RESTRICTED  WORLD TRADE  
ORGANIZATION  WT/TPR/G/204 
3 September 2008  
 
(08-4031) 
Trade Policy Review Body  
   
 
  
 
TRADE POLICY REVIEW 
 
Report by 
 
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 circ ulation 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/204 
 Page 3 
 
 
 CONTENTS 
 
    P a g e  
I. KOREA IN THE GLOBAL TRADING SYSTEM 5 II. ECONOMIC DEVELOPMENTS:  2004-2008 5 
 (1) D
OMESTIC ECONOMIC SITUATION  6 
 (2) E XTERNAL TRADE AND INVESTMENT  7 
 (3) D OMESTIC REFORMS  11 
III. TRADE POLICY DEVELOPMENTS:  2004-2008 13 
 (1) K OREA AND THE WTO 13 
(a) Implementation of WTO Commitments 13 
(b) DDA Negotiations 15 
 (2) B ILATERAL TRADE RELATIONS  17 
(a) China 17 
(b) The European Union 17 
(c) The United States 17 (d) Japan 17 
(e) ASEAN and Others 17 
 (3) F
REE TRADE AGREEMENTS  18 
(a) FTAs under Implementation or Recently Concluded 18 
(b) FTAs under Negotiation 20 (c) Other Bilateral Trade Negotiations under Joint Studies 21 
 
 (4) R EGIONAL ENGAGEMENTS  21 
  (a) Asia-Pacific Economic Cooperation (APEC) 21 
(b) Asia-Europe Meeting (ASEM) 22 
(c) ASEAN+3 22 
IV. FUTURE POLICY  DIRECTIONS 23 
 
 Republic of Korea WT/TPR/G/204 
 Page 5 
 
 
 I. KOREA IN THE GLOBAL TRADING SYSTEM 
1. Korea believes in the primacy of the multilatera l trading system. It has been consistently 
advocating that an open and strong multilateral trad ing system is fundamental to economic growth 
and development. Since its accession to the Gene ral Agreement on Tariffs and Trade (GATT) in 
1967, Korea’s gross national income per capita and exports have risen from a mere US$142 and 
US$0.3 billion to US$20,045 and US$371.5 billion in 200 7, respectively.  The global liberalization of 
trade under the transparent and rules-based multilatera l trading system helped Korea transform itself 
from one of the poorest countries in the world 40 y ears ago to a successfully industrializing economy. 
2. As one of the greatest beneficiaries of the open multilateral trading system, Korea has been 
fully committed to the successful conclusion of th e Doha Development Agenda (DDA) negotiations. 
The slow progress made in the current DDA negotia tions was a cause of worry for Korea. Giving 
primary priority of its trade policy to the DDA ne gotiations, Korea has been playing an active and 
constructive role in the DDA negotiations in an effo rt to promote further liberalization and strengthen 
the rules and disciplines of the WTO system. It has so far tabled over 140 proposals and submissions. 
Korea will continue to make efforts to help  move the multilateral trade agenda forward. 
3. In parallel with these efforts for trade libera lization on the multilateral front, Korea has been 
making efforts to nurture more future-oriented and mutu ally beneficial bilateral trade relations with its 
trading partners. As part of these efforts, Korea h as been engaged in several WTO-consistent regional 
free trade agreements (FTAs). To Korea, the objec tive of pursuing FTAs is to manage its bilateral 
trade relations in a more systematic manner and secure better access in trade and investment to 
foreign markets which may be unavailable under the mu ltilateral setting. Moreover, it is expected that 
FTAs will prompt the domestic restructuring of l ess competitive sectors and thus raise the level of 
efficiency within the economy. In this light, Korea believes that these FTAs will complement, not 
replace, efforts for multilateral trade liberalization. 
4. Apart from the DDA negotiations and FTAs, Ko rea is also participating in regional 
cooperation mechanisms, including the Asia-Pacif ic Economic Cooperation (APEC), the Asia-Europe 
Meeting (ASEM), and the ASEAN+3 processes. In 2005, Korea was the host economy of APEC, 
taking a leading role, inter alia , in issuing a political statement of support for the DDA negotiations 
on the occasion of the Economic Leaders’ Meeting,  held in November 2005. Through these regional 
cooperation mechanisms, Korea continues to cont ribute to making progress in achieving free and 
open trade and investment regimes in these regions  and thus to moving toward global trade 
liberalization. 
II. ECONOMIC DEVELOPMENTS:  2004-2008 
5. The Korean economy gradually rebounded from the 2003 recession caused by the stagnation 
of domestic demand mainly due to household inde btedness. In particular, Korea overcame the 
liquidity and solvency problems of credit card co mpanies following the sharp rise in the delinquency 
rate from the credit boom to the household sector.  
6. Aside from addressing the problems of the credit card companies and household indebtedness 
by restructuring the credit card companies and establishing "bad banks" for delinquent borrowers, the recovery of the global economy also helped the Ko rean economy to bounce back on track. The stable 
and favourable external economic environment that l asted until the first half of 2007 contributed to 
the strong performance of Korea’s exports. In additi on, continuous domestic reforms have created an 
efficient and strong platform for the sust ainable growth of the Korean economy.  WT/TPR/G/204 Trade Policy Review 
Page 6 
 
 
 7. However, the global economic downturn since th e latter half of 2007, which was triggered by 
the subprime mortgage loan problems in the United States, produced a gloomy outlook on the Korean economy. Despite the adverse impact of external  shocks, the Korean government places growth and 
employment as top priorities, and aims to accompli sh continuous growth and to create more jobs 
through uninterrupted domestic reforms. 
(1) D
OMESTIC ECONOMIC SITUATION  
8. Korea underwent a recession in 2003 mainly due to a drop in domestic consumption as 
households focused on improving their financial balan ce sheets in the wake of a sharp rise in debt. 
Thanks to the pick-up in domestic consumption, the real GDP growth has gradually come back on 
track to its potential growth rate of around 4. 5% since 2004. A short setback in 2005 was due to 
sluggish overseas demand, yielding a short-term de celeration of exports. The recovery of domestic 
consumption was mainly due to the measures take n by the Korean government following the collapse 
of the credit card bubble, such as the establishment of "bad banks" to purchase delinquent loans and 
the revision of the framework for personal bankrupt cy. The government also restructured credit card 
companies and investment trust companies. 
9. Sluggish fixed investments may also be attri buted to the relatively gradual recovery of 
domestic demand. During the period under review, the gr oss rate of fixed capital formation has been 
stagnant between 2 and 4%, compared with 6.6% in 2002. This decline is largely due to the reluctance 
on the part of corporations to increase their leve l of fixed investment given the uncertainty of the 
environment regarding their growth prospects. It is also, in part, due to the efforts by large firms to 
reduce debt and thereby improve their balance sheets. 
10. Much of the growth since 2004 has been dr iven by exports. Strong external demand, 
particularly from China, has boosted Korea’s expor ts and contributed to economic recovery, despite 
the appreciation of the Korean won relative to the dollar. The increase in exports, however, combined 
with sluggish domestic demand, has exacerbated the problem of imbalances in the domestic economy. 
In particular, the gap in profitability between large and small firms has widened. 
Table 1 
Major Korean Economic Indicators (2002-2007) 
(%, won) 
 GDP 
Growth Rate Private 
Consumption 
(% change) Gross Fixed     
Capital Formation 
(% change) Unemployment 
Rate Consumer 
Price 
(% change) Exchange Rate 
(KRW/USD,   end 
of period) 
2002 7.0 7.9 6.6 3.3 2.8 1200.4 
2003 3.1 -1.2 4.0 3.6 3.5 1197.8 
2004 4.7 -0.3 2.1 3.7 3.6 1043.8 
2005 4.2 3.6 2.4 3.7 2.8 1013.0 
2006 5.1 4.5 3.6 3.5 2.2   929.6 
2007 5.0 4.5 4.0 3.2 2.5   938.2 
Source:  Korea National Statistical Office; Bank of Korea. Republic of Korea WT/TPR/G/204 
 Page 7 
 
 
 11. Inflation has been modest during most of the period, running within or slightly below the 
lower bound of the target range set by the Bank of Korea (BOK).1  However, consumer prices have 
accelerated their upward trend since October 2007, mainly due to cost factors, such as high oil prices. 
The overall employment situation has been stab le during the period under review, with the 
unemployment rate falling slightly from 3.7% in 2004  to 3.2% in 2007. Meanwh ile, the exchange rate 
relative to the dollar appreciated by about 10% fro m 2004 to 2007, reflecting the sound rebound of the 
domestic economy.   
12. In 2008, in the aftermath of the sub-prime mo rtgage loan problems in the United States, 
Korea’s economic outlook is more uncertain than ever. The surge in prices of oil and other raw 
materials will also have an adverse impact on Korea’s economy by weakening domestic demand. 
Meanwhile, exports are expected to maintain a robus t growth due to greater quality competitiveness 
and the diversification of major export items and markets. Although exports remain buoyant, Korea’s 
economic growth rate in 2008 is forecast to be lowe r than 5% in 2007. In this regard, the Korean 
government places high priority on growth and job crea tion, and aims to increase the potential growth 
rate through continuous domestic reforms. 
(2) EXTERNAL TRADE AND INVESTMENT  
13. The favourable external environment since the last review has brought about a steady increase 
in exports of Korean goods. These swelled by 31%  from the previous year to US$253.8 billion in 
2004, and increased by 12, 14.4 and 14.1% in the following three years, respectively. Imports to 
Korea followed a similar pattern due to the recovery  of the domestic economy. In 2004, imports rose 
by 25.5% to US$224.5 billion compared with the pr evious year. Imports increased by 18.4% to 
US$309.4 billion in 2006 and by 15. 3% to US$356.8 billion in 2007. This increase was due to surges 
in the prices of oil and other raw materials. 
Table 2 
Korea Trade Statistics (US$ million) 
 Exports  Growth Rate (%)  Imports  Growth Rate (%)  Trade Balance  Current Account  
2004 253,845 31.0 224,463 25.5 29,382 28,174 
2005 284,419 12.0 261,238 16.4 23,180 14,981 
2006 325,465 14.4 309,383 18.4 16,082   5,385 
2007 371,489 14.1 356,846 15.3 14,643   5,954 
Source: Korea International Trade Association; Bank of Korea. 
14. Over the period under review, the current acc ount has maintained a surplus. From 2004 to 
2007, however, it shrank from US$28.1 billion to US$5.9 billion. Trade surplus al so decreased by half 
from US$29.4 billion in 2004 to  US$14.6 billion in 2007. In additi on to the heightened prices of oil 
and other raw materials, which have eroded trade su rplus, rapidly rising e xpenses, such as overseas 
travel expenses, have resulted in a decrease in the current account surplus.  
15. Korea’s major export items have been semi conductors, automobiles, mobile phones, and 
vessel parts/ocean structures. Since 2004, the sh are of automobiles and wireless communication 
devices in the total value of Korea’s exports has decreased, while the share of vessel parts/ocean 
                                                      
1 Current inflation target has been set for the period 2007-2009 as a range of 3.0±0.5% in terms of the 
3-year average of annual consumer price inflation. WT/TPR/G/204 Trade Policy Review 
Page 8 
 
 
 structures, petroleum products, and flat panel disp lays and sensors has increased. Meanwhile, major 
import items have been raw materials, including crude oil and natural gas, and semiconductors. The 
share of crude oil in the total value of imports con tinues to be the largest part, and it increased even 
more, from 13.3% in 2004 to 16.9%, in 2007. 
Table 3 
Korea’s Trade of Major Products 
(US$ million, %) 
 Export   Import 
  2004 2005 2006 2007  2004 2005 2006 2007 
Semiconductors 26,516 
(10.4) 29,986 
(10.5) 37,360
(11.5) 39,045
(10.5) Crude oil 29,917
(13.3) 42,606 
(16.3) 55,865 
(18.1) 60,324
(16.9)
Automobiles 26,577 
(10.5) 29,506 
(10.4) 32,922
(10.1) 37,284
(10.0) Semiconductors 23,618
(10.5) 25,133 
(9.6) 28,043 
(9.1) 0,817
(8.6)
Wireless Communication Devices 26,223 
(10.3) 27,495 
(9.7) 27,018
(8.3) 30,458
(8.2) Natural Gas 6,552
(2.9) 8,646 
(3.3) 11,925 
(3.9) 12,653
(3.5)
Vessel Parts/ Ocean Structures 15,657 
(6.2) 17,727 
(6.2) 22,123
(6.8) 27,777
(7.5) Petroleum Products 6,848
(3.1) 7,783 
(3.0) 9,559 
(3.1) 11,969
(3.4)
Petroleum Products 10,203 
(4.0) 15,366 
(5.4) 20,404
(6.3) 23,966
(6.5) Iron Boards 5,709
(2.5) 7,498 
(2.9) 7,928 
(2.6) 10,150
(2.8)
Flat panel display  & sensor 1,315 
(0.5) 4,783 
(1.7) 12,388
(3.8) 16,929
(4.6) Computers 6,339
(2.8) 7,797 
(3.0) 9,035 
(2.9) 9,896
(2.8)
Notes:  Share in total exports or imports is in parentheses. 
Source: Korea International Trade Association. 
Table 4 
Geographical Distribution of Korea’s Trade 
(US$ million) 
  Exports Imports 
  2004 2005 2006 2007 2004 2005 2006 2007
Total 253,845  284,419  325,465 371,489 224,463 261,238  309,383  356,846 
Asia 129,525  146,914  168,447 188,790 111,247 126,033  146,049  170,549 
China 49,763  61,915 69,459 81,985 29,585 38,648 48,557 63,028
Japan 21,701 24,027 26,534 26,370 46,144 48,403 51,926 56,250
North America 46,232  44,789  46,804 49,273 30,971 33,190  36,745  40,474 
U.S. 42,849  41,343  43,184 45,766 28,783 30,586  33,654  37,219 
Middle East 11,006  12,241  14,463 19,721 33,665 47,395  62,531  67,541 
Europe 44,593  52,853  60,282 71,198 30,535 33,610  37,410  47,987 
Latin America 11,563  14,987  20,387 25,567 6,651 7,017  9,729  11,321 
Africa 5,633  6,203  7,730 8,257 2,847 2,946  4,372  4,317 
Oceania 4,924 6,018  6,781 7,983 8,498 10,971 12,436  14,592 
Source: Korea International Trade Association. 
16. Korea’s exports to major destinations – China, Europe and the United States – have increased 
steadily after 2001. Since 2003, Korea’s exports to  China have accelerated, surpassing both Europe Republic of Korea WT/TPR/G/204 
 Page 9 
 
 
 and the United States as the largest export des tination for Korean goods. As for imports, goods from 
Japan, China, Europe, and the United States ha ve all recorded steady increases since 2004. In 
particular, the Chinese share of imports to Kor ea surpassed that of Japan in 2007, being second only 
to that of the Middle East from which imports comprise mostly oil and natural gas. 
17. Major Korean services exports and imports have been in the areas of transportation, business 
services, and travel. In particular, the share of tr ansportation in total exports is more than half, 
representing the importance of transportation services  in Korea’s services exports. While the share of 
each major service in total exports and imports h as been steady over the period under review, total 
services imports have increased more than total ser vices exports, resulting in a services deficit. The 
deficit in services trade has remained over US $10 billion since 2005 and has continued to grow, 
reaching US$20.6 billion in 2007.  
Table 5 
Korea’s Trade of Major Services 
(US$ million, %) 
  Exports (Credit)  Imports (Debit) 
  2004 2005 2006 2007  2004 2005 2006 2007
Total 41,882 45,129 49,891 63,034 Total 49,928 58,788 68,852 83,609
Transportation 22,529
(53.8) 23,877 
(52.9) 25,807
(51.7) 33,767
(53.6) Transportation 17,655
(35.4) 20,144 
(34.3) 23,133 
(33.6) 29,874
(35.7)
Business 
Services 8,125
(19.4) 9,422 
(20.9) 10,532
(21.1) 14,124
(22.4) Business 
Services 13,163
(26.4) 15,538 
(26.4) 17,705 
(25.7) 22,508
(26.9)
Travel 6,069
(14.5) 5,806 
(12.9) 5,788
(11.6) 5,797
(9.2) Travel 12,350
(24.7) 15,406 
(26.2) 18,851 
(27.4) 20,890
(25.0)
Notes: Share in total exports or imports is in parentheses. 
Source :  Bank of Korea. 
18. In the wake of the 1997 financial crisis, the Korean government undertook reforms to attract 
foreign direct investment (FDI) inflows and em barked on various policy measures to enhance the 
environment for FDI inflows.  Combined with  increased opportunities in cross-border M&As 
resulting from corporate and financial restructuring, these efforts resulted in a surge of FDI inflows. 
The US$68.5 billion in actual inflows since 1998 is more than quadruple the amount received during 
the previous 40 years. This surge increased the ra tio of the stock of FDI to GDP from 2% to 8%. 
19. Since 2004, Korea has experienced a slight dec line in foreign direct investment. However, 
annual FDI inflow has remained high at levels over US$10 billion (measured on a notification basis). 
The Korean government has take n active measures such as, inter alia , cutting corporate taxes and 
reducing the trademark evaluation period, to stim ulate FDI through deregula tion and by enhancing 
vehicles for investment promotion. According to the OECD, Korea’s FDI regulatory restrictiveness 
index is lower than the average OECD level, de monstrating a higher level of openness in the FDI 
sector. Deregulation remains at the top of the Kor ean government’s agenda. In 2008, the Presidential 
Council on National Competitiveness (PCNC) was la unched. Its main objective is to create a 
business-friendly environment by eliminating unnecessary obstacles that hinder investment.  
20. Furthermore, the government has made consider able efforts to solicit foreign investors’ 
opinions and incorporate their suggestions into its policies.2 The Invest Korea Plaza and the G4F 
                                                      
2 For example, though not a legal obligation, the Ko rean government makes effo rts to review opinions 
on its policies from foreign chambers of commerce (e.g. AMCHAM, EUCCK, SJC) on a yearly basis. Invest WT/TPR/G/204 Trade Policy Review 
Page 10 
 
 
 website (www.g4f.go.kr) which we re set up in 2006 are good examples of the government’s efforts to 
provide one-stop administrative services to foreign investors. The government is also working to 
establish a more business-friendly environment and bette r living conditions for foreigners, particularly 
in the areas of education and medical services. To this end, the government implemented a five-year 
plan, which began in 2004 and ended in early 2008,  and has embarked on a new, improved three-year 
plan in 2008. The plans include measures for immi gration procedures, resi dential facilities and access 
to high quality schools and medical facilities.  Moreover, ensuring economic growth by attracting 
more FDI inflows is one of the top priorities fo r the Korean government. In this regard, it will 
strengthen its efforts to achieve this goal by im proving the overall investment environment through a 
combination of policies involving tax cuts, dere gulation, and more organized support for businesses. 
21. The Korean government has also been fac ilitating outward FDI, in recognition of its 
importance as a means of raising the competitivene ss of domestic companies. As a result, Korea’s 
outbound FDI has rapidly increased since 2004, driven mostly by a rise in FDI outflows to China. In particular, FDI outflows surged by a factor of tw o in 2007, with services taking up more than the 
majority share of the total FDI outflows, afte r the government undertook deregulation on outward 
FDI. For example, the procedures for establishing overseas offices of domestic financial institutions 
were simplified and the related crite ria were relaxed in April 2007. 
Table 6 
Foreign Direct Investment in Korea a nd Outward Investment by Korea:  1990-2007 
(US$ million) 
 1990 1995 2000 2004 2005 2006 2007
Total 803 1,970 15,256 12,792 11,566 11,243 10,514
Manufacturing 520 1,041 6,877 6,217 3,078 4,246 2,692
Servicesa 282 927 8,375 6,574 8,484 6,992 7,819
U.S. 318 665 2,921 4,718 2,690 1,705   2,341
Japan 236 425 2,452 2,263 1,881 2,111   990Inward 
FDIb 
EU 188 461 4,437 3,009 4,781 4,971   4,332
Total 1,066 3,208 5,110 6,137 6,792 10,958 20,352
Manufacturing 485 2,042 1,639 3,487 3,717 5,459 7,616
Servicesa 438 1,153 3,392 2,350 2,589 4,055 10,990
China 16 841 722 2,328 2,772 3,346  5,226 
U.S. 360 570 1,391 1,404 1,257  1,794 3,407 Outward 
FDIb 
Vietnam 0 183 71 178 310  588  1,270 
Notes:  a. Including electricity, ga s, water supply, and construction. 
            b.  Inward FDI on a notification basis.  Outward FDI on an investment amount basis. 
Source :  Ministry of Knowledge Economy; Export-Import Bank of Korea. 
                                                                                                                                                                     
Korea operates an advisory council, composed of approximately 30 foreign investors, to collect evaluations of 
the regulation and foreign investment policies on a biannual basis. Republic of Korea WT/TPR/G/204 
 Page 11 
 
 
 (3) DOMESTIC REFORMS  
22. Following up on the successful structural reform s since the 1997 financial crisis, the Korean 
government continues to undertake sectoral reform s. The government’s ongoing efforts in the 
financial sector include measures to improve situ ations in household credit markets and measures to 
restructure the asset management industry. Regarding corporate-sector reforms, the Korean 
government continues to make efforts to enhan ce transparency and accountability in corporate 
governance. Bearing in mind the role of competiti on policies in promoting further economic growth 
and transforming Korea into an advanced economy, the Korean government is also consistently 
pursuing strengthened competition policies.    
Financial Sector 
23. Since the last review, the reform process in  the financial sector has focused on the non-
banking industry, including the credit card industry, since much of the reform in the banking industry had already been accomplished. In particular, the credit card industry has been going through extensive restructuring since 2003, either by merg ing with parent banks or by recapitalization. For 
instance, one of the largest credit card compan ies, LG Card, received a 6.1 trillion won credit-
restructuring package from creditor banks and turned profitable. In order to resolve the problems of 
delinquent borrowers, "bad banks" we re established in 2004, for which qualifying debtors were given 
up to eight years to repay their loans without in terest. The Individual Debt or Rehabilitation Act was 
also introduced in 2004 to provide relief to debt ors through court mediation without requiring the 
debtor to declare bankruptcy. The law was combined  into the Debtor Rehabilitation and Bankruptcy 
Act in 2005. 
24. In addition, restructuring in the asset manage ment industry has continued, with a private 
equity fund (PEF) law introduced in 2004 in order to help PEFs engage in restructuring through 
M&As. Moreover, the privatization of the three larg est investment trust companies was completed in 
2005. To further upgrade the domestic capital market through deregulation and the lowering of entry barriers, the Financial Investment Services and Ca pital Market Act was enacted and will enter into 
force in February 2009. This act integrates six ex isting securities-related laws  and allows financial 
institutions to operate six financial investment bus inesses such as investment trading, investment 
brokerage, collective investment, trust, discretionary  investment and investment advisory. It also 
introduces a negative system in defining financial investment products, in which all financial 
investment products are allowed unless they are speci fically prohibited under la ws and regulations.   
Corporate Sector 
25. Since the 1997 financial crisis, the Korean  government has undertaken comprehensive 
corporate restructuring. As a result, the debt-to-e quity ratio has fallen from nearly 400% before the 
1997 crisis to around 100% in 2004. Even though corporate governance has been significantly improved since the 1997 crisis, Korea has taken fu rther steps to upgrade corporate governance. In 
2005, class action suits in securities-related cases agai nst large firms with assets of at least 2 trillion 
won were allowed, and this perm ission was extended to cover all lis ted firms in 2007. In addition, 
amendments to the Commercial Act were proposed in 2007 to increase the accountability of managers 
and controlling shareholders to minority share holders. The proposed amendments include, among 
other things, a prohibition against corporate directors using their corporate authority for their own or a third party’s benefit. WT/TPR/G/204 Trade Policy Review 
Page 12 
 
 
 Labor Sector 
26. In an effort to harmonize labor market flexib ility and protection for workers, new legislation 
on industrial relations reform was introduced in 2006. The new scheme began to impose non-
compliance charges in case of failure to comply  with a remedial order, which enhances the 
effectiveness of a remedy for a breach of rights.  The penal provision punishing unfair dismissal was 
removed and the requirement for specifying workin g conditions in writing was expanded. The Korean 
government reduced the period of advance notice in  case of dismissal for managerial reasons, and 
abolished the compulsory arbitration system and th e reporting requirement for third-party assistance. 
In addition to the scheme, the Korean government has made an effort to prevent abuses of, and 
discrimination against, non-regular workers, to support development of their vocational skills, to 
reinforce employment advisory ser vices to enable them to obtain regular employee status, and to 
expand the social safety net.  
Competition Policy 
27. With the financial and corporate restructurings  since the 1997 crisis almost completed and the 
household credit crunch afterwards nearly resolved , strengthening competition policies as a tool of 
market reform has become more important. In  2006, the Korea Fair Trade Commission (KFTC) 
completed the "Three-year Roadmap for Market Re form," and upgraded fair-trade institutions. To 
propose a direction for market reform after the Roadmap, the KFTC created a "Task Force for 
Advancement of Market Economy" and discussed measu res for the improvement of the overall fair 
trade policy. These measures were reflected in the Amendment Bill of the Monopoly Regulation and 
Fair Trade Act (MRFTA) in 2007. It includes, among other things, revision of the merger notification 
process, review criteria and subjects of sanction, as well as the introduction of an arbitration system, 
under which disputes on unfair trade practices ar e resolved through agreements between the 
concerned parties, so that efficacy of damage re dress and efficiency of case handling can be boosted. 
Currently, the KFTC is pursuing a revision of the law for the introduction of a consent order system, 
which will allow fast and efficient restoration of undermined competition. In addition, the 
Commission enacted the "Guidelines for Review of  Cartels involving Administrative Guidance" in 
2007 for greater consistency in law enforcement and gr eater predictability on the part of enterprisers. 
Regulatory Reform 
28. Another key element in the shift to more mark et-oriented reform has been the implementation 
of regulatory reform. The Regulatory Reform Committee (RRC) is a comprehensive regulatory 
reform coordination body with wide ranging resp onsibilities. These include setting annual reform 
guidance, monitoring evaluation of the regulatory performance by ministries, and reviewing Regulatory Impact Analysis documents. For three years from 2004 to 2007, the Regulatory Reform 
Task Force (RRTF) complemented the RRC. These bodi es are composed of government officials and 
representatives of the private sector, including representatives of foreign business organizations. The RRTF focused on bundled regulations that greatly  impact the economy in 64 areas. The Korean 
government not only handles complaints and regula tory proposals from business, but also provides a 
one-stop solution for clients.  
29. Transparency of the regula tory process has been enhan ced. Consultation with local 
governments, business groups and foreign business gr oups has expanded. In addition, to reduce 
administrative burdens, Korea has continued to de velop electronic services, such as Government for 
Citizen (G4C), Government for Business (G4B) and Government for Foreigners (G4F), designed to 
provide one-stop e-government services. Furthe rmore, the Korean government enacted the Republic of Korea WT/TPR/G/204 
 Page 13 
 
 
 Administrative Investigation Act in 2007, to pr ohibit arbitrary and overlapping administrative 
investigations. 
30. The new administration has placed regulatory reform as top priority on its national agenda. As 
planned, the Korean government will continue to upgr ade the regulatory system to meet the principles 
of market economy and global standards.  The Ko rean government is committed to providing a world-
class business environment through deregulation, pa rticularly focusing on regulations with major 
socio-economic impacts. 
III. TRADE POLICY DEVELOPMENTS:  2004-2008 
(1) KOREA AND THE WTO 
(a) Implementation of WTO Commitments 
31. Since the inception of the WTO, Korea has faithfully implemented its commitments and 
obligations under the WTO. Korea has been successf ul in bringing its laws and regulations into 
conformity with WTO norms.  In some areas, Kor ea has even undertaken volun tary liberalization and 
reform measures beyond the level of its commitments.  
Trade in Goods 
32. Korea adopted the 2007 version of the Harmonized System of Tariff Classification (HS) on 
1 January 2007; the new customs tariff consists of  11,729 ten-digit tariff lines as of 2008. A total of 
90.8% of all tariff lines are bound and the simple av erage bound tariff rate fell slightly from 17.2% in 
2004 to 17% in 2007. A further decrease should take place in 2009 when all Uruguay Round commitments are to be fully implemented. The aver age applied tariff rate in 2007 also fell slightly 
from 12.8% in 2004 and to 12.6% in 2007 and is lowe r than the average bound tariff rate. With a view 
to providing substantial market access for prod ucts from least-developed countries(LDCs), Korea 
currently provides LDCs with unilateral (non-reci procal) duty-free and quota-free preference for 75% 
of its national tariff lines. 
33. The WTO Members have agreed to extend th e special treatment for the Korean rice 
importation regime based on Annex 5 of the Uruguay Round Agreement on Agriculture through an 
enlarged minimum market access (MMA) agreem ent for the period of 2005-2014. Under the 
agreement, the minimum-access volume will almost double in size by 2014; from 225,575 tons in 2005 to 408,700 tons in 20 14. The tariff within the quota will remain at 5%.  
34. Korea revised its Grain Management Act in March 2005 to replace the government-
purchasing program with a Public Storage System for Emergency (PSSE). The PSSE was introduced 
as a means to ensure food security. Under the syst em, the government buys rice at market prices 
during harvest and then sells rice during non-harvest peri ods at market prices, so as to prevent  market 
distortion and be in conformity with WTO rules. 
35. Korea recognizes that standardization is an essential element to advance regulatory systems 
and to facilitate fair trade. In the light of this  recognition, Korea is making continuous efforts to 
harmonize Korean Industrial Standards (KSs) with international standards and to unify standards 
among ministries pursuant to the Industrial Standard ization Act, which was amended in May 2007 
and the National Standard Act. Moreover, the sec ond five-year National Standard Plan (2006-2010) 
was established in April 2006, with an emphasi s on advancing the national standards system, 
fortifying the standardization infrastructure, bu ilding capacity for international standardization WT/TPR/G/204 Trade Policy Review 
Page 14 
 
 
 activities, and facilitating the standardization of pr ivate sectors. As of the end of 2007, Korea had 
harmonized 13,957 of 22,760 KSs with relevant IS O/IEC standards, which corresponds to 61.3% of 
the total number of KSs.  
36. Korea has not been an active user of antidum ping measures. During the period under review, 
21 antidumping duties were imposed and 4 price und ertakings were accepted. Currently, antidumping 
measures are in force for 23 cases, 13 products and 10 countries. No countervailing duty or safeguard measure has been imposed since the last review. 
Table 7 
Number of Definitive Anti-Dumping Measures, 2004-2007 
 2004 2005 2006 2007 
Antidumping Duties 10 3 8 0 
Price Undertakings 1 1 0 2 
Source:  Korea Trade Commission. 
37. As a party to the WTO Government Procurem ent Agreement (GPA), Korea continues to 
improve its public procurement system with a vi ew to ensuring more open, transparent and non-
discriminatory procurement. Efforts have been  made to further update the Korea ON-line E-
Procurement System (KONEPS) to render it more stable and user-friendly.3 The use of KONEPS has 
been increasing in recent years. Government purchases via KONEPS accounted for approximately 
52% of Korea’s total government procurement as of 2006. With respect to small and medium enterprises (SMEs) policies, Korea has abolishe d the single tendering policy for SME cooperatives 
and recently adopted a policy of competitive te ndering among SMEs in order to enhance the 
transparency and competitiveness of the procurem ent market. As previously established, single 
tendering procurement and set-asides for SMEs stipulat ed in the relevant laws remain free from the 
WTO GPA coverage. 
Intellectual Property Rights 
38. Korea’s intellectual property rights (IPR) laws and regulations are fully compliant with the 
WTO TRIPS Agreement. In an effort to further st rengthen the protection of IPR, Korea has amended 
its Copyright Law to fully implement the WIPO  Performances and Phonograms Treaty (WPPT) and 
the International Convention for the Protecti on of Performers, Producers of Phonograms and 
Broadcasting Organizations (Rome Convention), and is currently going through domestic procedures 
to accede to those treaties by the end of 2008. 
Dispute Settlement 
39. Between 2004 and 2008 Korea has been  involved in eight dispute cases: as a complainant in 
six cases, and as a respondent in two cases. During the period under review, four Panel reports and 
two Appellate Body reports were adopted in four of the six complainant cases. In another complainant 
case, only a consultation request was made, and the dispute was resolved. In the remaining 
complainant case, the Panel concluded its work by no ting that a mutually agreed-upon solution to this 
dispute had been reached between the parties. In  one respondent case, Measures Affecting Trade in 
Commercial Vessels, a Panel report was a dopted, and Korea implemented the DSB’s 
                                                     
 
3 Korea’s electronic government procurement system was originally named the Government e-
Procurement System (GePS), and was renamed as KONEPS in July 2006. Republic of Korea WT/TPR/G/204 
 Page 15 
 
 
 recommendation. In another respondent case, a Pane l report and an Article 21.5 Panel report were 
adopted. 
Technical Assistance and Capacity Building 
40. Mindful of the importance of technical assi stance and capacity building activities for the 
promotion of the development dimensions of the multilateral trading system, Korea is committed to 
devoting as much resources as possible. From 2004 to 2007, Korea contributed a total of US$950,000 to support the WTO’s technical assistance activities.  Between 2004 and 2007, a total of 250 people, 
mainly governmental officials, were invited from developing countries to the training programs 
related to the WTO agreements. Forty-six train ees will be invited in 2008. The total amount of 
Korea’s official development assistance (ODA) increased from US$423 million in 2004 to 
US$672 million in 2007. In additi on, Korea provides an increasingly broad range of technical 
assistance programs to developing countries throug h the Korea International Cooperation Agency 
(KOICA), the Korea Development Institute (KDI) and other public agencies.  
(b) DDA Negotiations 
41. Since the launch of the DDA, Korea has played  an active and constructive role in the 
negotiations, and remains firmly committed to its successful conclusion. Korea fully recognizes the 
importance of trade and development, in light  of its own developmen tal experiences through 
international trade. Korea shares the belief th at open markets, non-discrimination and global 
competition in international trade are co nducive to global and national welfare.  
42. Achieving a higher level of market access th rough the DDA is a goal of utmost importance 
for Korea. Korea supports ambitious approaches to  the market access negotiations, and fully engages 
in all negotiating theatres.  Furthermore, since substa ntial expansion of the global market can also be 
achieved through participation of a large number of countries, Korea believes that appropriate 
flexibilities should be provided within the negotiati ng framework in order to take into account the 
specific concerns and sensitivities of each member country. From Korea’s perspective, this will 
encourage deeper engagement in the negotiations from all member countries. 
43. Korea has also worked, together with other like-minded Members, on minimizing transaction 
costs that may occur from market access issues and non-tariff barri ers. It believes that an improved 
trade environment in terms of pr edictability and transparency will accelerate further increase not only 
in returns to business but al so in consumer welfare. 
Agriculture 
44. Korea believes that a substantial reduction in  trade-distorting domestic support, as well as 
substantial improvements in market access will be ac hieved through a tiered reduction formula. Korea 
also believes that the full modalities should take into account Members’ individual agricultural 
realities duly and fairly, and reflect the concerns an d interests of both exporte rs and importers in an 
equitable and balanced manner. In particular, considering the different tariff structures among 
Members and vulnerabilities – especially in food secu rity, a sufficient level of flexibility should be 
given to Members.  
Market Access for Non-Agricultural Products  
45. Korea believes an ambitious outcome in the NAM A negotiations in this Round could deliver 
the most commercially meaningful benefits to all WTO Members. Korea supported a Swiss formula WT/TPR/G/204 Trade Policy Review 
Page 16 
 
 
 with dual coefficients on a line-by-line basis.  Kor ea is participating in discussions of electronics and 
electrical products sectoral initiatives as a co-sponsor. W ith regard to non-tariff barriers (NTBs), in 
2004, Korea submitted a proposal related to the vertical approach for addressing NTBs of the 
electronics industry. In 2005, Korea led plurilateral discussions on NTBs of the electronics industry.  
Services  
46. Korea has been focusing on the further liberali zation of key infrastructure services such as 
maritime transportation, construc tion, telecommunications, distributions, and financial services.  
Korea views the liberalization of these key infrastru cture services as beneficial not only to services 
themselves but to economic development and over all economic competitiveness. Meanwhile, Korea 
has also tried to respond to the interests of other Members including those of developing countries. In 
May 2005, Korea tabled the first revised offer, wh ich adds improvements, in the areas of entry and 
temporary stay of natural persons, Mode 4, among others, to its ambitious initial offer. 
Rules 
47. Concerning rules on antidumping measures, Korea believes that one of the urgent tasks for 
negotiators is finding ways to prevent the misu se or overuse of antidumping measures. Korea has 
strongly argued for the prohibition of zeroing a ltogether in dumping margin calculations.  Concerning 
the disciplines on fisheries subsidies, while activel y engaging in the talks so as to preserve the 
sustainability of fish resources, Korea cautions against unnecessary adverse effects the prohibition of 
subsidies may bring on the fisheries sector, partic ularly to socially and economically vulnerable 
groups. In this context, Korea stresses the impor tance of properly working fisheries management 
systems that would help avoid negative effects of fisheries subsidies on fish resources. 
TRIPS  
48. While Korea supports the strengthening of inte llectual property rights protection, it prefers a 
pragmatic approach when it comes to negotiation on the establishment of a multilateral system of 
notification and registration of geographical indicati ons for wines and spirits. Korea believes that any 
system to be established should not impose undue fi nancial and administrative burdens on Members.  
Trade and Environment 
49. Korea recognizes that the relationship between  WTO rules and multilateral environmental 
agreements (MEAs) needs to be defined in orde r to enhance the mutual supportiveness of trade and 
environment. Korea further recognizes the impor tance of establishing procedures for information 
exchange between MEA Secretariats and the re levant WTO committees, and the criteria for the 
granting of observer status. Korea continues to belie ve that liberalization of environmental goods and 
services could result in substantial benefits to Members and will commit to working toward a positive 
outcome in the negotiations.  
Trade Facilitation 
50. Korea supports the introduction of a multilateral rule on trade facilitation, as it believes that 
trade facilitation benefits business communities not only by cutting administrative costs and waiting 
times, but also by improving the predictability, transparency and competitiveness of business. Korea 
has actively engaged in the negotiations by s ubmitting and co-sponsoring proposals on many specific 
measures of trade facilitation, inter alia , in the areas of single-window, release time of goods, and risk 
management. Korea also considers special and di fferentiated treatment, technical assistance, and Republic of Korea WT/TPR/G/204 
 Page 17 
 
 
 capacity building for developing and least-develope d countries to be importa nt and supports the 
current horizontal approach to these areas.  
(2) BILATERAL TRADE RELATIONS  
(a) China 
51. China has been Korea’s largest trading partner since 2003. Bilateral trade with China has 
increased at an annual rate of 22.3% over the last  four years, reaching US$145 billion in 2007. From 
2004 to 2007, Korea’s exports to  China increased by 64.7% to US$82 billion and its imports from 
China more than doubled to US$63 billion. Since 20 02, China has replaced the United States as the 
largest investment destination fo r Korea’s FDI. In 2007, Korea’s FDI into China was US$5.2 billion 
and its cumulative amount reached US$22.5 billion. China’s FDI into Korea was only US$40 million 
in 2006, but it increased to US$385 million in 2007. 
(b) The European Union  
52. In 2007, the volume of bilateral trade be tween Korea and the EU was US$92.8 billion, 
making the EU Korea’s second-largest trading partne r. Korea’s exports to the EU more than doubled 
from US$24.8 billion in 2003 to US$55.9 billion in 2007. Korea’s imports from the EU increased by 
90% during the same period to US$3 6.8 billion. In terms of FDI, th e EU has recently surpassed the 
United States and become the largest foreign invest or in Korea. In 2007, the EU’s FDI into Korea 
reached US$4.3 billion, a 12% decrease from 2006. Korea’s FDI into the EU was US$2.6 billion in 
2007, a 150% increase from 2006. 
(c) The United States  
53. The United States is currently Korea’s third-la rgest trading partner after China and the EU, 
with bilateral trade in 2007 valued at approximate ly US$83 billion. Bilateral trade between the two 
countries increased by 40% over the last five year s. Korea’s exports to the United States reached 
US$45.7 billion and its imports from the United States US$37.2 billion in 2007. It has also been an 
important foreign investor in Korea. FDI from th e United States into Korea was US$2.3 billion in 
2007, a 37% increase from 2006. Korea’s FDI into the United States was US$3.4 billion in 2007, a 
90% increase from 2006.  
(d) Japan 
54. Korea and Japan have, for many years, mainta ined a close relationship as important trading 
partners. Japan is currently Korea’s fourth-largest trading partner. Korea’s exports to Japan decreased 
slightly, by 0.6% to US$26.4 billion in 2007, wh ile its imports from Japan increased by 8% to 
US$56.3 billion. Korea’s trade deficit with Japan has grown by 56% over the past five years, reaching 
US$29.9 billion in 2007. Korea’s FDI into Japan  was only US$246 million in 2006 but increased by 
110% in 2007 to US$518 million. Japan’s FDI into  Korea decreased by 53% to US$990 million in 
2007. 
(e) ASEAN and Others  
55. In 2007, Korea’s exports and imports w ith ASEAN amounted to US$38.7 billion and 
US$33.1 billion, respectively. From 2006 to 2007, Korea’s exports to ASEAN increased by 20.8% 
while Korea’s imports from ASEAN increased by 11.3%.  With regard to bilateral investment flows, 
Korea’s FDI into ASEAN showed an upward tre nd between 2004 and 2007. In particular, Korea’s WT/TPR/G/204 Trade Policy Review 
Page 18 
 
 
 FDI into ASEAN increased  sharply from US$677 million in 2005 to US$1.4 billion in 2006. In 2007, 
Korea’s FDI into ASEAN reached US$3 billi on while ASEAN’s FDI into Korea was only 
US$595 million.  
56. Korea values other regions as important trade partners, and continues to make efforts to 
further expand trading relationships with newly em erging markets such as Mexico, Latin America, 
Russia and CIS, South Asia, Middle East and Africa. During the period under review, Korea has 
conducted several joint studies and launched FTA negotiations  to expand trade with these regions as 
they are gaining importance as markets for exports and sources of imports.  
(3) FREE TRADE AGREEMENTS  
57. Since the last trade policy review, Korea has actively engaged in FTA negotiations. It has 
pursued comprehensive FTAs, covering all sectors and substantially all aspects of trade, in line with 
Article XXIV of GATT 1994, Article V of GATS and in certain areas beyond the WTO commitment.  
As stated earlier, the main objective of pursuing FT As is to secure better access to foreign markets, 
while at the same time creating growth moment um through accelerated trade liberalization in the 
domestic market. 
58. Another important  objective is to facilitate domestic reform and deregulation and thereby 
raise efficiency in the overall economy. FTAs not only result in trade liberalization but can also lead 
to substantial improvement in the domestic regul atory framework. More importantly, benefits from 
certain reform measures brought about by FTAs can be  shared by all countries, not just by the FTA 
partners, as negotiations in such areas as competiti on, services, and customs procedures often relate to 
the regulatory framework. For example, in the case of many services sectors, as it is difficult to 
differentiate standards and conditio ns between FTA partners and thir d party countries, countries that 
are not involved in a bilateral FTA with Korea may al so reap the benefits of liberalization in services. 
Another example is transparency measures. In one  recently signed FTA, Korea agreed that it would 
extend the prior comment period required for new legi slations. When this FTA comes into force, all 
countries will be able to enjoy the bene fits of the extended comment period.  
(a) FTAs under Implementation or Recently Concluded 
FTA between Korea and Chile 
59. The Korea-Chile FTA, the first FTA signed by Ko rea, entered into force on 1 April 2004. For 
the liberalization of trade in goods, the immediate el imination of tariffs granted by Korea to imports 
from Chile covers 87.2% of the total tariff line.  Tariff elimination is further expanded to the 
remaining products in stages over a timeframe of fi ve, seven, nine, ten, and sixteen years. The only 
exceptions are rice, apples and pears.  
60. During the last four years after the Agreement came into force, Korea’s exports to Chile 
increased at an annual rate of 61.1% and its imports  from Chile increased at an annual rate of 35.9%. 
Korea’s exports to Chile recorded  US$3.5 billion in the fourth year after the implementation of the 
FTA, from April 2007 to March 2008, an 89.7% increase from the third year, from April 2006 to 
March 2007. Korea’s imports from Chile increased by 5.8% to US$4.3 billion in the fourth year.  
FTA between Korea and Singapore 
61. The Korea-Singapore FTA, signed in August 2005,  entered into force on 2 March 2006. The 
FTA features a high level of liberalization. The scope  of the agreement goes beyond tariff elimination, Republic of Korea WT/TPR/G/204 
 Page 19 
 
 
 covering a wide range of areas including trade in services, investment, intellectual property rights, 
competition, government procurement, electr onic commerce, SPS, TBT, MRA, and dispute 
settlement. Under this FTA, Korea is  to eliminate tariffs on 91.6% of all goods within ten years, while 
Singapore is to eliminate tariffs on 100% of all goods immediately upon the implementation of the 
agreement. 
62. Bilateral trade volume between Korea and Si ngapore increased by 51% from the pre-FTA 
levels to US$20.2 billion in the second year after th e implementation of the FTA. In addition, Korea’s 
trade surplus with Singapore increased by 151% fr om the pre-FTA levels to US$5.8 billion in the 
second year. Korea’s investment in Singapore r ecorded US$0.84 billion during the post-FTA period 
of 22 months from March 2006 to December 2007,  a 61.5% increase from the pre-FTA period of 
22 months from May 2004 to February 2006. Singapore’s investment in Korea rose by 57.4% to 
US$0.96 billion during the same period. 
FTA between Korea and EFTA 
63. The Korea-European Free Tr ade Association (EFTA) FTA entered into force on 
1 September 2006. Under this FTA, Korea will remove  tariffs on 99.1% of products originating from 
EFTA over a period of up to seven years. Imports tariffs on some agricultural and fishery products 
will be phased out over a maximum period of te n years. The agreement covers not only the 
elimination of tariffs and non-tariff barriers to trad e in goods, but also liberalization of trade in 
services, investment, government procurement, intellectual property rights, competition, and 
cooperative measures in broadcasting services. 
64. Bilateral trade between Korea and EFTA clim bed by 13.1% to US$3.7 billion in the first 
11 months after the implementation of the FTA co mpared to the same time period before the 
implementation of the FTA. During this period, Korea’s exports to EFTA decreased from 
US$1.5 billion to US$969 million,  while Korea’s imports from EFTA increased from US$1.8 billion 
to US$2.7 billion. Excluding a few products such as gold, ships, and paintings, however, for which exports dropped sharply due to irregular demand, Ko rea’s exports to EFTA appear to have increased 
slightly from US$671 million to US$717 million. 
FTA between Korea and ASEAN 
65. The Korea-ASEAN FTA is the first FTA Korea co ncluded with one of its five largest export 
markets. In December 2005, Korea and ASEAN signed the Framework Agreement that forms the 
basis of the Korea-ASEAN FTA. Under this frame work, Korea and the ASEAN member countries, 
except Thailand, signed the Agreement on Trade in Goods that took effect on 1 June 2007. For the 
liberalization of trade in goods, Korea and ASEAN are to eliminate tariffs on products constituting 
90% of their respective imports until 2010. Tariffs on the other 7% of impor ts will be lowered to 
0-5% until 2016. In addition to trade in goods, the Korea-ASEAN FTA negotiation also covers trade 
in services and investment. The Agreement on Trad e in Services was concluded in November 2007. 
FTA between Korea and the United States 
66. By establishing an FTA with the United States, Korea aims to upgrade its current economic 
structure and improve the nation’s competitiveness. After 14 months of negotiations, the Korea-U.S. 
(KORUS) FTA was concluded in April 2007 but has yet to come into force.  
67. This agreement is comprehensive in scope, cove ring a full range of trade-related areas from 
goods and services to intellectual property rights, g overnment procurement, competition, labor, the WT/TPR/G/204 Trade Policy Review 
Page 20 
 
 
 environment, SPS, TBT, and dispute settlement. A bout 94% of Korea-U.S. trade in consumer and 
industrial products will be duty-free within three year s of the agreement’s effective date. In addition, 
the agreement will immediately eliminate duties on 56% of Korea’s agricultural imports from the 
United States. When implemented, the KORUS FT A will build on a long-standing and robust trade 
and investment relationship between the two countries.  
(b) FTAs under Negotiation 
FTA Negotiations between Korea and Canada 
68. In July 2005, Korea and Canada agreed to launch official negotiations for an FTA.  Both sides 
have held fourteen rounds of negotiations so far. 
FTA Negotiations between Korea and Mexico 
69. In September 2005, Korea and Mexico agreed to launch Strategic Economic 
Complementation Agreement (SECA) negotiations. Since then, three rounds of negotiations have 
been held, but the talks stalled in June 2006 due to wide ga ps in positions regard ing the level of tariff 
elimination. In August 2007, Korea and Mexico offi cially agreed to resume their negotiations for a 
high-level and comprehensive FTA. The first round of FTA negotiations was held in December 2007 
and the second round took place in June 2008.  
FTA Negotiations between Korea and India 
70. In February 2006, Korea and India agreed to pursue a comprehensive economic partnership 
agreement (CEPA). A partnership agreement is tec hnically the equivalent of an FTA, and the Korea-
India CEPA is the first FTA that Korea is pursui ng with one of the BRICs nations. The tenth round of 
negotiations was held in May 2008.  
FTA Negotiations between Korea and the European Union  
71. Negotiations on the Korea-EU FTA commenced in  May 2007. Korea and the EU have held 
seven rounds of negotiations so far, and the seventh round took place in May 2008. The Korea-EU 
FTA, if concluded, is likely to contribute greatly  to promoting trade and investment with EU 
members. 
FTA Negotiations between Korea and the Gulf Cooperation Council (GCC) 
72. Following a preliminary meeting in November 2007, Korea and the GCC held the first round 
of negotiations in July 2008. 
FTA Negotiations between Korea and Japan 
73. Korea and Japan launched FTA negotiations in  December 2003. Since the conclusion of the 
sixth round of negotiations on the Korea-Japan FTA held in Tokyo in November 2004, the talks have 
been stalled due to differences over such issues as  the level of market access in agriculture and 
fisheries, public procurement, non-tariff measures (NTMs), and industrial cooperation. Both countries 
agreed to consider a resumption of FTA negotiati ons and create a favorable environment for the 
resumption, in working level consultati ons that were held in June 2008. Republic of Korea WT/TPR/G/204 
 Page 21 
 
 
 (c) Other Bilateral Trade Negotiations under Joint Studies 
China 
74. Korea and China have continued to make effo rts to strengthen their bilateral trade and 
economic cooperation. In October 2006, the two countries completed a non-governmental joint 
research on the prospect for a Korea-China FTA. In March 2007, Korea and China launched a joint 
study for a possible bilateral FTA at the governmental , industrial, and academic levels. This study is 
scheduled to be completed by the end of 2008. The final decision regarding the launch of Korea-
China FTA negotiations will be made after the resu lt of the study is reviewed and opinions from 
industries and relevant experts are received in public hearings. 
The Southern Common Market (MERCOSUR) 
75. Korea and MERCOSUR believe that there is gr eat potential to be exploited for further 
cooperation between Korea and the MERCOSUR members. In November 2004, an agreement was reached to conduct a joint study on the feasibility of a trade agreement (TA) between Korea and 
MERCOSUR. The joint study on the Korea-MERCOSUR TA was officially completed in November 
2007, and both parties agreed to discuss the future  plan at the next Korea-MERCOSUR consultative 
meeting. 
Others 
76. Korea has been conducting joint studies in vari ous formats on the feasibility of FTAs with 
Russia, Turkey and Peru. A joint study with Russi a at the governmental, industrial, and academic 
levels was launched in November 2007. A joint study between Korea and Turkey was recently 
launched in June 2008 with participation from the Korea Institute for International Economic Policy 
and the Foreign Trade of the Republic of Turkey . Furthermore, Korea and Peru completed a non-
governmental joint study in May 2008. 
(4) R
EGIONAL ENGAGEMENTS  
77. Korea values APEC, ASEM, and ASEAN+3 as  fora that promote greater economic 
cooperation within and across regions and ultimatel y support the multilateral trading system. Korea 
has actively participated in these fora for the further liberaliza tion and facilitation of trade and 
investment, and played a role in promoting cooperati on in various fields to help achieve the goal of 
common prosperity at both the regional and inter-regional levels. 
(a) Asia-Pacific Economic Cooperation (APEC) 
78. As one of the inaugural members of APEC, Ko rea has been playing an important role in 
shaping APEC to be more efficient and active.  Furthermore, Korea has continued to introduce 
meaningful initiatives aimed at deepening regional integration in APEC. Among these initiatives, the 
2005 Busan Roadmap provided a new scope of prosper ity and a greater level of ambition seeking co-
prosperity for the members in working to ward an Asia-Pacific Economic Community. 
79. Korea is using three distinctive policy tools for the successful implementation of the Bogor 
Goals. First, Korea is making efforts to sup port DDA negotiations as one of its primary policy 
objectives. In this regard, as the APEC host economy in 2005, Korea took a leading role in issuing a 
political statement of support for the DDA negotia tions in November 2005. Korea also led APEC 
trade ministers to a unanimous endorsement for the Swiss formula to reduce tariffs for non-WT/TPR/G/204 Trade Policy Review 
Page 22 
 
 
 agricultural goods in June 2005. Second, Korea’s e ngagement in FTAs with major trading partners 
will create momentum for more open and transparen t economic regimes in the region. Third, Korea’s 
domestic reform activities contributed to creating mo re business-friendly environm ents in the region.  
80. Korea is fully committed to promoting reforms and providing a vision that enhances the 
prosperity of people in the Asia-Pacific region over the medium-to-long term. At the same time, 
Korea will continue to contribute to the minimizati on of red tape for enhanced trade facilitation.  
81. As one of the leading economies in terms of GD P size and trade volume, Korea will be more 
responsive to securing equitable and sustainable growth  in the region. In this context, Korea will seek 
to be more proactive in intensifying efforts to  strengthen capacity building initiatives. Expanding 
ODA and technical assistance to advance capacity building activities will serve as a catalyst for 
achieving the Bogor goals. 
(b) Asia-Europe Meeting (ASEM) 
82. Korea has been actively engaged in the ASEM process since the inception of the dialogue.  In 
2006, ASEM celebrated ten years of strengthening in formal networks in As ia and Europe, and its 
membership has expanded from 26 partner countries to 45 since 2004. In the course of the 
transformation process, Korea has contributed to maintaining the internal dynamism of the ASEM 
process by taking an active role in the general ma nagement process as a regional coordinator of the 
ASEM process from 2004 to 2006, after its previous te rm in 1998 to 2000. Korea has been pivotal in 
the process by deeply engaging itself and bridging  gaps between partner countries by discussing 
emerging issues such as security, trans-national crim e, and anti-terrorism, which the current global 
governance has yet to deal with. Recently, as the hos t of the 8th ASEM Finance Ministers’ Meeting 
held in Jeju in June 2008 and two rounds of th e Finance Deputies’ Meeting in 2007 and 2008 
respectively, Korea has contributed to a dvancing inter-regional fi nancial cooperation. 
(c) ASEAN+3 
83. Korea places great importance on the devel opment of the ASEAN+3 (Korea, China, and 
Japan) mechanism, aware that the mechanism has b een expanding and deepening cooperation in East 
Asia. In celebration of its 10th anniversar y, the ASEAN+3 Summit held in Singapore in 
November 2007 adopted the "2nd Joint Statement on East Asia Cooperation" and the "Work Plan" – 
which lists the specific implementation plan of the Joint Statement. Moreover, the Summit agreed to 
establish an ASEAN+3 Cooperation Fund (APTCF) as  a joint financial resource needed for the 
implementation of the ASEAN+3 cooperation projects.  
84. Korea has been playing an important role in the evolution of the ASEAN+3 mechanism 
through, among others, the EAVG (East Asia Visi on Group) in 2001 and the EASG (East Asia Study 
Group) in 2002. Multiple cooperation projects a nd diverse assistance activities initiated by Korea 
include: (1) the launching and development of the EAF (East Asia Forum) – an industry-government-
academia joint think tank;  (2) the hosting of the Building East Asia Identity Workshop in 2005 and 
the East Asia Week in 2006, both of which ai m to promote East Asian identity and mutual 
understanding; (3) a US$5 million contribution to th e IAI (Initiative for ASEAN Integration) between 
2003-2007 and the commitment of another US$5 million – the IAI intending to narrow the 
development gap among the ASEAN countries and to accelerate economic integration –; and (4) the 
ICT Cooperation towards Co-prosperity in East As ia Project, which began in 2007 and aims to 
promote East Asian ICT exchange a nd to support IT expert education. Republic of Korea WT/TPR/G/204 
 Page 23 
 
 
 85. Korea proposed the second phase of the East Asian Free Trade Area (EAFTA) study in 
January 2007 in an effort to maintain the mome ntum of the EAFTA discussions within the ASEAN+3 
framework. The final report of the study is exp ected to be submitted to the ASEAN+3 Economic 
Ministers and the ASEAN+3 Summit in 2009.  
IV. FUTURE POLICY DIRECTIONS 
86. It is unlikely that in the near future Korea will change the general direction of its trade policy, 
which is based on, and working unde r, an open and rules-based multilateral trading system, in spite of 
various challenges presented by deepened globaliza tion. From its own experiences, Korea continues 
to believe in the primacy of the multilateral trading system. As a country with a total value of trade 
equivalent to two-thirds of its GDP, Korea believes that multilateral trade liberalization is one of the 
best means to achieve balanced development and sustainable growth. In this respect, Korea will 
continue to be firmly committed to the successf ul conclusion of the DDA negotiations, and make 
utmost efforts to contribute constructively in th e DDA negotiations to bring great benefits to the 
global community.  
87. In addition to the efforts for multilateral trade lib eralization, Korea also considers FTAs to be 
a complementary tool to accelerate trade liberaliza tion, and will seek comprehensive, WTO-consistent 
FTAs. Korea believes that the FTAs it pursues will ser ve as building blocks for multilateral efforts 
toward greater global trade liberalization. By  incorporating far-reaching transparency and 
liberalization measures in various areas, it is al so expected that these FTAs will spark domestic 
restructuring in less competitive sectors.  
88. For economic cooperation on a regional level, Ko rea will continue to support APEC’s work 
on trade and investment liberalization and economi c and technical cooperation in the Asia-Pacific 
region. Furthermore, Korea will continue to activel y participate in the collective efforts of ASEAN+3 
and ASEM to promote freer trade and greater ec onomic cooperation at both the regional and inter-
regional levels. Korea will utilize these regiona l and inter-regional coope ration opportunities to 
support the multilateral trading system.   
89. In order to foster mutually beneficial bilatera l trade relations with its trading partners, Korea 
will continue to proactively address any trade i ssues through bilateral cons ultations in accordance 
with international rules. Economic cooperation w ith least-developed countries and other developing 
countries is another key priority for Korea’s bilateral economic relations. Expanded trading 
opportunities and strengthened investment relations  will be accompanied by technical assistance, 
capacity building, and sharing of development experi ences, particularly for least-developed partners.  
90. The ultimate objective of the Korean government’s  trade policy is to move Korea toward an 
advanced market economy. In order to accomplish th is task, Korea will continue to vigorously pursue 
liberalization and domestic reforms in a mutually  reinforcing manner. Domestic reform will be 
undertaken to enhance greater efficiency, market di scipline, transparency, and fair competition in the 
Korean economy. Simultaneously, Korea will continue to engage in a greater opening of the economy 
through combined efforts on the multilateral, regional , and bilateral fronts. This market opening will 
likely stimulate domestic reform, which will, in  turn, give rise to further liberalization. 
__________