WORLD TRADE  
ORGANIZATION  RESTRICTED 
WT/TPR/G/268 
15 August 2012  
 
(12-4396) 
Trade Policy Review Body Original:  English 
   
 
  
 
TRADE POLICY REVIEW 
 
Report by the 
 
REPUBLIC OF KOREA 
 
  
 
Pursuant to the Agreement Establishi ng the Trade Policy Review Mechanism 
(Annex 3 of the Marrakesh Agreement Establishing the World Trade 
Organization), the policy statement by the Republic of Korea is attached. 
 
 
Note: This report is subject to restricted ci rculation and press embargo until the end of the 
first session of the meeting of the Trade Policy Review Body on the Republic of Korea. Republic of Korea WT/TPR/G/268 
 Page 3 
 
 
CONTENTS 
 
    Page 
 
I.  KOREA IN THE WORLD ECONOMY AND THE MULTILATERAL TRADING SYSTEM 5  
II.  ECONOMIC DEVELOPMENTS IN KOREA 5  
 (1)   ECONOMIC RECOVERY FROM THE GLOBAL FINANCIAL CRISIS  6  
 (2)   TRADE AND INVESTMENT  8  
 (3)   EFFORTS FOR GREEN GROWTH  11  
 (4)   OFFICIAL DEVELOPMENT ASSISTANCE  12  
 (5)   DOMESTIC REFORMS  13  
III.  TRADE POLICY DEVELOPMENTS 15  
 (1)   KOREA AND THE WTO 15  
 (2)   FREE TRADE AGREEMENTS  19  
 (3)   REGIONAL ENGAGEMENTS  23  
IV.  FUTURE POLICY DIRECTIONS 24  
 
 
 Republic of Korea WT/TPR/G/268 
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I. KOREA IN THE WORLD ECONOMY AND THE MULTILATERAL TRADING 
SYSTEM  
1. Korea's prompt recovery from the global financ ial crisis of 2008 presents a forceful example 
which illustrates the important role and benefits  of the multilateral trading system.  Although 
tumultuous financial markets around the world impeded global production and employment, the 
Korean economy's deep integration into the multila teral trading system, coupled with the Korean 
government's prompt economic policies for a more open and competitive business environment proved to be crucial factors in moving the Korean economy forward.  Korea has continued to promote 
liberal trade and investment policies as well as dom estic regulatory reform measures.  As a result, 
despite ongoing uncertainties and volatility in the global economic environment, Korea is projected to 
sustain moderate growth in 2012.   
2. During the past four years, Korea has played a more active role on the global economic stage 
in basically all aspects of the multilateral trad ing system, ranging from development assistance to 
sustainable development.  Korea has been at the fore front of global efforts to keep protectionism at 
bay, leading the collective initiative to adopt the "standstill" commitment at the G20 Washington 
Summit in 2008 and hosting the G20 Seoul Summit in  2010 to discuss ways to ensure a worldwide 
economic recovery.  Korea also played a key role  in extending the "standstill" commitment until the 
end of 2014 at the recent G20 Los Cabos Summit.  Furthermore, Korea joined the Development 
Assistance Committee (DAC) of the Organisati on for Economic Co-operation and Development 
(OECD) in 2010, officially transforming its status from a recipient to a donor state of official 
development assistance (ODA) in less than half a cen tury.  Pursuant to the mandate of DAC, the 
Korean government has consistently increased the budget and scope of its ODA activities.   
3. Korea has fully committed itself to promoting su stainable development as stipulated in the 
Agreement Establishing the World Trade Organization (WTO).  In this vein, recognizing the urgency 
of combating climate change and promoting sust ainable economic growth, President Lee Myung-bak 
announced in 2008 Low Carbon, Green Growth as a national policy vision. 
4. Additionally, Korea has been a strong advo cate of the open and rules-based multilateral 
trading system anchored by the WTO, and is prep ared to support constructive efforts towards the 
conclusion of the Doha Developm ent Agenda (DDA) negotiations. 
5. In parallel, Korea has made notable progress in  concluding a number of free trade agreements 
(FTAs) that are in compliance with the WTO agr eements.  Korea has been pursuing comprehensive 
and high-standard FTAs not only to promote trad e liberalization but also to strengthen its 
competitiveness and to prompt domestic regulatory reforms.  Korea believes that its policy of 
pursuing "WTO-plus" FTAs—in a wide range of areas such as investment, competition, government 
procurement, cultural cooperation, intellectual property rights (IPRs), trade remedies, as well as trade 
in goods and services—can provide an exemplary pl atform for continuous trade liberalization for 
future WTO negotiations. 
II. ECONOMIC DEVELOPMENTS IN KOREA 
6. The Korean economy quickly rebounded from th e global financial crisis of 2008.  The 
recovery was aided by a series of assertive econom ic policies in 2009, including a fiscal stimulus 
package amounting to ₩ 38.8 trillion – 3.6% of GDP – which c onsisted mainly of various measures 
such as social-overhead-c apital (SOC) investments and support for small- and medium-sized and 
self-employed businesses that are particularly vulnerable to external shocks.  An aggressive monetary 
policy by the Bank of Korea to lower Korea's key inter est rate to a record low of 2% also contributed WT/TPR/G/268 Trade Policy Review 
Page 6 
  
to the recovery.  Most significantly, and in spite of the difficult economic environment, Korea pushed 
ahead with continuous domestic reform and restruct uring efforts that laid down the foundation for 
sustained future economic growth. 
7. The unforeseen financial crash in the second half of 2008 reminded Korea of painful 
memories during the Asian currency crisis of the late 1990s.  Following th e Asian currency crisis, 
Korea implemented a series of extensive reform  measures to address weaknesses in the Korean 
economy.  These efforts significantly improved the e fficiency and resilience of the Korean economy – 
as evidenced by the continuing display of relatively strong economic fundamentals – and placed Korea in a better position, as compared to a decade a go, to withstand the global financial headwinds. 
(1) E
CONOMIC RECOVERY FROM THE GLOBAL FINANCIAL CRISIS  
8. Leading up to the Asian currency crisis in the late 1990s, Korean companies – especially 
large business groups – accumulated huge amounts of debt s that were provided mostly by short-term 
loans from foreign banks.  The heavy reliance on shor t-term foreign loans led the Korean economy to 
succumb to the currency crisis, as the foreign cu rrency reserves were insufficient to deal with 
financial instability.  Such financial problems were exacerbated by the excessively regulated banking 
sector and inefficient financial markets. 
9. In the course of overcoming the Asian currenc y crisis, the Korean government carried out a 
wide array of rigorous economic refo rm measures.  Restrictions in th e financial market were relaxed 
in accordance with the International Monetary Fund (IMF) recommendations, and the free-floating 
exchange rate regime was adopted to support liber alization of the capital market.  Private firms 
reduced leverage on foreign debts.   
10. In addition, the Korean government and the ce ntral bank amassed sufficient foreign exchange 
reserves to prepare for contingencies such as external  financial shocks.  As a result of such reform 
measures, by 2007, the leverage ratio in the pr ivate sector was at a prudent 100-200% level and 
foreign reserves stood at US$200 billion.1  Korea also arranged a bilateral currency swap agreement 
with the United States in 2008, and subsequently with Japan and China.  The Korean economy was 
clearly on a better footing due to economic restru cturing undertaken during and following the Asian 
currency crisis.  
11. In spite of these overall improvements in the financial system, certain aspects of the Korean 
economy were still highlighted as pe rsisting vulnerabilities.  For example, there was the continuous 
growth of short-term foreign de bts in the banking system stemming from increased hedging activities 
by exporters.  Such activities caused the Korean won to appreciate about 30% in nominal terms from 
2002 to 2007.  Another issue for concern was the high loan-to-deposit ratio in the Korean banking 
system.  Moreover, the vulnerability of an export-oriented economy was shown by the current account deficit that spanned from 2007 to 2008 during whic h foreign demand precipitously dropped due to 
financial turmoil across the world.   
12. The vulnerability of the Korean economy to exte rnal economic shocks made the value of the 
national currency decline the most among the ma jor Asian currencies during the global financial 
crisis.  While the weak Korean won suppressed do mestic demand, the global economic turmoil also 
hurt Korea's exports by weakening foreign demand for Korean products.  As a result, in the fourth quarter of 2008, Korea's GDP contracted by 4.6% as compared to the third quarter of the same year.  
Ironically, difficulties were compounded by the fact th at previous reform measures – in particular the 
                                                      
1 The leverage ratio in 2011 remained at the 100-200% level, while foreign reserves as of March 2012 
stood at US$316 billion. Republic of Korea WT/TPR/G/268 
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liberalization of the capital market and the shift to free-floating exchange rate regime – contributed to 
making it much easier for foreign investors and sp eculators to withdraw capital from the Korean 
capital market, thereby worsening financial stability. 
13. However, the Korean economy has bounced back  since 2009, due in large part to the 
economy's resilient trade structure and the government 's prompt and effective policy responses.  The 
combined effects of Korea's current account surp lus, the government’s policy to increase fiscal 
expenditures, and the central bank's decision to lo wer the key interest rate  facilitated the economic 
recovery.  Consequently, in 2009, when the worl d economy was still in the midst of the financial 
crisis, Korea, along with only two other member  countries in the OECD, achieved positive GDP 
growth.2  
14. In the process of recovering from the global fina ncial crisis, many structural problems of the 
Korean economy have been largely rectified.  Fi rstly, Korea's trade competitiveness in the world 
market has significantly improved despite global fina ncial instability.  The value of the Korean won 
fell sharply during the early stages of the global financial crisis to almost ₩ 1,600 per U.S. dollar in 
March 2009, but regained its valu e gradually afterward to about ₩ 1,200 per U.S. dollar in June 2012, 
albeit  still lower than that of pre-crisis levels.3  The continued surplus in trade balance despite the 
appreciating Korean won since 2009 illustrates fundame ntal improvement of Korea's export structure 
and competitiveness in the global market. 
15. Secondly, the loan-to-deposit ratios of Korean banks have been impr oved.  As shown in 
Table I, deposits in banks have been continuously  growing primarily due to huge volatility in the 
stock market and high risks in the real estate ma rket.  Meanwhile, loans have increased relatively 
slower because of more prudent banking policies4 as well as weaker economic activity levels. 
Table I 
Korea's Loan-to-Deposit Ratios 
(₩ trillion) 
 Dec. 2006 Dec. 2007 Dec. 2008 Dec. 2009 Dec. 2010 Dec. 2011 Mar. 2012 
Loan (A) 598 690 785 806 828 883 879 
Deposit (B) 551 565 665 717 844 915 923 
Loan-to-Deposit Ratio (%) 
(A/B×100) 108.5 122.2 118.0 112.4 98.2 96.5 95.3 
 
Note: Figures for banks subject to the loan-to-deposit regulations as of March 2012. 
 
Source : Financial Supervisory Service, Results of Loan-to-Deposit Ratio as of March 2012 . 
 
16. Thirdly, short term foreign debts have b een considerably subdued following the global 
financial crisis.  To reduce short term debts and curb excessive volatility of capital flows, the Korean 
government imposed two macro-prudential measure s in the banking sector:  the regulation limiting 
the ratio of net foreign currency forward positions  to bank capital, and a bank levy on non-deposit 
foreign currency liabilities.  The limitation on the ratio of net foreign currency forward position to 
bank capital has been in effect since August 201 0, and the bank levy has been in place since 
August 2011.  As a result, the ratio of short term de bts to total debts in the banking sector dropped to 
49% by March 2012, from 73% in September 2008.  
                                                      
2 Korea, Australia, and Poland recorded positive gr owth in 2009 among the OECD member countries. 
3 The exchange rate was ₩ 942 per U.S. dollar in January 2008. 
4 The ratio has been lowered by 17.1% as of March 2012 since the announcement by the Financial 
Supervisory Service in December 2009 to introduce regulations capping the ratio at 100% starting from July 2012. WT/TPR/G/268 Trade Policy Review 
Page 8 
  
17. However, excessively volatile capital flows in the Korean economy still pose difficult 
challenges for monetary and fiscal policies, given th e turbulence of the global financial market.  The 
Korean government has committed itself to the cont inuous and steadfast implementation of economic 
reform policies so as to enhance its sovere ign creditworthiness and financial stability. 
(2) TRADE AND INVESTMENT  
18. Korea is the world's seventh largest exporter a nd ninth largest importer, with a total trade 
volume of more than US$1 trillion in 2011.5  From a deficit of US$13.2 billion in 2008, Korea's trade 
surplus increased sharply to US$40.4 billion in 2009 .  Since 2009, the trade surplus has surpassed 
pre-crisis levels.  During the period under review, the trade balance has main tained a surp lus, except 
for 2008 when the global financial crisis was at its peak.   
Table II 
Korea’s Basic Trade Statistics, 2004-11 
(US$ million) 
 Exports  Growth Rate 
(%) Imports  Growth Rate 
(%) Trade Balance  Current Account  
2004 253,845 31.0 224,463 25.5 29,382 32,312 
2005 284,419 12.0 261,238 16.4 23,180 18,607 
2006 325,465 14.4 309,383 18.4 16,082  14,083 
2007 371,489 14.1 356,846 15.3 14,643  21,770 
2008 422,007 13.6 435,275 22.0 -13,267 3,198 
2009 363,534 -13.9 323,085 -25.8 40,449 32,791 
2010 466,384 28.3 425,212 31.6 41,172 29,394 
2011 555,214 19.0 524,413 23.3 30,801 26,505 
 
Source: Korea International Trade Association, Korea Trade Statistics (online information last viewed on 18 July 2012);  
and Bank of Korea, Balance of Payments, Econom ic Statistics System (online information last viewed on 
18 July 2012).  
 
19. Korea's exports have been led by items such  as vessel parts/ocean structures, petroleum 
products, semiconductors and autom obiles, while its largest import products were crude oil, 
semiconductors, natural gas,  and petroleum products. 
Table III 
Korea's Major Trade Items, 2008-11 
(US$ million and %) 
Description 
(MTI code) Exports Description 
(MTI code) Imports 
2008 2009 2010 2011 2008 2009 2010 2011 
Vessel Parts/Ocean 
Structures 
(746) 43,157 45,128 49,112 56,588 Crude Oil 
(131) 85,855 50,757 68,662 100,806 
(10.2) (12.4) (10.5) (10.2) (19.7) (15.7) (16.1) (19.2)
Petroleum Products 
(133) 37,573 22,965 31,531 51,600 Semiconductors 
(831) 32,018 26,620 31,137 32,483
(8.9) (6.3) (6.8) (9.3) (7.4) (8.2) (7.3) (6.2)
Semiconductors 
(831) 32,793 31,042 50,707 50,146 Natural Gas 
(134) 19,806 13,875 17,006 23,859
(7.8) (8.5) (10.9) (9.0) (4.6) (4.3) (4.0) (4.5)
Automobiles 
(741) 35,032 25,411 35,411 45,312 Petroleum Products 
(133) 17,534 12,765 17,928 22,883
(8.3) (7.0) (7.6) (8.2) (4.0) (4.0) (4.2) (4.4)
Table III (cont'd)  
                                                      
5 International Monetary Fund, Direction of Trade Statistics  as of July 2012;  Korea International Trade 
Association, Korea Trade Statistics (online information last viewed on 23 July 2012) . Republic of Korea WT/TPR/G/268 
 Page 9 
 
 
Description 
(MTI code) Exports Description 
(MTI code) Imports 
2008 2009 2010 2011 2008 2009 2010 2011 
Flat Panel Display & 
Sensor 
(836) 18,732 25,578 32,589 30,996 Coal 
(132) 12,810 9,995 13,131 18,477
(4.4) (7.0) (7.0) (5.6) (2.9) (3.1) (3.1) (3.5)
Wireless 
Communications 
Devices 
(812) 35,713 30,986 27,621 27,325 
Iron Boards 
(613) 17,203 9,271 10,988 12,872
(8.5) (8.5) (5.9) (4.9) (4.0) (2.9) (2.6) (2.5)
 
Note:  Percentage shares of total exports or imports are in parentheses. 
 
Source: Korea International Trade Association,  Korea Trade Statistics by Commodity (online information last viewed on 
18 July 2012).  
 
20. Korea's shares of trade with its largest trading partners – China, Europe, the United States and 
Japan – remained relatively unchange d since the last review, although the share of total trade with 
Asia showed a marked increase.   
21. Exports to the U.S. held steady, while the shar e of exports to Europe decreased from 18.2% in 
2008 to 13.5% in 2011.  Meanwhile, the share of Kor ea's exports to China continued to grow – from 
21.7% in 2008 to 24.2% in 2011.  The shares of imports from the four major trading partners remained relatively unchanged.  Notably, as indicat ed in Table IV, Korea's high proportion of exports 
to Asia further increased from 50.7% in 2008 to 56.6% in 2011. 
Table IV 
Korea's Geographical Distribution of Trade, 2008-11 
(US$ million and %) 
 Exports Imports 
 2008 2009 2010 2011 2008 2009 2010 2011 
Total 422,007 363,534 466,384 555,214 435,275 323,085 425,212 524,413 
Asia 
 
China 
 
Japan 
 
North America 
 
U.S. 
 
Europe 
 
Latin America 
 
Middle East 
 
Africa 
 
Oceania 
 214,051 
(50.7) 
91,389 
(21.7) 
28,252 
(6.7) 
50,434 
(12.0) 
46,377 
(11.0) 
76,697 
(18.2) 
33,267 
(7.9) 
26,647 
(6.3) 
9,386 
(2.2) 
11,216 
(2.7) 190,761 
(52.5) 
86,703 
(23.9) 
21,771 
(6.0) 
41,089 
(11.3) 
37,650 
(10.4) 
56,017 
(15.4) 
26,764 
(7.4) 
24,039 
(6.6) 
8,467 
(2.3) 
16,321 
(4.5) 255,178 
(54.7) 
116,838 
(25.1) 
28,176 
(6.0) 
53,918 
(11.6) 
49,816 
(10.7) 
69,627 
(14.9) 
36,187 
(7.8) 
28,369 
(6.1) 
9,618 
(2.1) 
13,396 
(2.9) 314,006 
(56.6) 
134,185 
(24.2) 
39,680 
(7.1) 
61,135 
(11.0) 
56,208 
(10.1) 
75,087 
(13.5) 
40,131 
(7.2) 
32,884 
(5.9) 
14,396 
(2.6) 
17,065 
(3.1) 199,784 
(45.9) 
76,930 
(17.7) 
60,956 
(14.0) 
42,768 
(9.8) 
38,365 
(8.8) 
53,697 
(12.3) 
13,756 
(3.2) 
101,645 
(23.4) 
4,052 
(0.9) 
19,519 
(4.5) 154,114 
(47.7) 
54,246 
(16.8) 
49,428 
(15.3) 
32,575 
(10.1) 
29,039 
(9.0) 
43,862 
(13.6) 
11,648 
(3.6) 
61,613 
(19.1) 
3,185 
(1.0) 
16,044 
(5.0) 202,341 
(47.6) 
71,574 
(16.8) 
64,296 
(15.1) 
44,754 
(10.5) 
40,403 
(9.5) 
55,760 
(13.1) 
14,645 
(3.4) 
80,815 
(19.0) 
4,684 
(1.1) 
22,140 
(5.2) 234,438 
(44.7) 
86,432 
(16.5) 
68,320 
(13.0) 
51,181 
(9.8) 
44,569 
(8.5) 
65,260 
(12.4) 
20,165 
(3.8) 
119,211 
(22.7) 
5,607 
(1.1) 
28,477 
(5.4) 
 
Note:  Percentage shares of total exports or imports are in parentheses. 
 
Source: Korea International Trade Association, Korea Trade Statistics by Count ry and Continent/Economic Bloc (online 
information last viewed on 18 July 2012) . 
 WT/TPR/G/268 Trade Policy Review 
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22. Korea's trade in services recently recovered from adverse impacts of the global financial 
crisis.  As shown in Table V, transport services' share in the total services exports stands at about 40%, and that sector has recorded a surplus througho ut the period under review.  In contrast, tourism 
and business services have experienced persiste nt large deficits during the same period. 
Table V 
Korea's Trade of Main Services, 2008-11 
(US$ million and %) 
 Exports  Imports  
 2008 2009 2010 2011  2008 2009 2010 2011 
Total 90,635 73,580 87,282 95,000 Total 96,369 80,221 95,908 99,378 
Transport 
Services  44,768 
(49.4) 28,693 
(39.0) 38,982
(44.7) 37,057
(39.0) Transport 
Services  36,770
(38.1) 23,451 
(29.2) 29,675 
(30.9) 27,797
(28.0) 
Business Services 12,965 
(14.3) 12,088 
(16.4) 16,834
(19.3) 18,910
(19.9) Business 
Services 27,245
(28.3) 27,094 
(33.8) 30,422 
(31.7) 35,827
(36.1) 
Tourism and 
Travel Related 
Services 9,773 
(10.8) 9,819 
(13.3) 10,359
(11.9) 12,304
(13.0) Tourism and 
Travel Related 
Services 19,065
(19.8) 15,040 
(18.7) 18,779 
(19.6) 19,463
(19.6) 
 
Note:  Percentage shares of total exports or imports are in parentheses. 
 
Source:  Bank of Korea, Balance of Payments, Econom ic Statistics System (online information last viewed on 18 July 2012) . 
 
23. The Korean government has announced vari ous plans since 2008 to assist and raise 
productivity of its services industry.  Such plan s include R&D assistance to the services industry, 
creation of the Committee for Services Industry De velopment, and application of information and 
communications technology to enhance effici ency in the services sectors.  In the Services Industry 
Development Plan  of 2012, for example, the government set forth plans for increasing the 
competitiveness of services sectors such as business services, tourism, and education which have 
greater job-creating potential than others.  The implementation programs of the Plan include deregulation in relation to cons truction of hotels and lodges, provision of one -stop professional 
services in the legal, accounting, and patent areas, and establishing comprehensive strategies to attract 
foreign educational institutions.    
24. From 2008 to 2011, the inflow of foreign direct  investments (FDIs) to  Korea increased from 
US$11 billion to US$13 billion.  The Korean government has implemented a series of measures including cash grants and land supply at lower costs to job-creating foreign-invested companies.  The 
government has also made efforts to foster a mo re business-friendly environment and provide better 
living conditions to foreign investor s through a three-year plan that began in 2008.  To better assist 
foreign investors in Korea, the government estab lished a foreign investment policy center that 
conducts research on business trends of global firms,  effective investment incentives, and the success 
factors in foreign investments.  In July 2011, the government embarked on a second three-year plan to enhance the general investment climate in Korea.  The plan involves providing further incentives to 
foreign investors such as strengthened protection of their intellectual property rights, supplying land at 
lower costs, and continuous improvement of the overall business and living envi ronment in Korea.   
25. Korea's outbound FDI has shown a remarkable increase since the last review.  In particular, 
FDI outflows have surged in the mining and na tural resources sectors as Korean energy firms 
significantly increased investments ab road to secure a stable supply of raw energy sources, although 
manufacturing and services sectors still account fo r the predominant portion of Korea’s overseas 
investments. 
 Republic of Korea WT/TPR/G/268 
 Page 11 
 
 
Table VI 
Korea's Inbound and Outbound FDI, 1995-2011 
(US$ million and %) 
 1995 2000 2005 2008 2009 2010 2011 
Inbound FDIb Total 1,970 15,265 11,566 11,712 11,484 13,071 13,674 
Manufacturing 1,041 
(52.8) 6,877 
(45) 3,078 
(26.6) 3,007 
(25.6) 3,725 
(32.4) 6,659 
(50.9) 5,657 
(41.4) 
Servicesa 927 
(47) 8,384 
(54.9) 8,484 
(73.3) 8,703 
(74.3) 7,743 
(67.4) 6,409 
(49) 7,960 
(58.2) 
U.S. 665 
(33.7) 2,921 
(19.1) 2,690 
(23.2) 1,328 
(11.3) 1,486 
(12.9) 1,974 
(15.1)   2,372 
(17.4) 
Japan 425 
(21.5) 2,452 
(16) 1,881 
(16.2) 1,424 
(12.1) 1,934 
(16.8) 2,083 
(15.9)   2,289 
(16.7) 
EU 461 
(23.4) 4,446 
(29.1) 4,781 
(41.3) 6,339 
(54.1) 5,297 
(46.1) 3,196 
(24.5)   5,033 
(36.8) 
Outbound FDIb Total 3,218 5,252 7,203 23,817 20,327 24,245 25,595 
Manufacturing 2,043 
(63.4) 1,675 
(31.8) 3,701 
(51.3) 7,081 
(29.7) 4,549 
(22.3) 7,116 
(29.3) 7,946 
(31) 
Servicesa 
 
Mining  1,073 
(33.3) 3,440 
(65.4) 2,991 
(41.5) 10,544 
(44.2) 10,248 
(50.4) 9,713 
(40) 10,052 
(39.2) 
77 
(2.3) 119 
(2.2) 483 
(6.7) 4,092 
(17.1) 5,440 
(26.7) 7,295 
(30) 7,464 
(29.1) 
China 842 
(26.1)  757 
(14.4) 2,818 
(39.1) 3,764 
(15.8) 2,169 
(10.6) 3,619 
(14.9)  3,572 
(13.9)  
U.S. 572 
(17.7)  1,434 
(27.3)  1,259 
(17.4)  5,090 
(21.3)  3,563 
(17.5)  3,368 
(13.8) 5,874 
(22.9)  
Viet Nam 183 
(5.6) 71 
(1.3) 319 
(4.4)  1,366 
(5.7)  605 
(2.9)  837 
(3.4)  1,024 
(4)  
 
a  Including electricity, gas, water supply, and construction.   
b Inbound FDI is on a notification basis. Ou tbound FDI is on an invested-amount basis. 
 
Note: Percentage shares of total inbo und or outbound FDI are in parentheses. 
 
Source: Ministry of Knowledge Economy, Inbound FDI Data Base ; Export-Import Bank of Korea,  Outbound FDI Data 
Base . 
 
(3) EFFORTS FOR GREEN GROWTH  
26. In 2008, to more actively combat climat e change, the Korean government announced Low 
Carbon, Green Growth as a national policy vision.  The Presidential Committee on Green Growth 
(PCGG) was created to provide legal and institu tional framework for green growth, as well as to 
promote policies tackling climate change.  The Committee's National Strategy for Green Growth and 
the Five-Year Plan for Green Growth  lay out the basic direction of environmental and industrial 
strategies and provide a framework for enhanced international cooperation. 
27. In November 2009, the government adopted a national mid-term goal of cutting 30% of 
greenhouse gas (GHG) emissions by 2020, as compared with the projected business-as-usual (BAU) level.  The Framework Act on Low Carbon Green Growth  was enacted in January 2010 to serve as a 
framework legislation covering such areas as climate change, renewable energy, and sustainable 
development.  In line with the Framework Act , the National Assembly in May 2012 passed a 
legislation establishing an emissions trading scheme (ETS), which will enter into force in 2015.   WT/TPR/G/268 Trade Policy Review 
Page 12 
  
28. Further, the Global Green Growth Institute (GGGI)6 was launched in June 2010 with the aim 
of creating an international platform for devel oping policy innovations that promote sustainable 
economic development.  On the margins of the Rio+20 Summit in Brazil in June 2012, sixteen countries
7 signed the Agreement on the Establishment of the GGGI to become founding members, 
thereby officially transforming GGGI in to an international organization. 
29. Since the launch of green growth policies, major business groups in Korea have made green 
business one of their highest investment priorities.   Between 2008 and 2010, the combined total of 
such investments by the 30 largest business groups showed an annual average growth rate of 75%, 
amounting to ₩ 15.1 trillion, or about US$13 billion in 2010. 
(4) OFFICIAL DEVELOPMENT ASSISTANCE  
30. During the period under review, Korea set a milestone in its history of international 
development cooperation by joining the OECD DAC in  2010.  At the special review conducted by the 
DAC Peer Review Team in 2008, Korea reconfirmed its commitment to scale-up the volume of ODA.  The total amount of Korea's ODA has steadily increased from US$696 million in 2007 to US$1.17 billion in 2010.
8  As a result, Korea's ODA/GNI ratio reached 0.12% in 2010, a figure that is 
expected to further increase to 0.15% in 2012 and 0.25% by 2015. 
31. The objectives of Korea's ODA as stated in the Framework Act on International Development 
Cooperation  of 2010 include the reduction of poverty in  developing countries, improvement of their 
qualities of life, and promotion of friendly relations  and mutual exchanges with developing country 
partners.  Korea's unique experience of having tr ansformed itself into a DAC member from a least 
developed country (LDC) places Korea in a favourable  position to share its development experience 
with partner countries. 
32. In accordance with the Strategic Plan for International Development Cooperation9 and the 
Mid-Term ODA Policy10 for 2011-2015, Korea seeks to im prove aid effectiveness and better 
accommodate the diverse needs of developing partners.   
33. In 2010, the volume of Korea's bilateral aid amounted to US$901 million, accounting for 77% 
of its total ODA.  Around 60% of the bilateral ODA was delivered as grants and the remainder was in 
the form of concessional loans.  In terms of the regional allocation of aid in 2010, Asia and Africa 
accounted for 62% and 15% of Korea's aid, resp ectively.  37% of Korea's bilateral ODA was 
delivered to LDCs as of 2010. 
                                                      
 6 The GGGI was initially created as a non-prof it foundation in 2010 and converted into an 
international organization in 2012.  The GGGI seeks to promote a new model of economic growth, known as 
"green growth," that simultaneously targets key aspect s of economic performance, su ch as poverty reduction, 
job creation and social inclusion, and those of environmen tal sustainability, such as mitigation of climate change 
and biodiversity loss and security of access to clean energy and water. 
 7 The 16 signatories are:  Australia, Cambodia, Costa Rica, Denmark, Ethiopia, Guyana, Kiribati, 
Korea, Norway, Papua New Guinea, Paraguay, the Philippines, Qatar, the UAE, the United Kingdom, and 
Viet Nam.  
8 The volume of ODA in 2011 is estimated to be US$1.321 billion.  
9 The Strategic Plan for Internatio nal Development Cooperation  is a government-wide plan to set out 
Korea's vision and strategies on deve lopment cooperation.  The Plan wa s approved in October 2010 at the 
7th session of the Committee of International Development Cooperation (CIDC), which is chaired by the Prime 
Minister. 
10 The Mid-Term ODA Policy  lays out Korea's development policy direction, the volume of ODA, as 
well as mid-term development strategies.  Republic of Korea WT/TPR/G/268 
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34. Korea recognizes that the tying of aid rai ses the costs of goods and services needed to 
implement aid projects, and prompts decisions to be based on commercial considerations rather than local needs or the priorities of partner countries.  In this regard, Korea is committed to increasing the 
proportion of untied aid from 36% in 2008 to 75% by 2015
11, keeping with international rules and 
guidance such as the 2001 DAC Recommendation on Untying ODA  and the recommendations of the 
DAC special review in 2008.   
35. Korea is taking a leading role in enhancing global partnership for ec onomic development and 
poverty reduction.  In 2010, Korea successfully le d the development agenda at the G20 Seoul Summit 
with the adoption of the Seoul Development Consensus for Shared Growth  and the Multi-Year Action 
Plan .  The Seoul Development Consensus  focuses on measures to resolv e any bottlenecks for growth 
in developing countries based on the understanding that economic growth in  developing countries 
contributes to ensuring a more balanced global economy.  At the 4th High Level Forum on Aid 
Effectiveness (HLF-4) held in Busan in November 2011, Korea contributed to promoting a paradigm 
shift in development from "aid effectiveness" to  "development effectiveness" and broadening global 
development partnerships with new participants. 
36. Korea is also making a contribution to strengtheni ng Aid for Trade.  Korea is the ninth largest 
donor for Aid for Trade in the world, with its  aid commitment volume reaching US$935 million in 
2009.  Korea joined the Regional Technical Group (R TG) on Aid for Trade for Asia-Pacific in 2011, 
and subsequently hosted the 5th RTG meeting in Seoul in May 2012 in cooperation with the Asian 
Development Bank.  The meeting carried out in-dep th discussions for promoting Aid for Trade in the 
Asia-Pacific region with particul ar focus on enhancing public a nd private partnerships, regional 
integration, and South-South relationships.  With re gard to Aid for Trade in the context of the WTO, 
Korea has been a donor to the WTO DDA Global Trust Fund since 2002.  Korea has contributed 
US$350,000 every year to the Fund since 2007. 
(5) DOMESTIC REFORMS  
37. Since the last review, the Korean government has persistently implemented economic 
reforms.  In the financial sector, the government has introduced various forms of macro-prudential 
measures to alleviate systemic risks in the Ko rean economy caused by excessive capital flow 
volatility, as stipulated above in Chapter II.  Re garding the labor market, Korea's policy priorities 
involve addressing population aging, workforce shortage, and labor mark et dualism.  In the corporate 
sector, the Korean government has tried to enhanc e transparency and accountability in corporate 
governance.  Bearing in mind the significant role of competition policies in promoting economic 
growth, the Korean government has stepped up th e implementation and enforcement of competition 
rules and policies.     
Financial Sector 
38. Korea experienced substantial capital outflow during the early phase of the global financial 
crisis.  Following the global financial crisis, the G20, the IMF, and the OECD acknowledged the need 
to address excessive volatility in capital flows.  In response to such recognitions, the Korean 
government adopted a series of macro-prudential measures to reduce capital flow volatility in 2010 
and 2011.12  
                                                      
11 In 2006, the proportion of untied aid was only ab out 2% of Korea's total bilateral assistance.  
12 Such measures include caps on banks' foreign exchange forward positions and taxes on foreign 
investment in local bonds that were introduced in October 2010 and January 2011, respectively. WT/TPR/G/268 Trade Policy Review 
Page 14 
  
Labour Sector 
39. Workforce shortage – especially in small- and medium-sized enterprises (SMEs) – and a 
rapidly aging population are barriers to maintaining Korea's economic growth potential.  The Korean 
population is expected to peak in 2030 and subsequently drop 8% by the mid-century, while the 
working-age population is projected to peak in 2016 and then drop by more than one quarter by 2050, 
according to the OECD Economic Surveys: Korea 2012 .   
40. In order to deal with the demographic shifts, Korea has undertaken labour market reforms that 
boost employment and productivity.  The government's 2020 National Employment Strategy  which 
was launched in 2010 aims to tap into underrepresente d workers – women, youth and the elderly – to 
increase the employment rate from 63% of working-age population in 2010 to approximately 70% by 
2020.   
41. Korea has also taken steps to alleviate th e burden of childcare, and to create more 
family-friendly workplaces in acco rdance with recommendations by  the Committee on Low Fertility 
and Population Aging Policy in 2006.  These include  expansion of public childcare, flexible working 
hours, lengthening maternity leave to 90 days for women working in SMEs, increasing allowances 
during childcare leave and easing the conditions att ached to applying for childcare leave.  These 
measures were followed by the 2011 revision of the Equal Employment Opportunity and 
Work-Family Balance Assistance Act , which allows parents with children under age six to request 
shorter working hours. 
42. In September 2011, the Korean government announced the Comprehensive Non-Regular 
Workers Initiative  to strengthen social safety nets and enhance equal treatment for non-regular 
workers.13  Korea believes that this Initiative will help raise labour productivity and address social 
cohesion issues. 
Competition Policy and Other Reforms  
43. Korea has made continuous efforts to enhan ce corporate transparency and alleviate the 
concentration of wealth to a few dominant cor porations by strengthening rules on information 
disclosure and strictly enforcing regulations  against anti-competitive business practices. 
44. At the same time, Korea has lowered entry ba rriers that restrict competition and undermine 
consumer welfare in various economic domains.  Meanwhile, as even good-willed regulations may 
have the unintended effect of adversely impacting the business climate, the government has also been 
taking into account global business norms when implementing economic policies. 
45. The Korea Fair Trade Commission (KFTC) has been offering an administrative incentive14 to 
encourage large corporations to establis h systematic compliance programs for the Fair Transactions 
in Subcontracting Act  and maintain mutually beneficial rela tionships with SMEs.  In accordance with 
the provisions of the Fair Transactions in Subcontracting Act  – which prohibit primary contractors 
from unlawfully lowering payments to subcontractor s – the KFTC has monitored, investigated and 
cracked down on unfair price-cutting practices.   
                                                      
13 This Initiative aims to enhance workforce fl exibility by removing unnecessary discrimination 
against non-regular workers performing jobs identical or similar to those of regular workers, expanding social 
safety nets, and increasing welfare services for low-paid workers. 
 14 Corporations that benefit from the administra tive incentive are exempted  from annual in-writing 
inspection. Republic of Korea WT/TPR/G/268 
 Page 15 
 
 
46. In addition, the Anti-Corruption and Civil Rights Commission (ACRC)15 was established in 
February 2008 to fight corruption and promote clea n governance in Korea.  The ACRC is involved in 
formulating anti-corruption policies, coordina ting preventive activities such as institutional 
improvement and educational prog rams, detecting corruption through  investigations and evaluating 
the anti-corruption activities of other government  organizations.  The ACRC places priority on 
resolving grievances of the general public that stem from unfair practices infringing upon the rights 
and interests of citizens.  Through these efforts, the Korean government has continuously promoted 
transparency, predictability and accountability in th e corporate sector as well as in the government. 
III. TRADE POLICY DEVELOPMENTS 
(1) KOREA AND THE WTO 
(a) Implementation of WTO Commitments 
47. As one of the major beneficiaries of the multila teral trading system, Korea has consistently 
advocated for an open and robust multilateral trading system as a platform for promoting sustainable economic growth and development.  Korea has th erefore remained committed to implementing its 
obligations under the WTO agreements.  At the same time, Korea has actively and constructively 
engaged in the efforts to promote further trade and investment liberalization, while implementing 
domestic reform measures on a voluntary basis that go beyond its current WTO commitments. 
Trade Remedies  
48. In line with its strong commitment to the WTO mu ltilateral trading system  and to help resist 
growing protectionist trends around the world, Ko rea has made modest a nd selective use of WTO 
trade remedy measures.   
49. During the period under review, Korea has refrained from taking any safeguard or 
countervailing measures.  Korea did take 18 anti-dumping measures, but as shown in Table VII, this 
represents a drop from the preceding four-year revi ew period.  As of June 2012, anti-dumping 
measures are in force in 12 of the 18 cases, including both original measures and measures extended through sunset reviews. 
Table VII 
Korea's Use of Trade Remedy Measures, 2004-11 
 
Source: Korea Trade Commission, Trade Remedies: State of  Play as of April 2012 . 
 
Dispute Settlement 
50. During the period under review, Korea has been involved in three cases as a complainant, and 
in one case as a respondent.  In two of the cases in which Korea participated as a complainant, Panel 
reports were adopted and the recommendations a nd rulings of the Dispute Settlement Body (DSB) 
were implemented.  The third complainant case was suspended at Korea's request.  In the respondent 
                                                      
 15 The ACRC was created by merging the Ombudsma n of Korea, the Korea Independent Commission 
Against Corruption, and the Administrative Appeals Commission.  2004-07 2008 2009 2010 2011 
Anti-Dumping Duties 21 12 4 0 2 
Safeguard Measures 0 0 0 0 0 
Countervailing Duties 0 0 0 0 0 WT/TPR/G/268 Trade Policy Review 
Page 16 
  
case, both parties notified the mutually agreed so lutions to the DSB.  In addition, Korea has 
participated in 19 dispute cases as a third party. 
Intellectual Property Rights 
51. Korea's domestic laws and regulations on IPRs are in full compliance with the WTO 
Agreement on Trade-Related Aspects of Intellectual Pr operty Rights (TRIPS).  In an effort to further 
strengthen protection of IPRs, Korea negotiated the Anti-Counterfeiting Trade Agreement (ACTA) 
with seven other WTO Members and signed it in October 2011.  Currently, Korea is going through 
the necessary domestic procedures for the ratification of ACTA. 
(b) DDA Negotiations 
52. Korea has attached great importance to the ope n and rules-based multilateral trading system 
embodied in the WTO.  Korea firmly believes that the WTO can and should play a pivotal role in further improving the global trade and investment e nvironment, particularly in the face of current 
global economic challenges.   
53. Korea will continue to actively and constructivel y take part in collective efforts to explore 
fresh and credible approaches to help move the DDA negotiations forward, as agreed at the 8
th WTO 
Ministerial Conference in December 2011. 
Agriculture 
54. Korea has been actively participating in the ag riculture negotiations as a member of the G10 
and the G33.  Korea shares the view of other par ticipants that future negotiations should build on the 
progress achieved thus far.  Korea believes that it would not be desirable to attempt to reopen issues 
already stabilized, as doing so would run the risk  of preventing the negotiations from progressing in a 
timely manner.  Notwithstanding its domestic agricu ltural sensitivities, Korea will continue to engage 
in the negotiations in a constructive manner  to help move the discussions forward. 
Non-Agricultural Market Access (NAMA) 
55. Due to continuing difficulties in narrowing the differences over outstanding issues such as the 
sectorals, the NAMA negotiations have not produc ed meaningful outcome during the period under 
review.  In the area of non-tariff barriers, Member s have been engaged in constructive discussions.  
Korea has been working with other Members si nce 2008 to reach a balanced outcome and will 
continue to extend efforts to advance the negotiations. 
Services 
56. The services sector is one of Korea's key industries.  Korea believes the continued 
development of the services sector is essential fo r further enhancing the overall competitiveness of 
other industries including manufacturing. 
57. In this vein, Korea has actively participated in the services negotiations regarding both market 
access and rules such as domestic regulations.  On  market access negotiations, Korea considers 
five infrastructure-related services – telecommuni cations, distribution, c onstruction, maritime 
transport, and financial services – to be of particul ar significance and has been  working to enhance the 
level of liberalization in these areas, among others .  Regarding negotiations on domestic regulations, 
Korea, as one of the demandeurs, seeks to ensure that domestic regulations do not present unnecessary 
barriers to trade in services. Republic of Korea WT/TPR/G/268 
 Page 17 
 
 
Trade Facilitation 
58. Korea is of the view that multilateral rules on trade facilitation would not only reduce 
administrative costs and waiting time but also enhance predictability and transparency in the customs 
procedures.  In this context, Korea has participat ed in the trade facilitation negotiations in an active 
and constructive manner by submitti ng and co-sponsoring a number of proposals on specific topics in 
such areas as single-window, release time of goods, risk  management, and so forth.  While working to 
advance the textual negotiations, Korea has also shar ed with other Members its experiences regarding 
the benefits and challenges of the single window system by presenting case studies at a WTO symposium held in November 2011. 
59. Although the DDA negotiations are at an overall st alemate, trade facilitation is considered as 
one of the areas in which progress could be achieved on its own merits.  Thus, Korea will continue to 
make contributions toward tangible progress in the negotiations by offering fresh ideas and playing a 
bridge-building role. 
Rules 
60. Korea has engaged in the DDA rules negotiations  to make WTO rules more transparent and 
predictable in the areas of trade remedies and regional trade agreements.   
61. Large gaps still exist among Members engaged in  fisheries subsidies negotiations, one of the 
most contentious areas in the DDA negotiations on  rules.  Korea has provided constructive ideas 
regarding the issues of fuel subsidies in fisheri es, as well as illegal, unreported and unregulated (IUU) 
fishing.  In particular, regarding IUU fishing, Kor ea believes it is imperative that regulations be made 
more effective and practical.  In this regard, Kor ea has suggested the establis hment of a transparency 
mechanism that provides data for enforcement activities, imposes penalties on IUU fishing, and 
creates a periodic peer review process. 
Trade and Environment 
62. To enhance mutual compatibility between trad e and environment, Ko rea supports improving 
coordination between WTO rules and multilateral environmental agreements (MEAs).  Korea 
recognizes the importance of establishing proced ures for information exchange between MEA 
secretariats and the relevant WTO committees.  Furt her, Korea continues to embrace liberalization of 
environmental goods and services that would provi de substantial benefits to Members and is 
committed to working towards a positive outcome in this area. 
(c) Other Trade Liberalization Efforts 
Combating Protectionism 
63. Since the outbreak of the global financial and economic crisis, Korea has strongly advocated 
international efforts to deter and push back protectionism in the WTO and other forums.  In particular, 
Korea has been playing a positive ro le in the collective adoption of the "standstill" commitment at the 
G20 Washington Summit in 2008 and the Asia-P acific Economic Coope ration (APEC) Economic 
Leaders’ Meeting in 2008, as well as in subsequent ly extending the commitment until the end of 2014 
at the recent G20 Los Cabos Summit.  Korea is al so actively participating in the WTO exercise 
designed to monitor trade and trade-related measures. WT/TPR/G/268 Trade Policy Review 
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Government Procurement 
64. As a Party to the WTO Agreement on Govern ment Procurement (GPA), Korea has keen 
interest in establishing more transparent and rules-based practices in the area of government 
procurement.  Korea also seeks to ensure the efficient and effective management of public resources 
by further opening up Korea's procurement market to international competition.  Along these lines, 
Korea actively participated in the discussions to revise the WTO GPA which were launched in 1997.  
The negotiations to revise the GPA text and ex pand the coverage were finally concluded in 
December 2011.  Currently, Korea is going thro ugh the necessary domestic procedures for the 
ratification of the revised GPA. 
ITA Expansion 
65. Recognizing that a successful expansion of the Information Technology Agreement (ITA) 
will help boost the global economy and enhance th e credibility of the multilateral trading system, 
Korea has been engaged, since May 2012, in in-dep th technical discussions with other Members to 
expand the product coverage of the ITA.  Further, Korea shares with Members a common interest in 
reflecting in the ITA the changing patterns of gl obal trade and developments in information and 
communications technology, as fairly long time has p assed since the ITA was concluded in 1997.   
Advancing Negotiations on Trade in Services 
66. Over the past several months, Korea and some WTO Members have been exploring new 
approaches aimed at progressing the liberalization of  trade in services, with a view to capturing 
significant improvements made through various avenues since the conclusion of the General 
Agreement on Trade in Services (GATS).  Korea will c ontinue to work closely with other Members to 
advance the liberalization of trade in services and im prove the services rules, with the ultimate goal of 
reinforcing and strengthening the multilateral trading system. 
Trade Agreements among Developing Countries 
67. Korea has been engaged in negotiations to lib eralize trade among developing countries by 
participating in preferential trade agreements am ong developing countries, such as the Global System 
of Trade Preferences (GSTP)16 and the Asia-Pacific Trade Agreement (APTA).17  
68. In December 2010, Korea and seven other par ticipants of the GSTP successfully concluded 
the Sao Paulo Round Negotiations wh ich expanded the scope of pref erential tariff reduction and the 
margins of preference among participants.  Korea h as also been engaged in negotiations with other 
APTA participating states in areas such as trade facili tation, investment, and trade in services with the 
aim of going beyond traditional tariff concessions. 
LDC-related Measures 
69. Taking into account the WTO Hong Kong Ministerial Declaration in 2005, Korea has 
expanded duty-free and quota-free market access to 95%  of its tariff lines (based on HS 6 digits) for 
                                                      
 16 The GSTP is a preferential trade agreement signe d in April 1988 with the aim of increasing trade 
among developing countries in the framework of the United Nations Conference on Trade and Development. 
 17 APTA, formally known as the Bangkok Agreement, was originally signed in 1975 and is the oldest 
preferential trade agreement among developing countries in  the Asia-Pacific region. The original participating 
states of APTA are Bangladesh, India, Korea, Laos, the Philippines, Sri Lanka, and Thailand. Republic of Korea WT/TPR/G/268 
 Page 19 
 
 
products originating from LDCs sinc e January 2012.  Korea has also relaxed its rules of origin 
requirements regarding such preferential treatments.    
(2) FREE TRADE AGREEMENTS    
70. Korea has actively engaged in FTA negotiati ons since 2003, aiming for a comprehensive 
network of FTAs connecting Euro pe, Asia, and the Americas.   
71. Korea has pursued high-standard and comprehe nsive FTAs covering virtually all aspects of 
trade, in line with WTO provisions such as Article XXIV of GATT 1994 and Article V of GATS.  Most of Korea's FTAs cover not only trade in goods but also trade in services, investment, and trade 
rules such as non-tariff barriers and trade remedy systems, and IPRs. 
72. The main objectives of Korea's FTA policy include  further liberalizing th e international trade 
regime as well as increasing momentum for econom ic growth.  By developing global free trade 
networks with FTA partners, Korea will find new market opportunities around the world.  Korea also 
recognizes that FTAs reduce trade costs such as tariffs and non-tariff barriers, and help defuse potential trade disputes with FTA partners.  Furthe rmore, FTAs can enhance the efficiency of the 
economy by promoting further competition and increase consumer welfare by bringing down the price 
of imported goods, as well as by diversifying consumers’ choice. 
73. During the period under review, the Korea-ASEAN FTA, the Korea-India CEPA, the 
Korea-EU FTA, the Korea-Peru FTA and the Korea- U.S. FTA have entered into force.  As of 
July 2012, eight FTAs signed by Korea involving 45 countries are in force.  The negotiations on the Korea-Turkey FTA and the Korea-Colombia FTA we re recently concluded, and Korea is currently 
engaged in negotiations with eight  trading partners such as Australia, Canada, China, the Gulf 
Cooperation Council (GCC), Indonesia, Japan, Mexico, and New Zealand. 
74. The Korea-EU FTA and the Korea-U.S. FTA entered into force on 1 July 2011 and 
15 March 2012, respectively.  The two bilateral FTAs with the world’s largest economies are expected to produce positive economic effects, although it is still premature to assess the exact 
impacts due to the short time period of implementa tion since the agreements entered into force.   
Trade in Goods 
75. Korea has sought to liberalize more than 90% of its trade with FTA partners within ten years, 
in terms of both tariff lines and import value.  In the Korea-U.S. FTA, for instance, Korea will eliminate tariffs for 92.0% of its tariff lines and 92.6%  of its import value within five years, and for 
98.3% of its tariff lines and 97.4% of its import value within ten years. 
76. With the trade remedy provisions in its FTAs,  Korea has endeavoured to strike a balance 
between promoting substantial trad e liberalization and protecting th e domestic industry from injuries 
and damages.  Korea's FTAs introduced certain WTO- plus provisions in order to enhance procedural 
transparency and prevent trade remedy measur es from undermining trade liberalization efforts. 
77. Korea has increased market access to its sensitive agricultural sector in its FTAs.  The share 
of agricultural imports from FTA partners has grow n during the past five years – from 14.6% in 2007 
to 26.8% in 2011, and may reach 50% in 2012 with th e Korea-U.S. FTA entering into force.  These 
figures indicate an improvement in access to Kor ea's agricultural market for its FTA partners.  
78. During the period under review, Korea's farmi ng household income has shown stagnation or 
even decline.  The average farming household income in 2011 was ₩ 30.1 million, which is lower WT/TPR/G/268 Trade Policy Review 
Page 20 
  
even in nominal terms than the ₩ 32.0 million in 2007.  Low labour productivity in agriculture – 
attributable to the increase in the proportion of farmers aged 60 years or more18 and small-scale 
farming traditions – coupled with an increase in agricu ltural imports are considered to be factors that 
suppress farming household incomes.   
Trade in Services  
79. As part of its overall effort to increase th e competitiveness of its services industry, Korea 
further liberalized the services sector beyond its WTO commitments through subsequent FTA 
negotiations – in particular the Korea-U.S. FTA and the Korea-EU FTA.  Korea made meaningful 
market access commitments that extend across major services sectors such as, inter alia , legal 
services, higher education services, R&D services, a nd environmental services.  Korea's continued 
commitment to the liberalization of trade in service s is expected to enhance overall productivity in the 
services sector, which in turn can transform Korea into a regional services hub. 
Investment  
80. The investment chapters of Korea's FTAs,  by incorporating powerful investment 
liberalization and investment protection elements, create a more stable, transparent, and 
investor-friendly environment for foreign i nvestors from FTA partner countries.   
81. According to the most recent statistics, inbou nd investment into Korea increased by 17% to 
US$2.3 billion during the first quarter of 2012, vis-a- vis the first quarter of 2011 – the highest level 
since 2008.  The investment inflow was generally of a "greenfield" nature19, mainly concentrated in 
the manufacturing sector, and came from industrialized regions such as the EU and Japan.   
82. As Korea's FTA network consolidates w ith other FTAs which are currently under 
negotiations, Korea is expected to further attract foreign investment, thereby promoting job creation 
and revitalizing its econo my, among other effects. 
Competition  
83. Competition rules in FTAs improve consumer welfare by reducing consumer prices and 
increasing varieties of goods and services availabl e.  Anti-competitive prac tices such as forming 
cartels and abusing the dominant market position will be subject to enforcement action by parties to 
the FTAs. 
Transparency 
84. FTAs require the parties to ensure that their laws, regulations, and procedures affecting trade 
are promptly published or otherwise made available.   Domestic institutions become more transparent 
in order to satisfy the requirements of FTAs;  fu rthermore, most of these improvements are extended 
to non-FTA partners as well.   
                                                      
 18 According to the 2010 Census of Agriculture, Forestry, and Fisheries issued by Statistics Korea, the 
share of farmers – aged 60 years or  more – exceeded 40% of the total population of Kor ea's farming households 
in 2010. 
 19 Greenfield investment refers to an investment in a manufacturing, office, or other physical 
company-related structure or group of structures  in an area where no previous facilities exist. Republic of Korea WT/TPR/G/268 
 Page 21 
 
 
(a) FTAs in Force or Recently Concluded 
FTA between Korea and Chile 
85. The Korea-Chile FTA, the first FTA signed by Korea, entered into force on 1 April 2004.  
Under this FTA, Korea is to eliminate tariffs on 96. 2% of all goods, while Chile is to eliminate tariffs 
on 96.5% of all goods within ten years. 
86. During the past seven years subsequent to the Agreement coming into force, bilateral trade 
between Korea and Chile increased 4.6 times, from US$1.58 billion to US$7.24  billion, far outpacing 
the growth of Korea's trade with the rest  of the world during the same period.   
FTA between Korea and Singapore 
87. The Korea-Singapore FTA entered into force on 2 March 2006.  Under this FTA, Korea is to 
eliminate tariffs on 91.6% of all goods within ten years, while Singa pore is to eliminate tariffs on 
100% of all goods immediately upon the entry into force of the Agreement. 
88. Bilateral trade volume between Korea a nd Singapore has increased 134.2%, reaching 
US$29.8 billion in the fifth year after the impl ementation of the FTA, surpassing the increase in 
Korea's trade with other countries which grew by 98% during the same period. 
FTA between Korea and the European Free Trade Association (EFTA) 
89. The Korea-EFTA FTA entered into force on 1 September 2006.  Under this FTA, within 
ten years, Korea is to remove tariffs on 99.1% of  goods excluding agricultural products originating in 
EFTA, while EFTA is to eliminate tariffs on 100% of goods originating in Korea. 
90. Since the entry into force of the Agreement, bilateral trade volume between EFTA and Korea 
increased approximately 2.4 times from US$2.9 bi llion in 2005 to US $7.0 billion in 2011. 
FTA between Korea and the Association of  Southeast Asian Nations (ASEAN) 
91. Korea's FTA with ASEAN member countries is based on the Framework Agreement on 
Comprehensive Economic Cooperati on.  Under this Agreement, Korea and ASEAN members signed 
the Agreement on Trade in Goods, the Agreement on Trade in Services, and the Agreement on 
Investment.  Under the Agreement on Trade in Good s which entered into force on 1 June 2007, Korea 
and ASEAN agreed to eliminate tariffs by 2 010 on goods constituting 90% of their respective 
imports.  Tariffs on 7% out of the remaining 10% of imports will be lo wered to zero to 5% by 2016.  
The Agreement on Trade in Services and the Ag reement on Investment went into effect on 
1 May 2009 and 1 September 2009, respectively. 
92. Bilateral trade between Korea and ASEAN has in creased 102.1 since entry into force to reach 
US$125 billion in 2011, while Korea's trade with other countries increased 70.1% during the same 
period.   
Comprehensive Economic Part nership Agreement (CEPA) be tween Korea and India 
93. The Korea-India CEPA entered into force on 1 January 2010.  Under the Korea-India CEPA, 
Korea is to eliminate or reduce tariffs on 93.2% of  all goods while India is to eliminate or reduce 
tariffs on 85.3% of all goods within ten years.   WT/TPR/G/268 Trade Policy Review 
Page 22 
  
94. In 2010, the first year of the entry into for ce of CEPA, bilateral trade volume between Korea 
and India increased 40.8% compared to that of 2009.   
FTA between Korea and the European Union 
95. The Korea-EU FTA was concluded in July 2009  and has been applied provisionally since 
1 July 2011.  The impact of the Korea-EU FTA is significant because of the size of the economies 
involved and both parties' commitment to comprehensive market access.   
96. Under the Korea-EU FTA, Korea is to elim inate tariffs on all industrial goods within 
seven years while the EU is to el iminate tariffs on all industrial goods within five years.  The average 
concession rate of both parties is 99.6%. 
97. During the first 12 months following the provisional application of the Korea-EU FTA, trade 
between Korea and the European Union decreased slight ly due to the European debt crisis.  However, 
the total volume of exports and imports of goods receiving preferential treatment by the FTA has 
increased 16.3% and 13.6%, respectively.  It shows that the Korea-EU FTA has been an important 
pillar of the Korean economy during the recen t volatile global economic situation.   
FTA between Korea and Peru 
98. The Korea-Peru FTA entered into force on 1 Au gust 2011.  Korea is to eliminate or reduce 
tariffs on 97.4% of all goods, and Peru  is to eliminate or reduce tariffs  on 98.9% of all products within 
ten years. 
99. Bilateral trade volume between Korea and Peru increased 23.1% during the 
first seven months since the entry into force of th e Agreement, compared with the same period of the 
previous year. 
FTA between Korea and the United States 
100. The Korea-U.S. FTA negotiations were launched in  February 2006 and, after eight rounds of 
negotiations, the Korea-U.S. FTA wa s signed on 30 June 2007.  In Febr uary 2011, Korea and the U.S. 
also concluded an additional agreement with a view  to facilitating the ratification and the early entry 
into force of this FTA.  In the second half of 2011, the Korea-U.S. FTA was approved by Korea's 
National Assembly and the U.S. Congress and fi nally entered into fo rce on 15 March 2012. 
101. Within five years of the FTA's entry into fo rce, approximately 96% of bilateral trade in 
industrial goods will become duty free.  As a comp rehensive and high-level FTA that covers a full 
range of trade-related areas, the Korea-U.S. FT A is expected to improve transparency and 
predictability in Korea's regulatory and rule making procedures and to enhance its business 
environment. 
102. Between 15 March 2012 and 30 June 2012, bila teral trade between Korea and the U.S. 
increased 1.4% to reach US$32.7 billion, while Korea' s trade with the rest of the world decreased 
2.5% to record US$325.1 billion.  FDI on a notifi cation basis has also in creased 48.2% to reach 
US$1.168 billion as compared with the same period of the previous year.   
FTA between Korea and Turkey 
103. Korea and Turkey initialled the Framework Ag reement Establishing the Korea-Turkey Free 
Trade Area and the Agreement on Trade in Goods  in March 2012 after four official rounds of Republic of Korea WT/TPR/G/268 
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negotiations which began in March 2010.  Both Agre ements are to be signed in the second half of 
2012.  Negotiations for an Agreement on Trade in Services and Investment will begin immediately 
after the Agreement on Trade in Goods enters into force. 
104. Under the Agreement on Trade in Goods, Kor ea is to eliminate tariffs on 92.2% of all 
products originating in Turkey, while Turkey is to  eliminate tariffs on 89.8% of all goods originating 
in Korea within ten years. 
FTA between Korea and Colombia 
105. The Korea-Colombia FTA negotiations were la unched in December 2009, and the two parties 
concluded negotiations in J une 2012.  The Agreement is expected to  be initialled in the second half of 
2012.    
(b) FTAs under Negotiations 
106. Korea is negotiating FTAs with Australia, Ca nada, China, the Gulf Cooperation Council 
(GCC), Indonesia, Japan, Mexico, and New Zealand. 
107. Negotiations with China and Indonesia have been recently launched.  The negotiations for the 
Korea-China FTA officially started in May 2012, and as of 18 July 2012, two rounds of negotiations 
have been held.  The Korea-Indonesia CEPA ne gotiations commenced in March 2012, and as of 
18 July 2012, Korea and Indonesia ha ve had one round of negotiations. 
108. In recent months, Korea has consulted with Au stralia, Canada, Japan to create a favourable 
environment for the resumption of the stalled ne gotiations for a bilateral FTA with each country. 
(c) FTAs at the Pre-Negotiations Stage 
109. Korea has completed joint feasibility studies for a Korea-China-Japan FTA, a 
Korea-Viet Nam FTA, a Korea-Israel FTA, a Korea-Central America (includes Costa Rica, El Salvador, Guatemala, Honduras, Panama) FTA and a Korea-MERCOSUR
20 FTA.  The feasibility 
study for a Korea-Malaysia FTA is currently under way. 
(3) REGIONAL ENGAGEMENTS  
110. Korea considers regional economic cooperation to be a pathway to eventual multilateral trade 
liberalization.  Korea values regional forums such  as APEC and ASEAN+3 as mechanisms that foster 
greater economic cooperation within and across regions , which in turn facilitates the strengthening of 
the multilateral trading system.  Korea has actively participated in these forums to achieve further 
trade liberalization. 
(a) Asia-Pacific Economic  Cooperation (APEC) 
111. As one of its founding members, Korea has played an active role in APEC by, in particular, 
introducing initiatives aimed at deepening regional economic integration.  There has been wide 
recognition that different econo mic levels among economies in the APEC region may serve as 
obstacles to the realization of the Free Trade Area of the Asia-Pacific (FTAAP).  In this regard, Korea 
has led the Capacity Building Initiative  since 2008, in order to contribute to APEC's efforts to achieve 
the mid-and-long-term objectives as set out by the FTAAP.  As a lead economy of this Initiative, 
                                                      
20 Mercado Común del Sur. WT/TPR/G/268 Trade Policy Review 
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Korea held its inaugural program of Rules of Origin Capacity Building Workshop  in Seoul in 
July 2012. 
112. Korea held the 5th APEC Education Ministerial Meeting in Gyeongju, Korea in May 2012.  
The Ministerial Meeting adopted the Gyeongju Initiative  which affirmed that educational cooperation 
is an essential driving force for sustainable, secure, inclusive, innovative, and balanced growth in the 
APEC region.  
113. Korea has committed itself to promoting trade and investment in environmental goods (EG) 
in APEC, and has made concerted efforts with ot her member economies to develop an APEC EG list 
in line with the instructions of the Leaders agreed in Honolulu in 2011. 
(b) Northeast Asian Economic Cooperation 
114. During the period under review, Korea, together with China and Japan, has made efforts to 
institutionalize Northeast Asian economic cooperati on.  At the ASEAN+3 Summit in Manila in 
November 1999, the leaders of Korea,  China and Japan met together for the first time in history.  The 
Trilateral Summit has been held on the margins of  the annual ASEAN+3 summits ever since.  An 
independent Trilateral Summit outside of the ASEA N+3 framework was first held in Fukuoka, Japan 
in December 2008, and it has also become an annual event.   
115. Korea, China, and Japan signed an agreement to  facilitate and protect mutual investments at 
the 2012 Trilateral Summit in Beijing.  Aimed at improving the investment climate in the region, the agreement – the first legal framework on trilate ral economic co-operation – includes provisions on 
transparency, intellectual property rights protecti on and investor-state dispute settlement.  The 
three countries also agreed to begin preliminary procedures to launch official negotiations for the 
Korea-China-Japan FTA before the end of the year, on the basis of the outcome of the joint study for 
the FTA completed in December 2011.  In July 2012, the three countries held the first round of 
preliminary working level meetings in Japan. 
(c) East Asian Economic Cooperation 
116. Since 2004, Korea has been engaged in the di scussions for East Asian economic integration 
under the East Asia Free Trade Area (EAFTA)  and the Comprehensive Economic Partnership for 
East Asia (CEPEA)  initiatives, also known as the ASEAN+3 FTA and the ASEAN+6 FTA, 
respectively.  Korea has also participated in the Regional Comprehensive Economic Partnership 
(RCEP) Framework  that ASEAN proposed in 2011, which aims at establishing a regional economic 
community on the basis of ASEAN's existing individual FTAs with non-ASEAN partners. 
IV. FUTURE POLICY DIRECTIONS 
117. Korea continues to place emphasis on liberalizi ng trade at all levels – multilateral, regional 
and bilateral.  Despite the current challenges pr esented by a volatile global economic environment, 
Korea is committed to keeping its trade policies in line with the fundamental principles of an open and 
rules-based multilateral trading system.  In this regard, Korea will continue to participate in 
international efforts for a successful conclusion of the DDA negotiations. 
118. Korea considers FTAs to be an effective and complementary tool for accelerating multilateral 
trade liberalization, and will continue to pursue high-standard, comprehensiv e, and WTO-consistent 
FTAs.  Korea believes that the FTAs it pursues can  serve as building blocks for further trade 
liberalization at the regional and global levels. Republic of Korea WT/TPR/G/268 
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119. Korea will continue to engage international e fforts to promote free trade, sustainable and 
inclusive economic growth, and ba lanced development.  To this end, Korea seeks to be a 
bridge-builder between the devel oped and developing countries in global economic forums such as 
the WTO and the G20 Summit.  Korea also supports the promo tion of regional free trade and 
economic cooperation in East Asia and the Asia-Pacific region.   
120. Korea will actively participate in global efforts to combat climate change and promote 
sustainable development by fostering interna tional cooperation in these areas and implementing 
effective domestic green growth po licies.  In order to achieve a mo re balanced global economy, Korea 
will continuously seek ways to increase not only th e scope but also the effectiveness of its ODA 
programs. 
121. Korea will conduct appropriate domestic reforms that are necessary to improve efficiency, 
market discipline, transparency, and fair competiti on in the Korean economy, as it pursues the shared 
goal of creating prosperity for everyone in the global community.    
 
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