sustainability and cooperation commitments in korea’s ftas...
TRANSCRIPT
CEPAL, July 18, 2018
Won-Ho Kim Hankuk University of Foreign Studies
Sustainability and Cooperation Commitments in Korea’s FTAs with Latin America
1. Shift of Korea’s “Economic Diplomacy” Paradigm
Periods Cold War Era 1990~1997 Since 1998
Paradigm/Diplomatic goal
Ideology competition
Logics of economic interests
Global partnership
Trade partners Western economies
Economies in transition included
More focus on developing world
Trade strategy GATT (1967) GATT/WTO WTO/FTA
Trade Policy Shift in Korea
• Korea
– Inthebeginningofthe1960s,Koreaundertookexport-leddevelopmentstrategyasaresource-poor,smalleconomytobeatradingnation
– Inthe1970s,KoreaswitchedtoupgradingtheindustrialstructurebyintroducingheavyandchemicalindustriesandestablishedGTCstodiversifyexportitemsandmarkets
■ Koreahadadheredto‘multilateralism’because
❑ Itstraderelationswerediversified.❑ Bytakingthebilateralroute,Koreawouldhaveruntherisk
ofultimatelydistortingitstradestructure.❑ AtthefirstWTOMinisterialConferencein1996,Korea
demandedtighterregulationsonregionalismagainstexpansion
❑ TheKoreanagriculturalsectorwasdesperatelyresistanttoliberalizationthroughGATT-URprocess
■ But,mushroomingRTAsallovertheworldincreaseddiscriminationandtradediversionagainstKorea.
■ Unprecedentedfinancialcrisis,1997-1998❑ Anymeasuretosecureexportmarkets;creationofMOFAT❑ Increasedreadinessforrestructuringandrenovating,eventradestrateg❑ Needtofollow-uptheEAregionalintegrationmovement
■ Consumer-orientedtradepolicytomaximizethewelfareofthegeneralpublic
– Afterthefinancialcrisisof1997-1998,Koreadevelopedamoreaggressiveinstitutionalframework:FTAinitiative
– FTAbecameonepillarofKorea’snewparadigmforeconomicdiplomacy
– Korea´sregainingofcompetitivenessafterfinancialcrisisacceleratedFTAnegotiations
Trade Policy Shift in Latin America
• LatinAmerica
– StructuralismwasdominantlargelyduringtheperiodbetweentheGreatDepressionandthedebtcrisisof1980s:ISIpoliciesandhightariffbarriers
– MembershipofGATTcamealsolate
– Instead,LatinAmericancountriespromotedintra-regionalintegration:LAFTA,theCentralAmericanCommonMarketandAndeanPactin1960sand1970s
– Afterthe1980sdebtcrisis,mostLatinAmericancountriestooktradeliberalizationmeasures
– Amongothers,MexicoandChilewereactiveinintegrationwithAsia(joiningAPECin1993,1994)
Korea´s First FTA (with Chile)
– Dec.1998,Inter-MinisterialMeetingdecidedtopursueFTAs,withChileasthefirstpartner
– Korea-ChileFTAwentintoeffectinApril1,2004
– ThemostdrasticoutcomewasthemarketshareincreasesofKoreancarsinChile,andChileanwineinKorea
– Korea-ChileFTAinspiredothercountries,bothinAsiaandLatinAmericafortrans-Pacifictradearrangements
Lessons Learnt from Korea-Chile FTA
– Koreastillhadtodealwiththedomesticfront– BasicPlanforAgricultureandRuralArea– FTAImplementationFund
–Underthedemocraticcontext,theKoreangovernmentrationalizedthelegalprocessofFTAnegotiation
– ProcedurebeforegoingaheadtostartFTAnegotiations(IMM,FTAAdvisoryMeeting,pubichearings,etc.)
– TheKoreangovernmentearnedconfidenceintradenegotiationandbegantodrawabolderplanforfutureFTAsinthenameof“FTARoadmap”in2003
– Simultaneous,multiplenegotiations–Minimizeopportunitycost– Trade-offpositiveandnegativeimpacts–Maximizegainsfromleverageofsimultaneousnegotiations
Korean FTA Strategy
1998~2013 2013~2017 2017~
Trade Negotiation Unit in Ministry of Foreign Affairs
and Trade
MinistryofTrade,IndustryandEnergy(MOTIE)
New Trade Negotiation Unit in MOTIE
“Simultaneous Multiple Negotiation” (2003)
“NewFTAStrategy” Crisismanagement
Deep Integration* + Sustainability Against protectionism
• Compesateliberalizationwithfurtherpenetrationintooverseasmarkets
• Respondtoregionalistdiscrimination
• Mega-FTAssuchasRCEP(andTPP)
• UpgradingexistingFTAs
• NewFTAswithemergingeconomies
• TrumppressuretorenegotiateKORUS
• China’scommercialretaliationwithTHAAD
*Singapore issues: investment, gov procurement, trade facilitation, competition policy + IPR
… As result
■ KoreahasgainedthelargestFTA“territory”intheworld❑ 15FTAswith52countries❑ TheonlycountrywithFTAswithallofUS,China,andEU❑ Covering77%ofWorldeconomyintermsofGDP❑ Covering71.1%ofKorea’stotaltrade
■ Ultimatemandate
❑ OvercomeprotectionismthroughasmoreanddeeperFTAsaspossible
❑ Bigcontrastwithpre-1997stance
▪ Korea, 4th largest energy consumer, 97% import - 9th CO2 emitter as of 2005, 83% energy supply based on fossil fuel because its key
industries belong to the heavy and petrochemical sectors.
▪ On August 15, 2008, celebrating the 60th anniversary of the Republic of Korea, the then-President Lee Myung-bak declared ‘low carbon green growth’ as Korea’s new vision for development for the next 60 years.
- from quantity-oriented, fossil-fuel dependent growth to quality-oriented… - “It is a new national development paradigm in which green technologies and clean
energies create new growth engines and jobs.”
▪ Presidential Committee on Green Growth was created in February 2009 for inter-Ministrial coordination and public-private consultation
▪ PCGG has prepared a Green New Deal (2009~2012), followed by a National Green Growth Strategy (2009~2050) and a Five-Year Plan for Green Growth (2009~2013).
▪ The Framework Law for Green Growth bill passed the National Assembly in late 2009. Its Implementation Decree proclaimed as of April 2010.
2. Korea´s Paradigm Shift to Green Growth
Amongthe10policyagenda,
10.GlobalGreenLeader
Enhanceinternationalcooperationforgreengrowthandclimateaction
IncreaseGreenODA&supportdevelopingcountries
BuildGreenHubKorea
FTAbecameoneofthetoolsalsotoenhancetheagendaofgreen
growth
Environment Clauses in Korea´s FTAs
Chile ASEAN EU Peru US Colombia Cent Am
Preamble o x o o o o oMain agreement/Annex Main Main Both Both Both Both Both
Obligation to enforce Env law x _ o x o x x
Env standards x x o x o x xEnv cooperation o o o o o o o
Consultation / Info exchange x o o o o o oMEA x x o o o o o
Exception clause o o o o o o oDispute Settlement x x o x o x xPublic participation x x o x o o oPublic submission x x o x o x xEnv goods / service x x o o x o o
Sustainability Commitments in FTAs
• Korea-ASEANFTA(FRAMEWORKAGREEMENTONCOMPREHENSIVEECONOMICCOOPERATION,2005)asthefourthofitskindincluded“Art.4HumanResourceManagementandDevelopment”,and“Art.11EnvironmentalIndustry”brieflyinitsAnnexEconomicCooperajon
• Korea-EUFTA(2010)asthesixthofitskindincluded“Ch.13TradeandSustainableDevelopment”,emphasizingtheprinciplesofILOandcommitmentsinMEA
• Korea-PeruFTA(2011)astheseventhofitskindincluded“Ch.18Labor”,and“Ch.19Environment”
Peru as the 2nd FTA Partner in Latin America
– Korea-PeruFTAwentintoeffectinAugust1,2011– Korea’s7thFTAafterChile,Singapore,EFTA,ASEAN,India,EU
– PeruwantedtocompetewithChileforaccesstoAsianmarkets
– Korea-PeruFTAisconsidered“thedeepest”ininvestmentandtradefacilitationamongEastAsia-LatinAmericaFTAs(IDB-ADB2014)
– Koreancars’marketshareinPerujumped,andthePeruviancuttlefishandsquidalsodominatedKoreanimportmarket
Korea-Peru FTA• Ch.18Labor
“establishaLaborAffairsCouncil…tooverseetheimplementajonofthisChapter
“committoinijajngcooperaWveacjvijesassetoutinAnnex18A”• labor-managementrelajons:formsofcooperajonanddisputesemlementamonglabor,management,andgovernment• socialsafetynetprograms• humanresourcesdevelopmentandmanagement•migrantworkers:disseminajonofinformajononlaborrightsofmigrantworkersineachParty’sterritory“NeitherPartyshallhaverecoursetoChapterTwenty-Three(DisputeSeYlement)foranymamerarisingunderthisChapter”
• Ch.19Environment
“promotethedevelopmentofinternajonaltradeinordertocontributetotheobjecjveofsustainabledevelopment”“(environmental)measuresarenotappliedinadiscriminatoryandarbitrarymanneranddonotconsjtuteanunjusjfiablebarriertotrade”“establishanEnvironmentalAffairsCouncil...tooverseetheimplementajonofthisChapter,includingcooperaWveacWviWesundertakenunderAnnex19A”
• cooperajonontrade-relatedaspectsofbiologicaldiversity• prevenjonandmanagementofenvironmentaldisasters• environmentaleducajonNeitherPartyshallhaverecoursetoChapterTwenty-Three(DisputeSeYlement)foranymamerarisingunderthisChapter
Colombia as the 3rd FTA Partner in the Region
– Korea-ColombiaFTAwassignedinFebruary2013– KoreabecamethefirstAsianFTApartnerforColombia
– Korea-ColombiaFTAmetresistanceinColombia– Colombianautomotivesectorparticularlyhasbeenresistanttothe
treaty
– Korea-ColombiaFTAwentintoeffectasofJuly15,2016,afterfinalapprovalbytheColombianConstitutionalCourt
– ColombiancoffeeandcutflowerareexpectedtodominateKoreanimportmarketsoon
Korea-Colombia FTA• Ch.16TradeandSustainableDevelopment
“promotepublicparWcipaWonduringthewholeprocessofdesigning,implemenjng,andevaluajng,environmentalprojects,policies,andprograms”
“RecognizingthesovereignrightsofStatesovertheirnaturalresources”
“notfailtoeffecjvelyenforceitslaborlaws…inamanneraffecWngtradeorinvestmentbetweentheParjes”
“TheCouncilonSustainableDevelopment…mayalsoidenjfypossiblenewareasofcooperajon,and…shallreviewtheimplementajonandeffecjvenessofthisChapter”
• Ch.20DisputeSemlement
“Exceptforanymamerarising…underChapter16,thisChaptershallapplywithrespecttotheavoidanceorsemlementofalldisputes”
• Annex16-ACooperajonCooperaWveacWviWesmayinclude,butshallnotbelimitedto:
ENVIRONMENT• cooperajonininternajonalfora• informajonexchangeandjointworkoncorporatesocialresponsibilityandaccountabilityexchangeofviewsontheimpactontradebyenvironmentalregulajons,norms,andstandards
LABOR•exchangeofinformajon,parjcularlyonlaborlawandpolicy,labormarketstajsjcsandbestworkingpracjcesoftheotherParty•exchangeofmissionscomposedofofficials,professionals,techniciansand/orexperts•organizajonandparjcipajoninconferences,seminars,workshops,meejngs,andoutreachprograms,aswellastrainingsessions
Central America as the 4th Partner in the Region
– CentralAmericahasbeensignificantforKoreanSMEs
– Korea-CentralAmericaFTAwasofficiallysignedinFebruary2018
– ThiswouldbethefirstFTAbetween(six)CentralAmericancountries(5+Panama)asagroupandanAsianeconomy(cf.China-CostaRicabilateralFTA)
– Atthelastminute,Guatemalareservedtheirmembershipforlatertime
Korea-Central America FTA• Chapter16Labor
“freetradeandinvestmentshouldleadtojobcreaWon,anddecentwork,withtermsandcondijonsofemployment”“LaborCommiYeeshall…overseeandevaluatetheagreedcooperajveacjvijes…serveasaforumfordialogueonlabormamersofmutualinterest…reviewtheoperajonandoutcomesofthisChapter;andtakeanyotheracjonitdecidesappropriatefortheimplementajonofthisChapter”“NeitherPartyshallhaverecoursetoChapter22(DisputeSeYlement)foranymamerarisingunderthisChapter”“committoestablishcloserelajonshipthroughcooperaWveacWviWesinareasofmutualinterest”
• Chapter17Environment“recognizethateconomicdevelopment,socialdevelopment,andenvironmentalprotecWonareinterdependentandmutuallyreinforcingcomponentsofsustainabledevelopment”“TheEnvironmentalCommiYeeshall…overseeandevaluatetheagreedcooperajveacjvijes…serveasaforumfordialogueonenvironmentalmamersofmutualinterest…reviewtheoperajonandoutcomesofthisChapter”“NeitherPartyshallhaverecoursetoChapter22(DisputeSeYlement)foranymamerarisingunderthisChapter”“TheareasofcooperaWonbetweentheParjesinrespectofthisChaptermayinclude:environmentalmanagement;insjtujonalcapacityforenforcementofenvironmentallaw;cleanerproducjontechnologies;waterquality;airquality;energyefficiencyandrenewableenergy…”
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FTAs in effect - Chile - Apr. 2004 Effective
- Peru - Colombia
- Aug. 2011 Effective - Jul. 2016 Effective
FTA concluded Central America 5 Signed on Feb 21 2018
Negotiation underway Ecuador (SECA)* 5th round Nov 2016
To start soon MERCOSUR (TA)**Joint feasibility study 2007; Negotiation declared May 25
2018Negotiation stalemated Mexico
Since 2008; To join Pacific Alliance as associate member
*Strategic economic cooperation agreement **Trade agreement
LAC Partners for FTA
Ecuador
– EcuadorpreferredSECA“StrategicEconomicCooperationAgreement”– KoreawillbecomethefirstAsianFTApartnerforEcuador
– KoreaexpectstoexpandresourcecooperationanddiversifyoilimportsourcesbyconcludingaSECAwithEcuador
– EcuadorexpectsanewexportswindowwhilecompetingwithotherAndeaneconomies
MERCOSUR
– KoreaandMERCOSURcompletedajointfeasibilitystudyonatradeagreementinNovember2007
– Nofurthermeasuressincethe“MOUfortheEstablishmentofaJointConsultativeGrouptoPromoteTradeandInvestmentsbetweentheRepublicofKoreaandMERCOSUR”inJuly2009
– WithgovernmentchangesinArgentinaandBrazil,MERCOSURpolicydirectionhaschanged
JointStatementforInitiatingNegotiationsforKorea-MercosurTradeAgreementinMar.2017NegotiationformallydeclaredinMay2018
Mexico
–ThetimingofFTAproposaltoeachotherwasmismatched■ Korea-MexicoSECA/FTA
❑Sept.2005Summitsagreetonegotiate“SECA”❑Feb.-Jun2006Concluded3roundsofnegotiation❑Aug2007Decisiontonegotiate“high-level&comprehensiveFTA”❑Dec.2007-June2008Tworoundsofnegotiations,thenstalemated
–KoreahasinvestedlargeprojectsinthesteelindustrybyPosco,andintheautomobileindustrybyKiaMotors,etc.
–ThetwogovernmentsagreedinApril2016tojointlystudytoresumethenegotiationsoon.
WhetherKoreatakesanindirectpathbyjoiningTPPlostsignificancesincetheTrumpadministrationcamein.MexicoandKoreabecomesharingcommonintereststodiversifytradePacificAlliancemaybeanoption
Characteristics of the Four FTAs
• FourmajorrightsintheILODeclarajon:thefreedomofassociajonandtherighttocollecjvebargainingtheeliminajonofallformsofforcedorcompulsorylabortheeffecjveabolijonofchildlabortheeliminajonofdiscriminajoninrespectofemploymentandoccupajon
•ConsultajonandcooperajonpreferredinsteadofDisputeSemlementprocedures,unlikeKORUS•Cooperajonacjvijesencouraged,but
•FTAsfurtherinsjtujonalizeandintensifytheon-goingcooperajonprograms,ratherthancreajngthem
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2014 Goias Industry Federation MOU 2015 Waste management masterplan
2008 Leon/Rivas City, Waterworks Facility FS2016 Corn Island Green Energy Town building
project
2014 Capiata City, Sewage facility FS2017 Sewer improvement masterplan
2014 Trinidad Citty, Water and Wastewater Infrastructure FS
2012 Manta City, Water and Wastewater Infrastructure improvement FS
2011 Sewage treatment FS, Provincia Guaviare2013 Sewer improvement masterplan2015 Waste management improvement masterplan
2010 Pisco Copper Mine, Waste copper sludge incinerator FS2012 Sewer improvement masterplan2012 Lima Landfill Construction FS2013 Departamento Huánuco Water treatment FS 2014 Juliaca City Sewage treatment FS 2015 Apurimac Sewage treatment FS
2010 Mejillones Edelnor, Desulfurization-denitrification equipment of thermal power plant FS
2012 Air management improvement masterplan
CAR, EPC – KEITI MOUCAR, EPC trainees for ISCET
2014 Waste management masterplan Local officials as trainees for ISCET
Environmental Cooperation Projects
2013 Sewer improvement masterplan2015 Meteorological observation modernization FSRecuperación Río Lerma trainees for ISCET
CEPAL, July 18, 2018
Won-Ho Kim Hankuk University of Foreign Studies
Sustainability and Cooperation Commitments in Korea’s FTAs with Latin America