WORLD TRADE  
ORGANIZATION  WT/TPR/M/204 
1 December 2008 
 (08-5872) 
Trade Policy Review Body 
8 and 10 October 2008  
 
 
 
TRADE POLICY REVIEW 
 
REPUBLIC OF KOREA 
 
Minutes of Meeting  
 
Chairperson:  H.E. Mr. Yonov Frederick Agah (Nigeria)  
 
   Page 
 
I.
 INTRODUCTORY REMARKS BY THE CHAIRPERSON 3  
II. OPENING STATEMENT BY THE REPRESENTATIVE OF THE REPUBLIC OF 
KOREA 4 
III. STATEMENT BY THE DISCUSSANT 6  
IV. STATEMENTS BY MEMBERS 8  
V. REPLIES BY THE REPRESENTATIVE OF THE REPUBLIC OF KOREA AND 
ADDITIONAL COMMENTS 14  
VI. CONCLUDING REMARKS BY THE CHAIRPERSON 19  
 
Note:   Advance written questions by WTO Memb ers and the replies provided by the Republic of 
Korea are reproduced in document WT/TPR/M/2 04/Add.1 and will be available online at 
http://www.wto.org/english/tr atop_e/tpr_e/tp_rep_e.htm. WT/TPR/M/204 
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 I. INTRODUCTORY REMARKS BY THE CHAIRPERSON 
1. The fifth Trade Policy Review of the Republic of Korea was held on 8 and 10 October 2008.  
The Chairperson (H.E. Mr. Yonov Frederick Agah ) welcomed the Korean delegation, led by 
Mr. Ahn Ho-young (Deputy Trade Minister, Ministry of Foreign Affairs and Trade), and which included H.E. Mr. Lee Sung-joo;  as well as the discussant H.E. Mr. Bozkurt Aran (Turkey).  As 
usual, the discussant would speak in his personal capacity and not as a country representative.  In 
accordance with establishe d procedures, the discussant had provided in advance outlines of the main 
issues he intended to raise (document WT/TPR/D/179). 
2. The Chairperson recalled the purpose of Trade Po licy Reviews and the main elements of the 
meeting's procedures.  The report by the Re public of Korea was contained in document 
WT/TPR/G/204 and that of the WTO Secretariat in WT/TPR/S/204.  As indicated in 
WT/TPR/6/Rev.1, the Member under review should pr ovide written answers, by the beginning of the 
review meeting, to questions submitted at least two weeks before the meeting.  Questions posed 
subsequently should be answered, to the extent possi ble, before the start of the second session of the 
meeting.  Questions left unanswered at the end of the second session should be answered in writing no 
later than one month after the meeting.  The follo wing delegations had submitted questions in writing 
at least two weeks in advance of the meeting and th ese had been transmitted to the Korean delegation:  
China;  Switzerland;   Brazil;  United States;  Malays ia;  New Zealand;  Australia;  Mexico;  Turkey;  
Argentina;  Canada;  Hong Kong, China;  Ecuador;  the European Communities;  and Japan.  Copies 
of these questions and of the Republic of Korea's answers were available in the meeting room.  
Written questions by Colombia;  Chinese Taipei; Ch ile;  Pakistan; Thailand;  India;  and Peru, 
submitted after the two-week deadline, had also been  transmitted to the delegation of the Republic of 
Korea, and copies, along with the answers, were  available in the meeting room.  All advance 
questions and responses were repr oduced in WT/TPR/M/204/Add.1. 
3. The Chairperson noted that since its previous Trade Policy Review in 2004, Korea's growth 
had been stable, underpinned by prudent macroec onomic policies together with ongoing structural 
reforms, including liberalization of its trade and investment regimes.  Progress had been noteworthy 
in areas including regulatory reform, customs pr ocedures, standards harmonization, intellectual 
property rights protection, and consumer protecti on.  He considered that Members would welcome 
further details on, inter alia :  plans to cope with the slowdown in economic growth and decline of 
foreign direct investment inflows, plans for reducing state involvement in the economy, the 
strengthening of regional integra tion links, further multilateral trade liberalizations plans, energy 
pricing developments, the furthering of services  liberalization, and improvement of labour 
productivity in this sector.  He hoped that the di scussion within the context of this Trade Policy 
Review would help the policymakers of Korea to pr epare to meet some of the challenges ahead and, 
at the same time, allow WTO Members to acquire  a better understanding of the outlook for this 
dynamic and open economy in a number of trade-related areas. WT/TPR/M/204 
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 II. OPENING STATEMENT BY THE REPRES ENTATIVE OF THE REPUBLIC OF 
KOREA 
4. The representative of the Republic of Korea
, Mr. Ahn Ho-young, stated that the Trade Policy 
Review of his country was taking place against a background of financial turbulence and increasing 
protectionist sentiment.  He recalled that, to cope  with the 1997 serious financial crisis, Korea had 
introduced measures for further liberalization of its  economy, including in trade and investment.  
Largely due to those measures, Korea had overcome the serious economic problems of that time.  He 
was firmly of the view that liberalization should continue. 
5. Korea's growth rate had exceeded the world average between 2005 and 2006.  Unemployment 
had been on a steady decline;  inflation had been w ithin the target range;  an d the won had appreciated 
steadily.  The major reason for Korea's growth over the past four years had been the good 
performance of the export sector, which had grown by  13% annually.  Another important element for 
Korea's economic development was outward foreign di rect investment (FDI), which had grown more 
than three fold between 2004 and 2007;  however, du ring the same period growth in inward FDI was 
not as pronounced.  Korea would con tinue to facilitate both outward a nd inward FDI in order to make 
its economy more competitive.  The impact of th e current financial turbulence on the macroeconomic 
figures remained to be seen. 
6. As a result of the reforms and liberalization un dertaken over the past ten years, the Korean 
economy was in a far better position to deal with  the challenges arising from the current economic 
situation.  In dealing with the 1997 crisis, Korea had introduced significant reforms in the financial 
sector, the corporate sector, the public sector, and in dustrial relations.  In 1997, none of the Korean 
banks met the 8% Basel capital adequacy ratio (C AR);  the CAR of most Korean banks was now 
12%.  Also, the non-performing loan ratio had fallen from more than 7% in 1997 to 0.7% presently.  
As a result of the financial sector measures, Korean  banks were in a far better position to deal with 
external shocks.  Korea had continued with the pr ocess of reform and liberalization that commenced 
in 1997;  it had introduced the Financial Investme nt Services and Capital Market Act in July 2007, 
which would enter into force in early 2009.  Back in 1997, the debt to equity ratio of many Korean 
businesses had averaged over 400%, now it had been re duced to 107%.  Thus the financial structure 
of Korean businesses, was a lot healthier.  Reform  of the corporate sector had continued and during 
the review period, class action law suits had been introduced. 
7. Deregulation had played a very important role  in the reform and liberalization process.  
Deregulation had been driven by the private sect or as opposed to government, as the final impact 
would be felt by the private sector.  Business representatives and associations provided input:  
business associations had made 1,822 submissions in  68 areas, and 1,304 plans had already been 
completed. 
8. Korea's vision for its trade policy was to build  an open and advanced economy consistent with 
the rules-based multilateral trading system (MTS).  Th at had been the golden rule.  Under this rule 
primacy was given to the MTS, complemented with  regional cooperation.  Major efforts had been 
made to implement WTO commitments and further WTO-plus liberalization in several areas.  As a result, the weighted average of applied tariff rate had declined from 4.65% in 2004 to 3.88% in 2007;  
the process of tariff reduction was to continue un til 2009.  Most agricultural subsidies had gone to 
rice.  Nevertheless, the subsidy system had been su bstantially overhauled in Korea:  the government 
purchasing system had been replaced with a Public Stockholding System, which was far more 
consistent with market rules.  Korea had made efforts to implement WTO commitments on 
government procurement and intellectual property righ ts (IPRs), and had take n unilateral measures to 
further liberalize trade in services.  Korea had b een a party in 8 disputes and a third party in 
another 14.  Korea had improved preferential acce ss unilaterally for LDCs, and increased technical 
assistance activities for various WTO activities during the review period.  WT/TPR/M/204 
 Page 5 
 
 
 9. Many Members held a high level of ambition to conclude the DDA before the end of the year;  
Korea hoped for some progress in a short period of time.  The market-based system might not be 
perfect but it might be among the best.  The current financial turbulence should not be an excuse against the market system;  Korea had participated in the WTO with reforms in line with the market 
system and this was how it envisaged con tinuing to participate in the WTO system. WT/TPR/M/204 
Page 6  
 
 III. STATEMENT BY THE DISCUSSANT 
10. The discussant
 noted that Korea was one of the fastest growing countries in the modern 
world, was the 3rd largest economy in Asia and the 13th largest in the world.  Wise macroeconomic 
policies boosted by structural reforms had resulted in GDP growth.  There had also been an impressive increase in the foreign exchange reserves since Korea's last Trade Policy Review.  
Although economic growth in 2008 was forecast to be  lower than the previous year, Korea expected 
to maintain robust growth due to increasing compet itiveness of its exports.  In spite of weak private 
consumption, deteriorating terms of trade, and falling investment, growth in real GDP between 2004 
and 2007 was largely attributable to exports.   
11. In each of the past four years, Korea had reco rded fiscal surpluses, which were a good sign of 
a well functioning economy;  also the success of th e inflation targeting policy had become clear, as 
the targets were observed during most of the period  under review through a relatively tight monetary 
policy.  However, the country's inflationary probl ems had been underlined by the weakening of the 
won against the U.S. dollar as well as by high oil prices.  Higher borrowing costs could have an adverse effect on invigorating the domestic economy.  He wondered how a relatively high growth rate 
would be maintained.  After the current financial turmoil, and surges in the prices of primary goods 
and the weakening of domestic demand, the growth ra te in 2008 was forecast to lower.  He urged 
Members to support Korea's determination to priori tize job creation and growth through continuous 
domestic reforms. 
12. The decline in inward FDI in relation to GDP s eemed to be inconsistent with the openness of 
the economy.  He asked for an explanation as to wh y the decline had occurred,  despite the incentives 
provided to foreign-invested firms;  and why inward FDI was declining. 
13. Structural reforms had been an integral part  of the Korea's growth, especially following the 
1997 financial crisis.  Ongoing efforts to impr ove the functioning of household credit markets, 
reforms towards corporate restructuring, and tax re form to broaden the tax base, as well as willingness 
to upgrade the regulatory system were all encouraging.   Korea needed to keep up the pace of reform 
so as to better cope with the immense external competition.  Stronger determination in further 
privatization efforts seemed to be essential as state intervention persisted in some of the key service 
sectors. 
14. Korea had provided continuous support and dedicated efforts for the strengthening of the 
MTS and was an active participant in the DDA proce ss.  However, in recent years there had been an 
obvious interest in signing free-trade agreemen ts (FTAs).  He wondered how these FTAs had 
contributed to the Korean economy, and to achievi ng initial expectations such as the facilitation of 
domestic reforms and deregulation. 
15. The relatively complex nature of customs tariffs was an issue.  The applied average MFN rate 
had remained unchanged since 2004 a nd was considered high by the OECD country standards.  Also, 
the average applied customs duty on agricultural pr oducts was more than eight times higher than the 
average for non-agricultural goods.  He also noted the average difference of 4.3 percentage points 
between the average bound and applied MFN tariff rates.  This gap, which was used in the form of so 
called "flexible tariffs", raised questions about  market access predictability and openness.   
16. Korea had managed to streamline its customs procedures further, in keeping with its 
reputation as initiator of best practices in this area.  However, non-tariff measures were also in place.  
Rice was subject to import quotas and quantitative expor t restrictions.  Korea also applied tariff 
quotas in line with its multilateral agricultural ma rket access commitments:  the level of out-of quota 
rates, many of which remained well above 100%, could in effect operate as quantitative restrictions or 
result in no imports.  Korea's action in legislating on IPRs and enforcing protection, which included  WT/TPR/M/204 
 Page 7 
 
 
 border enforcement and criminalization of end-user piracy, were indicative of its readiness to take 
more responsibility in this area at the international level. 
17. Low labour productivity in agriculture and services,  as well as heavy go vernment intervention 
in agriculture, gas, and electricity were the main  sector-specific problems.  In terms of market 
orientation, domestic financial assistance, incl uding product-specific market price support, was still 
high and distorted agricultural production and trade.  On the other hand, the manufacturing sector was 
outward oriented and competitive;  since the 1970 s the sector, especially the heavy and automotive 
industry, had been the backbone of the Korean economy.  The comparatively low productivity of the services sector could pose a long-term threat to th e economy.  In this regard, the importance of 
privatization, which could inject more productivit y, efficiency, and profitability into the services 
sector, should be emphasized.  WT/TPR/M/204 
Page 8  
 
 IV. STATEMENTS BY MEMBERS 
18. Members praised Korea's prudent macroeconomic  management, and continuous structural 
reforms as well as the pursuit of open trade and invest ment policies.  Members recognized that these 
policies had resulted in Korea becoming a more outward-oriented economy, which enjoyed steady 
growth, declining unemployment, increasing per capita incomes, and contained inflation.  However, 
several members observed that inward FDI as a share of GDP had declined and was low by 
industrialized country standards.  Members reitera ted the need for Korea to further liberalize its 
foreign investment regime and continue structur al reforms, especially involving deregulation and 
privatization.  Members commended Korea for its active and construc tive role in the DDA 
negotiations.  They expressed concern that Korea's cu stoms tariff remained relatively high (especially 
for agricultural products) and complex, involving a mu ltiplicity of rates.  Concerns were also voiced 
about the use of the "flexible tariffs" mechanism.   
19. The representative of China
 stated that trade and economic cooperation with Korea had 
developed rapidly.  China had become Korea's larg est trading partner, both as an export market and 
supplier.  Korea was one of China's largest FD I sources.  Korea's recovery from the 1997 Asian 
financial crisis through increased liberalization was an  important lesson to retain particularly in light 
of the current financial climate. 
20. The representative of Switzerland  stated that bilateral economic ties, including trade, had 
been strengthened and additiona l impetus had been provided by the EFTA-Korea FTA in 2006.  A 
large number of indirect taxes impeded an overall ass essment of the effective tax burden.  Switzerland 
urged Korea to streamline the indirect tax structure and possibly shift at least somewhat the burden of 
taxation toward a more direct-taxation-based system.   
21. Switzerland was concerned over the number of trade policy instruments used to protect 
domestic industries against import surges, including  different types of safeguards and adjustment 
duties.  It hoped that by the conclusion of the D oha Round, Korea would improve the predictability of 
its tariffs, narrow the gaps between applied and bound rates, and further reduce them.  Regarding 
industrial property rights, confidential data subm itted for marketing approval of pharmaceuticals and 
agricultural chemicals were prohibited from public  disclosure, unless the authorities saw a public 
interest need.  Unfair commercial use of such  data was also prohibited.  Switzerland sought 
clarification whether the Korean legislation provided for a specific term of protection for such data, so 
that, until its expiry test, data could not be relied upon or referred to by a second applicant for market 
authorization for a product.   
22. The two countries had common interests in the ag riculture negotiations.  He indicated that 
although Korea still had developing count ry status with regard to agricu lture, this was less stressed in 
the industrial sector, therefore paving the way for an  evolution, which might be followed by other 
countries in a similar situation.  Switzerland comm ended Korea's efforts for further reform in the 
financial market, which were expected to have a positive impact on the financial services industry as a 
whole, even in the current di fficult times for the industry. 
23. The representative of Brazil  emphasized the continuous growth  in bilateral trade and FDI 
inflows from Korea.  Brazil hoped that bilateral tr ade and economic ties would continue to improve. 
24. The representative of the United States  noted Korea's seriousness in pursuing a path of 
openness:  it had concluded a comprehensive and commercially significant bilateral FTA with the 
United States, knowing that this would mean taking on its own sensitive sectors and domestic 
opponents of liberalization.  This WTO-plus FTA was testimony to its great strides in structural 
economic reforms and opening the economy.  The Unite d States appreciated Korea's efforts to further 
improve its business and investment environment, including plans for the privatization of state-owned  WT/TPR/M/204 
 Page 9 
 
 
 enterprises, improved regulation of the financia l sector, steps to ease the bureaucratic burden on 
businesses and the recently created Presidential Council on National Competitiveness.  Korea's 
ambitious path of regulatory reform and impr oved corporate governance was recognized by the 
private sector;  as a good example, the Financial Ti mes Stock Exchange (FTSE) Group had decided to 
accord Korea developed country status.   
25. The United States appreciated Korea's progress in customs procedures, which had been 
streamlined and modernized since its last Review, as well as in standards, where Korea was working 
to harmonize to international standards.  Major improvements had been made in the protection of 
IPRs, with important amendments to copyright law and increased pursuit of effective enforcement.  
The United States was concerned about certain issues, such as reducing burdensome, often 
duplicative, and scientifically questionable regul ations and procedures related to conformity 
assessment, and the large imbalance in Korea's au tomobile trade.  The United States encouraged 
Korea to allow greater use of self-certification and,  similarly, less bureaucratic and onerous methods 
in ensuring compliance with Korean regulation, increased reliance on international standards,  
adherence to technology neutrality, and to ensure that Korea's SPS measures were based on science 
and consistent with the WTO rules.  It also urge d Korea to take a more constructive stance in the 
WTO negotiations and prohibit subsidies that c ontributed to overcapacity and over fishing. 
26. The representative of Thailand, on behalf of ASEAN Members  referred to the good economic 
and trade relations with Korea, both regional and bilateral.  The Trade in Goods chapter of the 
ASEAN-Korea FTA, signed in August 2006, had entere d into force in June 2007, while the Trade in 
Services chapter, signed in November 2007, was e xpected to enter into force in 2008.  ASEAN 
welcomed Korea's steps to facilitate trade and incre ase transparency, including in tariffs where almost 
all lines were ad valorem .  ASEAN urged Korea to further libe ralize trade in agriculture, which 
promoted trade flows and would also benefit Ko rea's economy.  ASEAN welcomed steps taken by 
Korea to reduce its dependency on oil and rising ener gy demand by investing in renewable energy and 
investment projects overseas. 
27. The representative of New Zealand  referred to Korea's role as a significant source of FDI and 
a well established and highly complementary trading partner.  New Zealand noted Korea's efforts to 
pursue streamlined customs procedures as well as  strengthen IPR legislation and revise competition 
laws and regulations.  It also acknowledged Kore a's intention to further increase the level of 
alignment of its standards w ith international standards. 
28. The representative of Australia  referred to the flourishing, highly complementary bilateral 
trade relationship, built on long-standing ties.  Services trade was also becoming increasingly 
important, mostly in the education, travel, and tr ansport subsectors.  He welcomed the agreement 
between Korea and Australia to commence prepar atory talks on a bilateral FTA.  Australia was 
concerned about Korea's high agricultural tariffs and overall level of assistance for agriculture, which 
placed undue costs on Korean consumers and taxpayers, and were counterproductive. 
29. The representative of Mexico  highlighted aspects of his country's trade relations with Korea, 
which was among the major beneficiaries of the MTS.  He sought comments on the limited tariff policy changes, particularly th e average applied MFN tariff rates, multiplicity of tariff-rate quotas 
(TRQs) and tariff peaks, since the last TPR of Korea.  While commending Korea's efforts to bring 
national standards in line with international sta ndards, and acknowledging that those applying to new 
technologies had increased considerably, he said that much  work remained in this area.  In light of the 
growing complexity of preferential agreements, he asked Korea to share its experiences on the 
operation of its intelligence-oriented customs administ ration systems.  His delegation expected replies 
to questions raised on new practices in the IPRs and services areas.  Mexico thanked Korea for its 
revised offer in 2005 and encouraged further openi ng of the services sector to national and foreign 
competition.    WT/TPR/M/204 
Page 10  
 
 30. The representative of Turkey
 indicated the special historic ties with Korea, which were 
reflected in bilateral trade as well as the growin g level of FDI from Korea.  A new structural 
mechanism such as a free-trade ag reement between Turkey and Korea would increase the potential of 
both countries.  The global economic challenges that had arisen in 2007 and in 2008 could shadow the 
sustainability of the growth trend in the Korean economy especially in light of the adverse effects on 
Korean exports, one of the most important factors that had contributed to Korea's economic growth.  
Korea would be dealing with challenges to ensure sustainability of its growth and competitiveness in 
the years to come, which necessitated the continuati on of structural and regulatory reforms.  He 
referred to the several tariff policy issues, the co mplicated nature of customs clearance stemming from 
the increased number of rules of origin require ments, import quotas and quantitative restrictions 
affecting rice. 
31. The representative of Argentina  noted the main features of bilateral trade ties between his 
country and Korea.  Argentina would continue to br oaden and deepen its bila teral agenda with Korea 
across the board politically, in trade issues, on education, and on scien tific and technical cooperation.  
A joint MERCOSUR- Korea study on a future trad e agreement, presented in November 2007, would 
contribute to setting up guidelines for furthering their trade relations in the near future.  He 
highlighted the solidity of Korea's fiscal policy, the reforms on financial and capital markets, the 
continuous modernization of the customs administra tion, the harmonization of Korean standards with 
international standards, and its firm commitment to the strengthening of the MTS.  However, he drew 
attention to the high out-of quota tariff rates (avera ge, peaks) applied to imports of agricultural 
products.  Argentina had sought further details on the methods for allocation of quotas and the 
products that were subject to agricultural tariff quotas. 
32. The representative of Canada  noted that Korea's growth and development would not have 
been possible without the existence of an open and rules-based world trading system, which was 
ensuring that Korea had unhindered access to global ma rkets and raw materials, the essential inputs 
for its industry.  Canada encouraged Korea to con tinue to deepen its engagement with the MTS, for 
the benefit of both its citizens and the common gl obal trading system.  Canada was hopeful that 
Korea's bold intention to re-examine 40% of its re gulations would lead to significant improvements in 
its regulatory system.  The remarkable results from participation in the WTO and continuous 
modernization, liberalization, and global engageme nt, would allow Korea to join the ranks of the 
world's richest nations. 
33. Canada noted with concern Korea's impor t policies on beef, which it considered 
discriminatory and which led to Korean consumer s paying significantly higher than world prices for 
domestic beef at a time of high food prices.  The representative of Canada stated that it appeared Korea was basing its beef import policy decisions on domestic politics and producer interests instead 
of science and global trading principles.  He noted that it was important that Korea ensured that its 
beef import regime was consistent with the global  trading rules.  Korea's TRQs were frequently 
under-utilized, even for commodities for which domestic prices were significantly higher than world 
levels.  In some cases, TRQ administration eff ectively blocked imports of  intermediate products 
required by Korean producers and processors. 
34. The representative of Hong Kong, China
 highlighted the strong bilateral trade ties with Korea 
and hoped that these would continue.  Korea pursu ed a substantial number of FTAs with major 
trading partners and regional groups , and intended to continue nego tiations with others; he urged 
Korea to make use of its FTAs to help advance mu ltilateral trade liberalization.  Hong Kong, China 
encouraged Korea to introduce improvements in sever al tariff-related areas (bindings, flexible tariffs, 
TRQs) as well as to step up efforts to reform its agricultural sector and thus reduce distortions in both 
trade and production of agricultural products.  WT/TPR/M/204 
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 35. Both countries agreed that prevention of th e misuse or overuse of anti-dumping measures was 
a priority task for Members;  he applauded Kore a's role in the anti-dumping negotiations and looked 
forward to continued cooperation for concluding th e negotiations in this area.  Korea's steps to 
streamline and modernize its customs procedure had grea tly facilitated the flow of international trade.  
He encouraged Korea to further align its national st andards with international standards.  Hong Kong, 
China was also interested in seeing continued reform efforts in the services sector, particularly with 
regard to state-owned enterprises and foreign owners hip ceilings.  It urged further trade liberalization 
in and substantive commitments on Korea's maritim e transport service and logistics and related 
services sectors;  these would contribute to creating a logistics hub in Korea but would also accelerate further the growth of the whole economy.  
36. The representative of Ecuador
 recalled Korea's transformation, known as the "Miracle of the 
River Hangang", from one of the world's poorest agri cultural countries to a leading trading nation.  
Despite Ecuador's growing negative bilateral trade balance with Korea, there was great potential to 
further trade relations between the two countries as well as to increase FDI flows.  Despite its solidity 
and dynamism, Korea would need to address certain  challenges such as the aging population, the 
increased tax burden, and increased income inequality , which could affect growth.  Ecuador trusted 
that Korea would meet its economic targets at th e latest by 2013.  Ecuador acknowledged Korea's 
progress in the area of customs services but it was particularly concerned about the tariff regime 
applied to agricultural imports. 
37. The representative of the European Communities  referred to the stable and fruitful bilateral 
trade and investment relationship which had continued to grow;  the EC had been the single largest 
foreign investor in Korea since 1962.  To furthe r strengthen and upgrade their bilateral relationship 
the EC and Korea had been negotiating a comprehe nsive FTA since 2007.  Korea's vast potential for 
attracting foreign investment remained somewhat untapped.  The EC welcomed the creation of the Presidential Council on National Competitiveness a nd noted that one of the Government's top 
priorities was to ensure economic growth by attrac ting more FDI inflows.  He urged Korea to pursue 
its plans aimed at boosting investment and grow th through liberalization and deregulation.  
38. Korea's outward-oriented economy benefited enormously from a strong and rules-based 
international trading system.  His delegation was concerned about the implementation of certain SPS 
measures.  Korea, a member of several internationa l bodies in this area, was supposed to apply animal 
and plant quarantine requirements based on these intern ational standards but, it appeared not to fully 
follow the international guidelines and recommenda tions set out by the World Organization for 
Animal Health (OIE), in particular those relating to  the determination of BSE-risk status of exporting 
countries.  The EC sought the reasons for not r especting and adopting these international science-
based recommendations. 
39. The representative of Japan
 indicated the significance of the bilateral economic cooperation 
and trade relationship in different fora and at various  levels.  International trade played a pivotal role 
in Korea's economy.  Korea's investment policy w as aimed at revitalizing the economy by creating a 
business-friendly environment.  The September 2008 po licy package of proposed changes to tax laws, 
which included the largest tax reductions ever, would increase support for inward FDI.  Japan 
welcomed the establishment of the Presidential C ouncil on National Competitiveness and other efforts 
to solicit foreign investors' opinions and incorp orate their suggestions into policies.  Japan 
commended Korea's progress in harmonizing standards to international norms as well as IPR 
enforcement measures. 
40. The representative of Colombia  noted that a better balance was needed, as well as increased 
bilateral trade flows in its growing relations  with Korea.  Korea's growth stemmed, inter alia,  from 
the high degree of internationalization and globaliza tion of its economy.  Korea needed to take action 
to control inflation and curb income inequalities.  Greater openness was required in certain sectors.  WT/TPR/M/204 
Page 12  
 
 No significant tariff changes had been made since the previous TPR.  Trade restrictive tariff-related 
measures (e.g. TRQs, adjustment duties) affected several sectors, including agriculture.  Colombia wondered about the type of measures Korea planned to adopt in order to simplify the customs tariff 
system, as well as to increase transparency and the predictability of trade relations.  A successful 
conclusion of the Doha Round would imply the reform of the agricultu ral regime and the considerable 
reduction of distortion in this sector.  Improved pr oductivity was required in the services sector, which 
was affected by measures limiting foreign competition.   
41. The representative of Chinese Taipei
 stated that the similarities between Korea's and the 
Separate Customs Territory's economic developm ent models, which were both driven by the 
promotion of foreign trade, explained their paralle l negotiating positions within the WTO.  There was 
great potential to work together to stimulate more trade liberalization and reform worldwide under the 
auspices of the WTO.  Recent economic growth ra tes and the rise in the level of per capita GDP 
suggested, inter alia,  that Korea was on track for becoming a major industrialized country in a short 
period of time.  Korea was one of the most active players on the FTAs "bandwagon".  While reducing 
potential export barriers these FTAs added inconvenience and complex ities to Korea's trade regime.  
Given its stated commitment to the MTS, Korea might  consider sharing its contributions in FTAs with 
Members on an MFN basis.  
42. The representative of Chile  pointed out that Korea was an example of how to do things right.  
Korea was one of the few development miracles of the XXth century.  There had been a 300% increase 
in bilateral trade flows since the entry in force of  their FTA four years ago.  He wondered how Korea 
could guarantee that the flexible tariffs observed bound levels.  And how Korea could justify the 
compatibility of these variable tariffs with the WT O provisions, in light of the conclusions of the 
Appellate Body report on the Chile - price bands case.   He asked Korea to indicate the products that 
were unbound and subject to flexible or adjustment tariffs. 
43. The two countries shared a common systemic  view.  The Korean economy could be 
significantly reformed if the DDA was to conclude successfully.  In the agriculture sector, high tariffs, 
the complex TRQs administration system, export restrictions, and several state-owned trade 
enterprises distorted domestic prices, so the price of food for Korean consumers was often double that 
for the rest of the world.  The Doha Round could introduce gradual agricultural reform with sufficient 
safeguards for the more sensitive sectors.  Korea granted subsidies to fisheries at levels that could lead 
to over-fishing, thus jeopardizing the activity's sust ainability.  The outcome of the Doha Round could 
limit and even ban some of these subsidies while allowing support for the more vulnerable segments 
such as small fishing, and recognize community self-re gulation.  It would also improve Korea's access 
to overseas markets for its manufactured goods and would eliminate its non- ad valorem tariffs.  It 
would enable Korea to open the services  sector and improve its competitiveness. 
44. The representative of Pakistan  expressed hope for further expansion of the already excellent 
bilateral trade relations.  Korea's progress was re flected in its global competitiveness through high 
value-added/high technology pr oducts, growing labour productivity in manufacturing, and 
technological advancement.  Pakistan appreciated  Korea's role in the MTS alongside a number of 
FTAs.  Korea was one of the major FDI stockholders  in Pakistan, and Pakistan had gained a lot 
through technology transfer from Korea.  Pakist an appreciated Korea's liberal and transparent 
regulatory regime but was concerned about TRQ administration, and asked for more transparency;  
Pakistan also considered that tariffs on certain manufactures, particularly textiles, were high.  
45. The representative of India  highlighted several common features between India and Korea, 
including the growth and composition of their mutu ally beneficial bilateral trade and investment 
relations.  The latest round of negotiations on th e India-Korea Comprehensive Economic Partnership 
Agreement (CEPA) in goods, services, and investme nt had taken place in September 2008 and an 
agreement was expected to be signed soon.  He pointed out, inter alia,  that according to the latest IMF 
country report on Korea, its business cycle was turning downwards while inflation pressures had  WT/TPR/M/204 
 Page 13 
 
 
 increased;  the current account had fallen into defi cit and the risk to the economic outlook were 
sizeable for both growth and inflation.  Kore a had spent almost US$25 billion since March 2008 to 
support the won, and the economy had started feel ing pain from the global credit crisis, which had 
obvious implications for its trade performance.  Re calling the three action areas put forward at the 
Asian Economic Forum on East Asia  in June 2008, India asked for any further suggestions for 
responding to the current global financial crisis. 
46. The representative of Peru  indicated that her country and Korea were engaged in a feasibility 
study for the conclusion of an FTA.  Both c ountries believed in the complementarity between 
unilateral, bilateral, regional a nd multilateral trade liberalization.  Korea's significant challenges 
required major internal and sectoral reforms, incl uding for example the fisheries sector where Korea 
was a leading nation. 
47. The representative of Nigeria  acknowledged the various bilateral programmes, which 
included an offer of technical support by Korea in th e area of agricultural development, assistance to 
modernize Nigeria's railway system, key investme nts in the oil sector, and the sponsoring of an 
economic strategy training programme in the area of human resource development.   Her delegation 
commended, inter alia,  Korea's efforts in market diversif ication;  the liberalization of key 
infrastructural services;  reduction of oil dependen ce, and aggressive recourse to renewable energy 
improvements;  and the establishment of "Bad Banks" as a safe way of loans recovery from 
delinquent borrowers.  Not many Members had tabl ed as many proposals and submissions as Korea 
since the start of the DDA negotiations.  Nigeri a lauded Korea's contribution to WTO technical 
assistance activities including capacity-building activ ities for the promotion of the development 
dimension of the multilateral trading system, wh ich totalled US$950,000 be tween 2004 and 2007.  
48. The representative of Honduras  highlighted aspects of the growing bilateral trade and 
investment relations, including Korea's position as a major market for Honduras' coffee.  She noted 
Korea's progress in trade openness indicators as well as its rank among leading trading nations and as 
an FDI source worldwide.  Korea had maintained its position among the highest ranking countries on 
the United Nations Human Development Index.  It s continued export competitiveness was due to the 
growth of labour productivity in the manufacturing sector, driven particularly by improvement in 
technology.  However, productivity in the se rvices sector remained low compared with 
manufacturing.  Korea had made progress on sta ndard setting reform a nd had privileged quality 
improvement rather than reducing the quantity of standards.  She acknowledged Korea's participation 
in the DDA and commitment to multilateralism despite the negotiation of various FTAs.  
49. The representative of Singapore  pointed out the substantive and continuous bilateral trade 
growth since the entry in force of the Ko rea-Singapore Free Trade Agreement (KSFTA) in 
March 2006; Singapore was Korea's second largest As ian investor.  Her delegation was concerned 
with Korea's use of anti-dumping provisions, includ ing against chemicals exports from Singapore.  
Singapore was also concerned that some governme nt procurement was not  covered by Korea's 
commitments under the GPA and that foreign supp liers seemed to be losing ground.  She also 
expressed concern about Korea's sanitary and p hytosanitary (SPS) measures on pre-mixes and 
processed meat products, which impeded market ac cess because of the process of extensive testing 
prior to importation.   
50. The representative of Guatemala  stated that bilateral cooperation, trade, and investment 
relations registered a noticeable growth rate and were complementary.  Korea was one of Guatemala's main destinations for sugar exports; Korean invest ment, particularly in the garment industry, had 
contributed to the creation of many jobs in Guat emala.  She also discussed the activities undertaken 
by the International Cooperation Agency of Korea in the development of human resources in several 
areas and support for economic growth for the po or indigenous populations Guatemala.   WT/TPR/M/204 
Page 14  
 
 V. REPLIES BY THE REPRESENTATIVE OF THE REPUBLIC OF KOREA AND 
ADDITIONAL COMMENTS 
51. The representative of Korea
 stated that 22 Members had submitted written comments and 
questions and another 4 Members ha d made oral statements with a dditional comments and questions.  
His delegation had already submitted written respon ses and he would address some of the questions 
orally under three headings:  (i) economic policy;  (ii) trade policy;  and (iii) sectoral issues. 
(i) Economic policy 
52. Regarding economic policy and in  particular FDI, the authorities were doing everything to 
encourage inward FDI but the outcome was not refl ecting all their efforts.  He referred to the 
three reasons for the decline of FDI inflows ci ted in the Secretariat Report.  Concerning the 
appreciation of the won, this was now depreciating,  due to the financial turbulence rather than the 
efforts of the Government.  Regarding the increase in cost of doing busin ess, changes in the won 
exchange rate (i.e. depreciation) could help deal with this issue.  With respect to the regulatory 
burden, he referred to the importance given by th e new President of Korea, Mr. Lee Myung Bak, on 
this matter.  The new business-friendly Government had taken action by establishing the Presidential 
Council on National Competitiveness as well as by pr omoting regulation to make the economy more 
competitive.  Corporate and income tax rates were being cut.  The President was attending meetings 
of the Presidential Council.  The head of a branch  of an automobile company had stated that the 
Korean plant was one of the firm's few around the world that was making a profit.  He hoped that, 
similarly, more foreign companies would find Korea's business environment conducive. 
53. On privatization and the increasing competitiveness of the Korean economy, he explained that 
following the 1997 financial crisis his authorities ha d aimed at quite fundamental reforms in four 
areas:  financial institutions, business sector corporations, public sector (especially public 
corporations), and industry relati ons.  Progress with public corporations was rather sluggish compared 
with the other areas and this was why it was becoming  one of the new Government's priority areas.  A 
three-way plan to promote restructuring of public corporations was announced recently:  a large number would be privatized, others  would be merged, and efforts would be made to improve the 
competitiveness of the remainder by adjusting their func tions.  He was confident that at the next TPR 
of Korea in 2012 there would not still be 305 public corporations in place. 
54. Regarding ways of coping with the present fi nancial turbulence, one Member had quoted his 
words pronounced at a seminar organized by th e World Economic Forum in Kuala Lumpur in 
mid-June 2008, when the world economy was sufferi ng from three "fs":  the first "f" standing for 
financial crunch;  the second "f" for fuel price hike;  and the third "f" for food price hike.  However, 
the world economy had changed quite a lot since th en:  the financial crunch was nothing like the 
current financial turbulence, but the price of fuel and food had gone down.  Governments had to shake 
off the temptation to take action that was inconsiste nt with market principles and try to resolve these 
issues through further reform and liberalization.  Re ferring to the second point that he had made at the 
June meeting, about the negative impact of gl obal economic difficulties upon less privileged class in 
the society, he indicated that Governments would have  to think seriously about how to deal with this;  
Korea was doing so, like a large number of WTO Members.  His third point referred to the role of 
large Asian economies at times of economic crises.  Three or four Asian economies had the largest 
volume of hard currency deposits.  In the aftermath of the 1997 financial crisis a large number of 
Asian economies agreed on the Chang Mai initiative,  a foreign exchange swap system based upon 
their local currencies currently in operation.  They also agreed on an Asian bond market, a common 
fund to further facilitate the working of the bond mark et in each of the Asian economies.  The idea for 
establishing an Asian Monetary Fund (AMF) did not pr ogress much at that time but in light of the 
current financial turbulence the discussion was being revived among the finance ministers of Korea,  WT/TPR/M/204 
 Page 15 
 
 
 Japan, and China.  An additional point and Korea's an swer to the initial question was to revive another 
old but now pertinent idea about a new international financial architecture. 
(ii) Trade policy 
55. A member of the Korean delega tion from the Ministry of Finance and Economy indicated that 
the overall simple average applied MFN tariff rate was 12.8% (6.5% for industrial goods), and 16% of 
all products were duty-free.  The trade-weighted aver age tariff, which was meaningful in international 
trade, was only 3.8% as of 2007.  Korea s upported the ambitious tariff reduction formula and 
coefficient in the DDA NAMA negotiations, thro ugh which Korea's applied rates would undergo a 
significant cut.   Except for some agricultural produc ts, Korea’s tariff structure was relatively simple, 
due to an 8% uniform tariff rates on manufactured goods, high ratio (99%) of ad valorem  duties, and 
low tariff escalation.  The current binding covera ge was 91.8% of non-agricultural products;  the 
applied MFN rates on unbound items ranged from zero  to 8%.  Korea intended to bind these tariff 
lines in accordance with the r esult of the DDA negotiations. 
56. The flexible tariffs were set taking into c onsideration domestic and international market 
conditions, to cope with import surges or price hikes;   these tariffs were within the range of Korea's 
WTO commitments.  They were predictable since the rates were established on a yearly basis 
(six months, if necessary) and were defined in Presi dential decrees available to the media one month 
prior to entry in force.  These tariffs were differe nt from the variable duties or minimum price system, 
which were subject to tariffication during the UR and thus were outlawed in the WTO.  Flexible 
tariffs sometimes also enabled autonomous liberaliza tion, since the Government decided to lower the 
tariffs under this scheme whenever there was a thre at of price hikes causing difficulties in supply of 
some essential products.  Their coverage was dimini shing;  it passed from 80 in 1997, to 27 in 2000 
and to 16 in 2008.  
57. The representative of Korea (Mr. Ahn) reiterate d that Korea's weighted average tariff had 
come down from 4.65% to 3.88% since its last Re view, in 2004 and the DDA's launch in 2001;  he 
hoped that by the time of Korea's next Review in 2012 the outcome of the DDA will have been implemented, bringing a significant reduction in Korea's tariff rates.  Korea's tariff system was complex mostly in the agriculture sector, due to th e TRQs and their very high out-of-quota rates, 
specific tariffs, and flexible tariffs, all of which reflected the particularly vulnerable situation of 
Korean agriculture.  Given the stat e of Korean agriculture, this patte rn would have to be maintained 
for a certain period of time.   
58. In addressing the relationship between FTAs and multilateralism, he said that the question 
was how did FTAs facilitate the reform and deregula tion desired by Korea.  There was competition in 
liberalization, and the objective was reform and liberalization that would further increase the 
competitiveness of the economy.  Korea could do th is multilaterally, regionally or bilaterally, and 
believed that all these efforts would complement each other.  For example, Korea was conducting 
important discussions on services liberalization at the WTO, but at the same time important progress had been made through a large number of FTAs, e.g.  in legal services in th e Korea-US FTA.  This 
services liberalization would be extended first to th e countries with which Korea had entered an FTA 
relationship, and then could be offered on an MFN basis.  The se rvices chapter in the KORUS FTA 
contained an MFN clause;  FTAs with other part ners (e.g. Chile, ASEAN) had similar clauses 
allowing them to benefit from future liberalization in the Korean services market.  Another example 
was the improved protection of the IPRs resulting from FTAs;  this outcome would be shared with all 
other WTO Members on an MFN basis. 
59. Concerning the complexity of TRQs, these were being allocated mainly through 
three modalities:  state-trading enterprises;  aucti ons;  and allocations conduc ted by certain industrial 
associations.  Supplies to the Korean market were  through one of these modalities.  The quota-fill rate WT/TPR/M/204 
Page 16  
 
 in Korea (69%, 2004) was higher than the WTO averag e (60%).  In addition, for items with a large 
amount of imports the quota fill rate was more than  90%.  Taking this into account, Korea's quota-fill 
ratio would be much higher than the WTO average level. 
60. Concerning Members' opinions on Korea's position on the DDA rules negotiations, in 
particular anti-dumping, he considered that in light of the divergence of these opinions Korea's 
position was right in the middle, and for the time being it would remain there.  Given the trade volume of the Korean economy the number of anti-dumpi ng investigations initia ted between 2003 and 2007 
was not too large.  He confirmed that the anti-dumpi ng rule in Korea was very much in line with the 
provisions of the relevant WTO Agreement as well as with practices established over the period. 
61. On technical standards, particularly conformity  assessment, a member of the Korean Agency 
for Technology and Standards explained that in August 2008 the National Standards Council decided 
to unify 13 compulsory certification marks opera ted by 5 ministries into one mark, KC (Korea 
Certification).  Module schemes for the conformity assessment procedures were simplified and 
systemized from 20 types into 9 types, which we re harmonized with the International Standard, 
ISO/IEC Guide 67.  The new certification system would be implemented in phases from July 2009 to 
January 2011.  Korea was also making efforts to extend the product coverage of self-certification, 
which was in place for the automobile sector as from 2004 and for consumer products as from 2007.   
62. With respect to the SPS-related issue, the repr esentative of Korea (Mr. Ahn) indicated that 
Korea's SPS rules and practices were strictly in lin e with the provisions of the WTO SPS Agreement 
and were founded on a scientific basis.  At the last meeting of the WTO Committee on SPS Measures certain Members had expressed concern about one am endment of the Livestoc k Epidemic Prevention 
Act.  He reiterated that the Act was consistent and would be implemented in  line with the relevant 
WTO provisions. 
63. Concerning the confidentiality of information submitted for approval of agri-chemicals and 
pharmaceuticals, a member of the Ministry of Food, Agriculture, Forestry and Fishery clarified that, 
according to the Agrochemicals Control Act, documents submitted on the raw material of 
agrochemicals should not be revealed unless the aut horities saw a public interest need.  The rationale 
for disclosure varied depending on the case.  To appl y for agrochemicals' registration, the submission 
documents (e.g. test report) may be presented only by  the owners of the documents.  However, items 
for which the registrant consented to the use of test reports, were exempt from this requirement. 
(iii) Sectoral issues 
64. The representative of Korea (Mr. Ahn) stated that  the automobile-related tax, a major issue at 
the FTA negotiations, had been simplified quite si gnificantly;  in light of past and forthcoming 
modifications, this was no longer a problem.  With resp ect to technical standards, there were all kinds 
of technical standards being used by WTO Me mbers.  Korea was making efforts to apply 
EC-consistent standards, which were being introduced  gradually on a year-by-year basis.  All efforts 
to simplify the automobile-related tax and technica l standards were being reflected in the rising 
imports of foreign automobiles in Korea  suggesti ng that the market was being liberalized in an 
important manner. 
65. Concerning agricultural subsidies, Korea's A ggregate Measurement of Support (AMS) had 
been consistently reduced from more than US$2 billi on (early 1995), in line with its UR commitments 
in this area.  Korea had made additional effo rts to provide agricultural subsidies in a less 
market-distorting manner, e.g. by abolishing the Price Support System for rice in 2005. 
66. Korea's level of liberalization in infrastructure services was relatively high. There was no 
restriction on foreign participati on in construction services and most of distribution services.  In  WT/TPR/M/204 
 Page 17 
 
 
 maritime transport services, there was no limit to fore ign equity participation in  international transport 
services;  foreign participation in cabotage operations was excluded.  With regard to telecommunication services, a 49% foreign equity  ceiling applied to facilities-based services, 
whereas indirect investment by foreigners was allo wed up to 100%.  Most limitations in financial 
services had been removed, especially in mode 3.  Korea would consistently push forward further services market reform;  for example, in the br oadcasting and communications sector, market-access 
barriers related to market entrance, ownershi p, and business would be reduced gradually. 
67. Members suggestions that fisheries-subsidy-re lated rules should be amended were based on 
two important but non-tenable assumptions:  subs idies caused over-fishing;  and fisheries were 
different from any other product, therefore subsid y-related rules should be changed accordingly.  
Korea's position remained unchanged in this area.  Apart from subsidy-related rules, the important 
matter to be addressed was the fishery management  system;  Members should not be diverted from 
the issue relating to the preservation of the fisher y resources.  Fisheries subsidies with no direct 
impact on the resources or those administered w ith proper fisheries management system should be 
allowed.  Moreover, some fisheries subsidies we re essential to support the livelihood of small and 
poor fishermen.  A few Members (e.g. Canada, EC, Japan) shared Korea's position in this area while a 
far larger number of participants in the DDA ne gotiations, who called themselves the "Friends of 
Fish", were of a different view.  Korea was more than  that, it was a lover of fish rather than a simple 
friend;  Korea was as serious in preserving fish resources as any other Member. 
68. One aspect of the TPRM was to bring Members to  work together for the WTO vision, which 
was freer trade in goods and services leading to bette r allocation of resources and higher standards of 
living.  But as Members might be taking actions no t exactly in line with the WTO vision, there was 
need for an institution like the TPRM where Memb ers would look at each others actions and make 
helpful suggestions for getting closer to the WTO vision. 
69. The discussant
 noted the importance of transparency in  order to understand each other's trade 
policy implementation, and to collaborate more for a fair, rules-based trading system that could bring 
prosperity to the peoples of the world.  Kor ea's TPR had shown how an export-oriented, open 
economy responded to the changing and challenging  global environment.  He wondered whether it 
was true that Korea had shifted away from expor t-driven growth to fight against inflation. 
70. Korea's reforms and its FDI-related incentives should have attracted more investment.  
Although the present global conditions were unfavour able, the Korean economy had the capacity to 
resolve this in time.  Privatization in some servi ces sectors could pave the way for more competitive 
market conditions that could encourage produc tivity and improve the investment climate. 
71. He referred to Korea's FTAs as well as its consolidated position as a major player in the 
multilateral arena.  However, some concern ha d been voiced about certain protective import 
measures, mainly flexible tariffs, non-tariff barriers,  and customs clearance procedures.  He strongly 
believed that, despite its increasing number of FTAs, Korea would overcome possible customs 
impediments expeditiously.  The predictability of  the tariff rates and the elimination of all 
unnecessary obstacles to trade were crucial.  He pr aised Korea for keeping IPRs high on the policy 
agenda;  he encouraged Korea to play a more leadin g role in this area and set an example, especially 
for the developing countries.  Sustainable economic  development needed continuous structural 
reforms and outward orientation for the rational allocation of resources. 
72. The representative of China  highlighted Korea's answer to Ch ina's question on the reasons for 
decline of manufacturing in Korea's economy. 
73. The representative of Chile  expressed disappointment with  respect to Korea's comments 
regarding fisheries subsidies, the relevant nego tiations and Korea negotiating position.  He recalled WT/TPR/M/204 
Page 18  
 
 that his Ambassador's response to the statement during the negotiations that Korea was a "lover of 
fish", was that: "Too much love, will kill you" (lyrics from a song). 
74. The representative of the European Communities
 asked Korea to confirm that the only use of 
the new excellent product (NEP) certificates in gove rnment procurement was for the procurement set 
aside for SMEs.  She wondered whether Korea c ould confirm whether a procuring entity could 
require the NEP certificate as proof of an inno vative product.  Regarding price controls and 
monitoring, she request further elaboration about the sort of data on import prices being monitored 
and disclosed to the public;  she also sought explan ations on the methodology of the exercise and the 
criteria for the choice of products.   
75. The representative of the United States  wondered whether the criterion was set out in the 
notice of intended  procurement or in the tender documentation whenever an additional point was to 
be given for NEP certified produc ts.  Regarding telecommunications, she sought clarification on 
whether the Prime Minister or another official in his Cabinet had the ultimate authority for telecom 
licences or whether his exclusion from supervision ap plied to both broadcasting and telecom licences.   
76. The representative of Canada  indicated that his delegation would also provide some follow-up 
questions in the course of the day. 
77. The representative of Japan  noted that his delegation ha d submitted a follow-up question 
regarding flexible tariffs and looked forward to a response within one month after the TPRB meeting. 
78. The representative of India  praised the standard-setting efficiency, effectiveness, and 
seriousness with which the Korean delegation had taken its TPR.   
79. The representative of Brazil  sought further clarification on whether the new Livestock 
Epidemic Prevention Act was already in force, and if it recognized the principle of regionalization, 
e.g. whether it was possible to consider specific regions of a foreign country as free from foot and 
mouth disease. 
80. The representative of the Chinese Taipei  stated that his delegation agreed fully with the 
proposal on a new financial architecture and hoped that  in future all the East Asian countries would 
join efforts to help all countries to get over the financial crisis.  He recalled that FTAs were 
discriminatory.  Although Korea provided a good example for FTA-expanded IPR protection 
applicable on an MFN basis,  his delegation was di sappointed with respect to tariffs.  He encouraged 
Korea to liberalize on the multilateral front in para llel with its FTA liberalization and without waiting 
for the conclusion of the DDA.  He was pleased wi th the confirmation that Korea's SPS rules were 
based on science and not only on politics.  As Chinese Taipei was a fish exporter to Korea, his delegation had raised the issue bilaterally duri ng the SPS Committee meeting this same week and 
looked forward to a mutually satisfactory outcome on this issue.  With regards to the comment by 
Chile, Chinese Taipei was like Korea a lover of fish bu t in its society this love would not kill fish but 
just increase protection.  
81. The representative of Korea
 replied that the economic rela tionship between Korea and China 
was competitive but complementary;  the large amo unt of Korean investment in China was viewed 
this way.  With respect to fisheries, Korea woul d exercise its love in such a manner that it would 
never lead to overkill.  Korea would provide a satis factory answer on the NEP certificate issues.  The 
price controls system was introduced to deal with  inflationary pressures rather than to discourage 
imports or undermine the export interests of Kore a's trading partners.  The Livestock Epidemic 
Prevention Act was in force:  in general, Korea had introduced a concept of regionalization but all 
depended on the type of plant or animal disease.  Ko rea had started to expand its network of FTA in 
1998 because, given the reality of the world economy, it believed that it was the way to go.  FTAs 
needed to have as little negative impact on the MTS possible.  WT/TPR/M/204 
 Page 19 
 
 
 VI. CONCLUDING REMARKS BY THE CHAIRPERSON 
82. The fifth Trade Policy Review of Korea has given us a much clearer understanding of Korea's 
trade policies and practices and of the challenges that it faces.  I thank Mr. Ahn Ho-young, Deputy 
Trade Minister of the Ministry of Foreign Affair s and Trade, and his delegation, as well as the 
discussant, Ambassador Bozkurt Aran of Turkey, and Members of the TPRB for contributing to our 
informative and constructive exchange of views dur ing these two days.  Korea's response to the large 
number of questions is also very much appreciated. 
83. Members commended Korea for its prudent macroe conomic policies and structural reforms, 
including its continuing pursuit of open trade and i nvestment policies, which have contributed to it 
becoming a more outward-oriented economy enjoyi ng stable growth, declining unemployment, 
increasing per capita incomes, and contained inflation.   In the midst of the present financial upheaval, 
several Members recalled Korea's recovery from the Asian Financial Crisis through increased 
liberalization (rather than protectionism), an  important lesson in today's global economic 
environment.   
84. Several members noted that inward FDI has d eclined as a proportion of GDP and is low by 
industrialized country standards.  They encouraged Korea to further liberaliz e its foreign investment 
regime and continue structural reforms, especially involving deregulation and privatization.  Members 
welcomed measures taken to create a business-friendl y environment, including  the creation of the 
Presidential Council on National Competitiveness.   
85. Members praised Korea's active and constructive participation in the Doha Round.  At the 
same time, some Members urged Korea to ensure that its regional trade agreements are 
complementary to the multilateral trading system .  Members also acknowledged Korea's support for 
the WTO's technical assistance activities.   
86. Korea was commended for its streamlined customs procedures.  Members noted that the tariff 
remains relatively high, given Korea's level of development, and somewhat complex, involving a 
multiplicity of rates.  Members were concerned that Korea's flexible tariff mechanism allows 
discretionary changes in certain rates.  Members also remarked that the average applied MFN tariff 
for agricultural products is more that eight times higher than the tariff for non-agricultural products.  They encouraged Korea to step up agricultural re forms and thus reduce distortions in both production 
and trade of agricultural goods.  Members also e xpressed concern about several aspects of Korea's 
agricultural tariff rate quotas, which are under-u tilized even for commodities for which Korea's 
domestic prices are significantly higher than world levels.  Members urged Korea to make 
improvements in these and other areas so as to make its trade regime more transparent and 
predictable. 
87. Some members were concerned about Korea' s recourse to anti-dumping actions and to 
changes in its calculation of dumping margins.  Certain Members sought clarifications on some 
aspects of technical standards and SPS practices.  So me Members noted Korea's further strengthening 
of intellectual property rights  and expressed interest in other related developments. 
88. Some Members noted the high degree of government intervention in agriculture and 
expressed concern regarding subsidies to the fish eries sector.  Other Members wondered about the 
ways for enhancing competitiveness of the services sect or, whose labour productivity was half that of 
manufacturing.  In addition, certain Members raised questions over the lack of foreign participation in 
telecoms and broadcasting, as well as plans for ma rket opening with regard to professional services. WT/TPR/M/204 
Page 20  
 
 89. To conclude, I would again like to thank Ko rea's delegation for enabling us to understand 
better its trade and trade-related policies and the domes tic and international contexts in which they are 
formulated and implemented.  I would also like to thank the discussant for his insightful comments, 
and Members for contributing to what has been a ve ry enlightening two days of discussions.  We look 
forward to receiving responses to the remaining outstanding questions within the next month. 
__________