
76.75
69.7
74.8
60
40
20
0
2002년2002
6월
JUN
2002년2002
12월
DEC
2003년
6월
JUN
2003
2003년
12월 JUN
2004년
2004년
12월 FEB2005년
DEC
2003
20046월 DEC
2004
20052월
*Spot Settlement Price
**Source: New York Mercantile Exchange, Inc. (http://www.nymex.com)
21
Thank You
22