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Korea’s FTA Policy & Economic Relations with
Latin America
July 19, 2005
whkim@kiep.go.kr
Korea Institute for International Economic Policy
Won-Ho Kim, Director, Center for Regional Economic Studies
2
Economic Growth
0
100
200
300
400
500
600
700
800
197019721974197619781980198219841986198819901992199419961998200020022004
- 10.0
- 5.0
0.0
5.0
10.0
15.0
GDP(US $ billion)
Real GDP Growth Rate(%)
<GDP & GDP Growth Rate>
3
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
1970
1972
1974
1976
1978
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
<GDP Per Capita, US$>
4
Trade
0
50
100
150
200
250
300
1970
1973
1976
1979
1982
1985
1988
1991
1994
1997
2000
2003
- 20
- 10
0
10
20
30
40
50
Balance(US $ billion)
Export(US $ billion)
Import(US $ billion)
5
• 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
Characteristics of recent FTAs
6
1955-1970
1971-1980
1981-1990
1991-1995
1996-2000
2001-
2004.5
New agreement
6 14 10 49 76 53
accumulation 6 20 30 79 155 208
Source: WTO CRTA(Committee of Regional Trade Agreement)
□ Proliferation of FTAs□ Proliferation of FTAs
• FTAs expand due to deferred multilateral negotiations and the
opportunity cost of non-participation in Regionalism increases
• 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
7
Status Country Note
Implemented Chile- signed (2003.2)- entered in force (2004.4)
Under negotiation Japan- 1st negotiation (2003.12)- to be completed by end of 2005
Negotiation concluded Singapore - to enter in force 2005
Joint study concludedASEAN, Canada
- initiate negotiations in 2005
Joint study concluded EFTA - to be completed by end of 2005
Under joint study Mexico - to be completed by Sept. 2005
Joint studyIndia,
MERCOSUR, CJK
- to start soon
Status of Korea’s FTAs
8
Consideration for selection of FTA partnersConsideration for selection of FTA partnersStandards Details
Economic benefits GDP, Trade
Economic costs Restructuring costs
Opportunity costs
Political and diplomatic motivations
National security, diplomac needs
Usage of Leverage effect
Others Motivate to improve a domestic system
Interests of FTA partners
Faithful execution of agreements
9
9
Korea's Exports Markets
2004 2005(JAN~MAY) 2000 2001 2002 2003 2004 2005(JAN~MAY)11,005,758 4,820,063 Middle East 4.4 4.7 4.6 4.4 4.3 4.3
11,562,623 5,705,191 LatAm 5.4 6.5 5.5 4.5 4.6 5.144,592,658 21,192,288 Europe 16.3 15.9 16.6 16.5 17.6 18.85,633,121 3,191,728 Africa 1.3 2.0 1.8 1.6 2.2 2.8
129,525,186 57,241,489 Asia 47.1 46.5 47.6 51.3 51.0 50.749,763,175 23,673,680 China 10.7 12.1 14.6 18.1 19.6 21.0
46,232,267 18,235,341North
America 23.2 22.1 21.6 19.1 18.2 16.2
42,849,193 16,773,356 US 21.8 20.7 20.2 17.7 16.9 14.94,923,889 2,337,066 Oceania 2.0 2.2 2.2 2.5 1.9 2.1
620,181 256,111 New Zealand 0.2 0.2 0.2 0.2 0.2 0.2369,170 163,497 Others 0.2 0.1 0.1 0.1 0.1 0.1
253,844,672 112,815,918 Total 100.0 100.0 100.0 100.2 100.0 100.0
10
Korea's Imports Origins
2004 2005(JAN~MAY) 2000 2001 2002 2003 2004 2005(JAN~MAY)33,665,305 17,241,571 Middle East 16.1 16.6 13.7 15.1 15.0 16.86,651,153 2,689,745 Latin America 2.0 2.4 2.5 2.6 3.0 2.6
30,535,455 13,618,687 Europe 12.5 13.4 14.3 13.8 13.6 13.22,847,276 1,131,210 Africa 1.8 1.2 1.1 1.1 1.3 1.1
111,246,531 50,303,442 Asia 43.8 44.7 47.5 48.7 49.6 48.929,584,874 15,537,486 China 8.0 9.4 11.4 12.3 13.2 15.1
30,971,458 13,562,454North
America 19.5 17.1 16.3 14.9 13.8 13.2
28,782,652 12,583,755 US 18.2 15.9 15.1 13.9 12.8 12.28,498,005 4,210,538 Oceania 4.3 4.5 4.5 3.8 3.8 4.1
879,269 371,556 New Zealand 0.4 0.5 0.5 0.4 0.4 0.447,504 27,030 Others 0.0 0.0 0.0 0.0 0.0 0.0
224,462,687 102,847,787 Total 100.0 100.0 100.0 100.0 100.0 100.0
11
Korea's Trade Partners
2004 2005(JAN~MAY) 2000 2001 2002 2003 2004 2005(JAN~MAY)44,671,063 22,061,634 Middle East 10.0 10.5 9.0 9.5 9.3 10.218,213,776 8,394,936 Latin America 3.8 4.5 4.0 3.6 3.8 3.975,128,113 34,810,975 Europe 14.5 14.7 15.5 15.2 15.7 16.18,480,397 4,322,938 Africa 1.5 1.6 1.4 1.4 1.8 2.0
240,771,717 107,544,931 Asia 45.5 45.6 47.6 50.0 50.3 49.979,348,049 39,211,166 China 9.4 10.8 13.1 15.3 16.6 18.2
77,203,725 31,797,795North
America 21.5 19.7 19.1 17.1 16.1 14.7
71,631,845 29,357,111 US 20.1 18.4 17.7 15.8 15.0 13.613,421,894 6,547,604 Oceania 3.1 3.3 3.3 3.1 2.8 3.01,499,450 627,667 New Zealand 0.3 0.3 0.3 0.3 0.3 0.3
416,674 190,527 Others 0.1 0.1 0.1 0.1 0.1 0.1478,307,359 215,663,705 Total 100.0 100.0 100.0 100.0 100.0 100.0
12
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$2.5 billion)
•Dynamic increase in the mid-1990s
•Lost momentum since the financial crisis
-Recent diversion to China
•ODA: Credit lines; Grants
•Korean residents: About 130T (50T in Brazil, 25T in Mexico, 20T in Argentina, 10T in Paraguay…)
13
• Financial Cooperation• Joining IDB in March 2005• CABEI under study
• FTA• Chile since April 2004• Mexico under joint study• MERCOSUR under discussion• CACM under consideration
• Consultation Channels• SICA• MERCOSUR• Rio Group Troika
14
Korea’s Exports Variation
Total Asia Europe North AmericaLatin AmericaMiddle EastOceania Africa1990 4.2 3.2 28 -6.4 20.9 13.3 -6.1 -1.61991 10.5 15.6 6.6 -4.1 36.1 26.4 0.9 172.21992 6.6 15.6 -7.6 -2.6 73.5 5.7 9.9 -26.51993 7.3 17.5 4.3 -0.9 -0.8 5.8 4.3 -18.11994 16.8 18 12.5 12.5 30.7 4.4 7.4 71.21995 30.3 35 50.3 18.1 14.6 26.1 25.7 -111996 3.7 6.8 2.6 -11.8 21.6 17.2 28.3 11997 5 4.2 16 1.2 -3.3 -10.7 10.4 35.51998 -2.8 -16 15.8 5.3 2.3 29 20 -7.51999 8.6 14.4 -9.2 27.7 -2.5 -2.8 -5 -16.82000 19.9 23.2 7.9 28.7 8.4 18.6 15 -4.62001 -12.7 -13.8 -14.9 -17 3.8 -5.9 -6.4 32.42002 8 10.6 12.7 5.6 -8.9 5 10.5 -3.32003 19.3 28.4 18.1 5.1 -0.7 14.6 34.7 8.82004 31 30.4 39.8 25.3 31.4 28.1 0.4 80.6
Jan-Mar 2005 12.8 8.1 22.2 10.5 25.4 18.7 27.6 22.1
<Figure 3> Asia's Export to Latin America (1992, 2002)
0
4000
8000
12000
160001992 2002
(US$ millions)
<Figure 4> Trend of Asia's Exports to Latin America
0
1
2
3
4
5
6
7
1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002
Share (%)KOR
JPN
HK
CHI
SIN
MAL
AUS
THI
NZ
17
Korea’s FDIs in Latin America
0
1,000
2,000
3,000
4,000
5,000
6,000
19
80
19
81
19
82
19
83
19
84
19
85
19
86
19
87
19
88
19
89
19
90
19
91
19
92
19
93
19
94
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95
19
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19
97
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98
19
99
20
00
20
01
20
02
20
03
0
50
100
150
200
250
300Latin America
World
(US$million)
18
Performance of Korea-Chile FTA
*FTA: April 2004~February 2005**Source: KITA
- 1500
- 1000
- 500
0
500
1000
1500
2000
2500
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 FTA
US$million
Exports Imports Balance
19
Major Exports to Chile
FTA2002 2003 2004
FTA (April 2004~February
2005)
US$ m var US$ m var US$ m var US$ m var
Total Exports - 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 oilImmed, 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 partsImmed, 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
Tire10, 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
Refrigeratorexcluded
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
20
Major Imports from Chile
FTA
2002 2003 2004FTA (April 2004~February 2005
US$ m
%US$ m
%US$ m
% US$ m % var
Total imports - 753.9 100.0 1057.
7 100.0
1933.5
100.0 1752.8 100.
0 54.3
Copper products(74)Immed,
7429.3 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
Grape 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
% of Copper related prod
- 72.9 69.2 75.9 74.4
21
International price of copper
*Spot Settlement Price
**Source: New York Mercantile Exchange, Inc. (http://www.nymex.com)
76.7569.7
74.8
104.3
120.5
148.7 150
0
20
40
60
80
100
120
140
160
2002 6년 월 2002 12년 월 2003 6년 월 2003 12년 월 2004 6년 월 2004 12년 월 2005 2년 월JUN 2002 DEC 2002 JUN 2003 DEC 2003 JUN 2004 DEC 2004 FEB 2005
22
Thank You
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