Korea's Free Trade and Investment Efforts Highlighted by Independent Report
An independent report has found that Korea has made continuous and impressive progress towards achieving its APEC free trade and investment goals.
The Study Report on Korea's Individual Action Plan was reviewed by representatives of APEC Member Economies in Cairns this week.
IAPs are developed by each APEC Member Economy to guide them in their efforts to achieve APEC's Bogor Goals of free trade and investment in the Asia-Pacific region by 2010 for industrialized economies and 2020 for developing economies.
The IAP review program provides each APEC Member with the opportunity to have their progress towards APEC's goals assessed by Independent Experts. A peer review session is then conducted in which officials from other economies pose questions to the economy under review to better understand where progress is being made and where additional efforts may be required.
With Korea's real GDP growing by an average by 4.76% over the 2002-2006 period since its last IAP, the report highlighted reform efforts that have been initiated. "The government is continuing to pursue microeconomic reform, to restructure each economic sector and to continue to upgrade the economic system," the report stated.
"Financial restructuring has been the single most important focus, with ongoing reforms aimed at upgrading the banking and financial markets."
The report highlighted efforts by Korea to foster innovation and creative talent to ensure future growth.
"Korea's R&D budget, currently 3% of GDP and high by international standards, is being further enhanced. A total of 40 trillion won was earmarked from the national budget for R&D investment between 2003 and 2007."
The report did note that with the deadline for attainment of APEC goals drawing nearer, greater effort needed to be made in some areas.
"With the Bogor clock ticking, it is a cause of unease that there has been little change in the main tariff and non-tariff measures as applied on an MFN basis," the report stated.
The report observed the changes in tariffs over recent years with simple average bound tariff rate reduced to a considerable extent compared with the rate in place in the 2003 IAP. The report found that when all WTO commitments are finally implemented in 2009, and when FTAs under negotiations are concluded, the average bound tariff will be further decreased.
The difference between the bound rates applying to agricultural products (currently averaging 61.1%) and those applying to industrial products, which currently average 10% was also discussed in the report: "Agriculture is still the area where the highest levels of protection apply and represents the toughest hurdle to meeting the Bogor goals."
The report also singled out the Korean Customs Service for mention in relation to its efforts to improve efficiency and transparency in port processing: "Korean Customs Service maintained its impressive record of utilising IT technology to improve efficiency, cut clearance times, enhance probity and integrity, and employ sophisticated intelligence and risk management systems. Its achievements over the past few years have attracted international acknowledgement."
The environment to facilitate business competition in Korea was also highlighted with observations that Korea is strengthening institutions to ensure fair business competition: "Recent changes include policies to upgrade the nation's economy in line with 3-year Market Reform Roadmap; establishing and facilitating voluntary regulation by market participants; enhancing the case handling process and related organizational capacity; and strengthening international cooperation."
Social factors were highlighted by the report stating that the Korean Government "is also expanding social and welfare expenditures, for example by widening the scope of social insurance entitlements, enhancing the education system, and stabilising the cost of housing for those at the lower end of the socio-economic scale."
The report was researched and written by Mr Greg Wood, the CEO of GSRW Consulting in Australia and Associate Professor Hikari Ishido from Chiba University in Japan.
Three APEC Member Economies, China, Korea and New Zealand, are having their IAPs' reviewed at the current round of APEC meetings taking place in Cairns.
The full report will be made available on the APEC website (www.apec.org) after it has been presented to APEC Senior Officials on July 3.
