This is the third article in a series of “Creative Korea Leadership – K-Trade” provided in partnership with Ministry of Trade, Industry and Energy.
SEOUL, KOREA- KOTRA (Korea Trade Investment Promotion Agency) has been pushing ahead to strengthen strategic marketing activities of beneficial items for FTA, such as auto parts and textiles, to maximize the effects of the FTA, a senior KOTRA official said.
"Along with this, KOTRA has been propelling the project to actively foster FTA export-leading enterprises as a means of creating FTA-using success cases." said Kim Byung-kwon, a strategic marketing director for the agency.
In an interview with Korea IT Times, Kim said, "From the auto parts marketing support project, KOTRA plans to hold Korea Autoparts Plaza project, an exhibition and consultation meeting for global cars, 16 times this year."
KOTRA already held special exhibitions for Korean-made textiles twice in New York and Milano each as part of its efforts to support Korea's export of textile goods.
"Last April, we also invited key buyers from countries that concluded FTAs with South Korea, including the U.S. and EU, to the FTA Business Plaza, a large export consultation meeting, held in Seoul." he explained.
"In the case of auto parts, particularly, we are supporting Korea's export of auto parts in all stages through such exhibition projects as the International Transportation Machinery Parts Industrial Fair, the Global Partnering Project for Joint Development of Auto Parts, Korea Autoparts Plaza, and the Auto Parts Joint Office Project." he said.
In addition, KOTRA made a strong push for the project to foster Korea-U.S. FTA export leading companies by selecting a total of 37 leading companies since June 2012 to realize the FTA conclusion effects with the U.S., a main export market.
"Since July 2013, KOTRA has been also actively supporting the project to foster Korea-EU/Turkey export leading companies in a bid to attack the EU and Turkish markets. For the project, it will select 12 companies as an initial step and expand the number to 20 by the end of this year." said Kim.
"Thanks to such efforts, Youngshin Chemical, an auto parts producer who participated in the project to foster Korea-U.S. FTA export leading companies, succeeded in signing a $8 million contract with GM. DMC also concluded a $3 million contract to supply rubber parts for cars with an American company." he said.
Support plans to enhance SMEs' FTA utilization rate
Noting that most of domestic institutions propelling FTA-related projects are chiefly dealing with local education and consultation projects, Kim said, "KOTRA has been making efforts to create visible FTA utilization effects by small and medium-sized enterprises (SMEs) through the overseas marketing project for FTA beneficial items and the project to foster export leaders in major markets."
In particular, the project to foster the FTA export leading companies has been propelled as a part of the pan-government agencies' FTA support steps under the close cooperation with the Ministry of Strategy and Finance, the Ministry of Trade, Industry and Energy, and the FTA trade comprehensive support center.
"In the future, KOTRA plans to strengthen its offering of FTA market-related information, including those on items with a high possibility of big tariff concession and concession schedule and expand new marketing projects aimed at the nine markets which have now ratified agreements with South Korea _ the U.S., EU, Turkey, India, ASEAN, Chile, Singapore, EFTA and Peru." he noted.
South Korea also settled a FTA with Colombia in June 2012 and is now engaging in FTA negotiations with four countries, Indonesia, Vietnam, China, and Japan and also with the Regional Comprehensive Economic Partnership (RCEP).
Commenting that FTA utilization education and consultation for enterprises are necessary to enhance the SMEs' FTA utilization rate, he said, "KOTRA and FTA-related institutions, including the FTA Trade Comprehensive Support Center and regional FTA utilization support centers, are now offering FTA utilization-related education and consulting services."
At present, KOTRA is operating three courses for executives and staff members of SME exporters including courses on the working-level process for FTA place of origin certification exporters and the Korea-U.S. FTA strategy to advance into the American market, as part of its "FTA utilization expert fostering education" program at its global training center.
"Although there is a difference between FTA agreements, tariff reductions following the FTA conclusion have been progressing over a long-term period in most cases. Accordingly, KOTRA is strengthening the tailor-made consulting service for each enterprise to settle down Korean companies' utilization of FTA preferential tariffs from the beginning stage of the pact effectuation." he said.
In case of the Korea-EU FTA, tariff concessions have been made for all industrial goods on a gradual basis over the next five years.
Kim also said, "KOTRA plans to provide for Korean exporters by offering exact information and rapid field assistance to help them prepare for the FTA post verification test."
FTA exporters with the preferential tariff must keep relevant materials, including a certificate of origin and the specification of raw materials, for five years.
Gains and Losses of Korea-China FTA
Mentioning that China, the world's second largest economic power following the U.S., is Korea's biggest trading partner, Kim said, "The Korea-China FTA, if concluded, will bring about great economic effects equivalent to those from the Korea-U.S. and Korea-EU FTAs."
During the first seven months of this year, Korea's exports to China came to $82.4 billion, representing 114 percent of the nation's combined exports to the U.S., Japan and Hong Kong, which stand at $72.1 billion.
"If South Korea concludes the FTA with China, the nation will become a sole country that signed FTA with the world's biggest three economic blocs, along with Chile. And the nation's FTA economic territory will expand to some 70 percent of the world's GDP." said the KOTRA strategic marketing director.
In addition, it will bring about the FTA hub effect to South Korea through its role of bridgehead for foreign countries' advancement into China and China's entry into foreign countries.
In the case of Korea-China FTA conclusion, real GDP is expected to increase by 0.95~1.25 percent over the five years after the effectuation and by 2.28~3.04 percent over 10 years according to the market opening level of China, according to the material released at the Korea-China FTA public hearing held in February 2012.
Meanwhile, the Ministry of Strategy and Finance expected the employment to increase by 190,000~250,000 persons over the five years after the FTA effectuation and by 240,000~330,000 over the 10 years.
"In particular, the Korea-China FTA conclusion will bring about positive effects in the nation's trade and investment owing to overall trade expansion with China and improvement of investment environment in China." he explained.
"However, such domestic industries as agricultural, fishery, food, clothing and textile sectors are expected to face difficulty owing to their weak competitiveness against their Chinese counterparts." he said.
"As a result, the Korean government is preparing proper steps to protect such domestic industries in the negotiation process with China." he said.
"Considering the Korea-China FTA negotiation now in progress, KOTRA is concentrating its efforts on such public marketing strategies, including the FTA-related information investigation, gathering of bottleneck problems facing Korean and foreign companies operating in China, hosting a consultation meeting by inviting a purchase mission of agricultural and fishery products, and a marketing project to explore Chinese local consumption market." he added.
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For more related articles:
1. President Park Geun-hye's special trade and investment promotion measures
2. Korea seeks to maximize benefits from FTAs
