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S
Trade Policy Review
Republic of Korea
DDA Negotiations
Erdem Tokmakoglu
S
Appendix
• Korea DDA
• Tiered Reduction formula
• Swiss Formula
• Mode 4
• Natural Members
• Movement of Natural Persons
• Multilateral Environmental Agreements
• Observer status
• Trade facilitation
• Single-window System
• SDT Treatment
• Capacity Building
General Picture
S Higher level of market access through the DDA
S Large number of countries participation
S Minimizing transaction costs
S Predictability and transparency
S Tiered reduction formula for agriculture
S Flexibility
S Swiss formula
S Liberalization of key infrastructure services
General Picture
S Improvements on Mode 4
S Misuse or overuse of antidumping measures
S Avoid negative effects of fisheries subsidies on fish
resources
S Financial and administrative burdens of negotiations
S Information exchange between MEA Secretariats and
WTO committees
General Picture
S Criteria for the granting of observer status
S Liberalization of environmental goods and services
S Multilateral rule on trade facilitation
S Submitting and co-sponsoring on many specific
measures on trade facilitation
S Differentiated treatment, technical assistance, capacity
Building for LDCs
Paragraph 41
Since the lunch of the DDA,
Korea has played an active
and constrictive role in the
negotiations.
Korea fully recognizes the
importance of trade and
development.
Paragraph 41
In international trade;
üOpen Markets
üNon-discrimination
üGlobal competition
Conductive to global and
national welfare.
Paragraph
42
S Utmost importance for
Korea; achieving higher
level of market access1
though the DDA
S Market access for
goods in
the WTO means the
conditions, tariff and
non-tariff measures,
agreed by members for
the entry of specific
goods into their
markets.
S Korea supports
ambitious approaches to;
ü Market access
negotiations
ü Fully engages in all
negotiating theatres.
Paragraph 42
Substantial expansion of
global market can also be
achieved through participation
of a large number of countries
Korea believes;
üAppropriate flexibilities within
negotiating framework to each
member country
•Specific Concerns
•Sensitivities
ØThis will encourage deeper
engagement
Paragraph 43
S Korea has also worked, together
with other like-minded Members on;
ü Minimizing Transaction Costs1;
ü Market access issues
ü Non Tariff barriers
1. In economics and related
disciplines, a transaction cost is
a cost incurred in making an
economic exchange (restated: the
cost of participating in a market).
Trade
environment
Consumer
welfare
Transparency
Predictability
Returns in
business
Paragraph 44
Agriculture
Korea believes;
• Reduction in trade-
distorting domestic support
• Substantial improvements
in market access
Will be achieved through a
tiered reduction formula.
Paragraph 44 Agriculture
S Korea believes that the full modalities should take into occur
Member’s individual agricultural realities duly and fairly,
S And, reflect the concerns and interests of both exports in a
equitable and balanced manner
S Considering the different tariff structures among members and
vulnerabilities.
S Especially in food security, a sufficient level of flexibility should
be given to members
Example Tiered Reduction
Formula
S Tiered Reduction Formula for Albania, Armenia, Georgia, Kyrgyz Republic
and Moldova.
S (a) where the base level of OTDS is greater than US$60 billion, or the
equivalent in the monetary terms in which the binding is expressed, the
reduction shall be [75][85] per cent;
S (b) where the base level of OTDS is greater than US$10 billion and less
than or equal to US$60 billion, or the equivalents in the monetary terms in
which the binding is expressed, the reduction shall be [66][73] per cent;
S (c) where the base level of OTDS is less than or equal to US$10 billion, or
the equivalent in the monetary terms in which the binding is expressed,
the rate of reduction shall be [50][60] per cent.
Paragraph 45 Marker for
Non-Agricultural Products
Outcome in
the NAMA
The most
commercially
meaningful
benefits
WTO
members
Korea believes;
Korea supported a Swiss Formula
with dual coefficients on a line-by-line
basis.
Swiss Formula
S Greatly narrowing the gap between high and low tariffs is called
harmonizing the tariffs. The “Swiss formula” is a special kind of
harmonizing method. It uses a single mathematical formula to
produce:
ü a narrow range of final tariff rates from a wide set of initial
tariffs
ü a maximum final rate, no matter how high the original tariff was.
S A key feature is a number, which is negotiated and plugged into
the formula. It is known as a “coefficient” (“A” in the formula
below). This also determines the maximum final tariff rate.
Swiss Formula
S The formula
S Z = AX/(A+X)
S where
X = initial tariff rate
A = coefficient and maximum tariff rate
Z = resulting lower tariff rate (end of period)
Swiss Formula
Example, How a Swiss formula with a coefficient of 25 works over six
years. The coefficient of 25 also defines the maximum tariff at the end
of the period.
Swiss
Formula
Mathematically speaking
How the Swiss formula
coefficient defines the
maximum final tariff:
From the formula, Z=AX/(A+X),
as the initial tariff X rises to
infinity, X/(A+X) approaches 1,
resulting in Z=Ax1.
Paragraph 45 Marker for
Non-Agricultural Products
S Korea is participating in discussions of
electronics and electrical products sectoral
initiatives as a co-sponsor.
S With regard to NTBs, in 2004, Korea submitted
a proposal related to the vertical approach for
addressing NTBs of the electronics industry.
S In 2005, Korea led plurilateral discussions on
NTBs of the electronics industry.
Paragraph 46 Services
Key Infrastructure
Services
Construction Telecommunications Distributions Financial Services
Maritime
Transportation
Korea has been focusing on the further liberalization of;
Beneficiary not only to services themselves but to economic
development and overall economic competitiveness.
Paragraph 46
Services
Korea has also tried to
respond to the interests of
other Members including
those of developing countries.
In May 2005, Korea tabled the
first offer, which adds
improvements, in the areas of
entry and temporary stay of
natural persons, Mode 4,
among others, to it’s ambitious
initial offer.
Mode 4
S The movement of natural persons is one of the four ways
through which services can be supplied internationally under
GATS
S Otherwise known as “Mode 4”, it covers natural persons who
are either service suppliers or who work for a service supplier
and who are present in another WTO member to supply a
service.
S It does not concern persons seeking access to the employment
market in the host member, nor does it affect measures
regarding citizenship, residence or employment on a
permanent basis.
Mode 4
S Overall, the degree of Mode 4 access that has been bound is
quite shallow.
S In most instances, members have scheduled an initial
“unbound” and then qualified it by granting admission to
selected categories of persons, with a marked bias towards
persons linked to a commercial presence and highly skilled
persons.
S Duration of stay; quotas, including on the number or proportion
of foreigners employed; “economic needs tests” or “labor
market tests”, generally inscribed without any indication of the
criteria of application; pre-employment conditions; residency
and training requirements.
What Natural
Members
Natural persons who are
service suppliers of a Member
Self-employed
Natural persons of a Member
who are employed by a
service supplier of a Member
At home,and sent abroad to supply a
service
In the host country
The Annex
The GATS does not cover;
Natural persons seeking access to the
employmentmarket
Measures regarding citizenship,residence
or employmenton a permanentbasis.
Governments are free to
regulate entry and temporary
stay, provided these measures
do not nullify or impair the
commitments.
Movement of Natural
Persons
S Mode 4: “supply of a service by a service supplier of one Member, through
presence of natural persons of a Member, in the territory of any other
Member”
S Independent foreign natural persons as service suppliers
S Foreign service suppliers through foreign natural persons
S Annex on movement on natural persons
S Exclusion on access to labor market, citizenship, employment on
permanent basis
S Mode 4 covers only temporary entry and stay in a Member’s territory to
supply services
S Does not interfere with government policies regarding entry and temporary
stay of natural persons, flexibility in application of visa restrictions
Paragraph 47
Rules
Concerning rules on
antidumping measures
Urgent task; to prevent the
misuse or overuse of
antidumping measures
Korea strongly argued for the
prohibition of zeroing
altogether in dumping margin
calculations.
Paragraph 47
Rules
Concerning the disciplines on
fisheries subsidies, while actively
engaging in the talks so as to
preserve the sustainability of fish
resource, Korea cautions against
unnecessary adverse effects the
prohibition of subsidies may bring
on the fisheries sector, particularly
to socially and economically
vulnerable groups.
In this context, Korea stresses the
importance of properly working
fisheries management systems that
would help avoid negative effects of
fisheries subsidies on fish
resources
Paragraph 48
TRIPS
While Korea supports the
strengthening of intellectual
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
indications for wines and spirits.
Korea believes that any system to
be established should not impose
undue financial and administrative
burdens on Members.
Paragraph 49 Trade and
Environment
Korea recognizes;
S That the relationships between WTO rules and MEAs needs to be
defined in order to enhance the mutual supportiveness of trade
and environment
S The importance of establishing procedures for information
exchange between MEA Secretariats and the relevant WTO
committees, and the criteria for the services granting of observer
status.
S Korea continues to believe 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
Multilateral
Environmental
Agreements
These negotiations aim to
reaffirm how important it is for
trade and environmental
policies to work together for the
benefit of both.
They focus on how WTO rules
are to apply to WTO members
that are parties to
environmentalagreements,in
particular to clarify the
relationship between certain
trade measures taken under the
environmentalagreements,and
WTO rules
Observer Status
S Observer status is a privilege granted by some organizations
to non-members to give them an ability to participate in the
organization's activities.
S Observer status is often granted by intergovernmental
organizations (IGO) to non-member states and international
nongovernmental organizations (INGO) that have an interest in
the IGO's activities.
S Observers generally have a limited ability to participate in the
IGO, lacking the ability to vote or propose resolutions.
Paragraph 50 Trade
Facilitation
S Korea supports the
introduction of a
multilateral rule on
trade facilitation.
Trade facilitation
benefits
Trade Facilitation
S Trade facilitation looks at how procedures and controls
governing the movement of goods across national borders can
be improved to reduce associated cost burdens
and maximize efficiency while safeguarding legitimate
regulatory objectives.
S WTO defined trade facilitation as: “The simplification
and harmonization of international trade procedures” where
trade procedures are the “activities, practices and formalities
involved in collecting, presenting, communicating and
processing data required for the movement of goods in
international trade”.
Paragraph 50 Trade
Facilitation
S Korea has actively engaged in
the negotiations by submitting
and co-sponsoring proposals
on many specific measures of
trade facilitations
ü Inter-alia
ü Single-window
ü Release time of goods
ü Risk management
Single Window System
S The Single Window System is a trade facilitation idea.
S As such, the implementation of a single window system
enables international (cross-border) traders to submit
regulatory documents at a single location and/or single entity.
S Such documents are typically customs declarations,
applications for import/export permits, and other supporting
documents such as certificates of origin and trading invoices.
Paragraph 50
Trade
Facilitation
• Korea considers
• Differentiated treatment
• Technical assistance
• Capacity building for developing and LDC
to be important
• Supports the current
horizontal approach to
these areas.
SDT Treatment in the WTO
Agreement
S Developing countries could opt to establish their initial bound tariff
levels using ceiling bindings at whateverlevel they chose, rather
than being required to convert their existing border protection
measures into tariffs.
S They had lower reduction percentages and longer implementation
periods for their tariff reduction, export subsidy reduction and
domestic supportreduction commitments (and least developed
countries were not required to make any reduction commitments).
S Greater flexibility was provided in the use of certain policy
instruments such as investmentsubsidies or export subsidies.
Capacity Building
S Capacity building is a conceptual approach to
development that focuses on understanding the
obstacles that inhibit people, governments, international
organizations and non-governmental organizations from
realizing their developmental goals while enhancing the
abilities that will allow them to achieve measurable and
sustainable results.
S UN, World Bank, NGOs
Korea's Trade Policy Review

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Korea's Trade Policy Review

  • 1. S Trade Policy Review Republic of Korea DDA Negotiations Erdem Tokmakoglu
  • 2. S Appendix • Korea DDA • Tiered Reduction formula • Swiss Formula • Mode 4 • Natural Members • Movement of Natural Persons • Multilateral Environmental Agreements • Observer status • Trade facilitation • Single-window System • SDT Treatment • Capacity Building
  • 3. General Picture S Higher level of market access through the DDA S Large number of countries participation S Minimizing transaction costs S Predictability and transparency S Tiered reduction formula for agriculture S Flexibility S Swiss formula S Liberalization of key infrastructure services
  • 4. General Picture S Improvements on Mode 4 S Misuse or overuse of antidumping measures S Avoid negative effects of fisheries subsidies on fish resources S Financial and administrative burdens of negotiations S Information exchange between MEA Secretariats and WTO committees
  • 5. General Picture S Criteria for the granting of observer status S Liberalization of environmental goods and services S Multilateral rule on trade facilitation S Submitting and co-sponsoring on many specific measures on trade facilitation S Differentiated treatment, technical assistance, capacity Building for LDCs
  • 6. Paragraph 41 Since the lunch of the DDA, Korea has played an active and constrictive role in the negotiations. Korea fully recognizes the importance of trade and development.
  • 7. Paragraph 41 In international trade; üOpen Markets üNon-discrimination üGlobal competition Conductive to global and national welfare.
  • 8. Paragraph 42 S Utmost importance for Korea; achieving higher level of market access1 though the DDA S Market access for goods in the WTO means the conditions, tariff and non-tariff measures, agreed by members for the entry of specific goods into their markets. S Korea supports ambitious approaches to; ü Market access negotiations ü Fully engages in all negotiating theatres.
  • 9. Paragraph 42 Substantial expansion of global market can also be achieved through participation of a large number of countries Korea believes; üAppropriate flexibilities within negotiating framework to each member country •Specific Concerns •Sensitivities ØThis will encourage deeper engagement
  • 10. Paragraph 43 S Korea has also worked, together with other like-minded Members on; ü Minimizing Transaction Costs1; ü Market access issues ü Non Tariff barriers 1. In economics and related disciplines, a transaction cost is a cost incurred in making an economic exchange (restated: the cost of participating in a market). Trade environment Consumer welfare Transparency Predictability Returns in business
  • 11. Paragraph 44 Agriculture Korea believes; • Reduction in trade- distorting domestic support • Substantial improvements in market access Will be achieved through a tiered reduction formula.
  • 12. Paragraph 44 Agriculture S Korea believes that the full modalities should take into occur Member’s individual agricultural realities duly and fairly, S And, reflect the concerns and interests of both exports in a equitable and balanced manner S Considering the different tariff structures among members and vulnerabilities. S Especially in food security, a sufficient level of flexibility should be given to members
  • 13. Example Tiered Reduction Formula S Tiered Reduction Formula for Albania, Armenia, Georgia, Kyrgyz Republic and Moldova. S (a) where the base level of OTDS is greater than US$60 billion, or the equivalent in the monetary terms in which the binding is expressed, the reduction shall be [75][85] per cent; S (b) where the base level of OTDS is greater than US$10 billion and less than or equal to US$60 billion, or the equivalents in the monetary terms in which the binding is expressed, the reduction shall be [66][73] per cent; S (c) where the base level of OTDS is less than or equal to US$10 billion, or the equivalent in the monetary terms in which the binding is expressed, the rate of reduction shall be [50][60] per cent.
  • 14. Paragraph 45 Marker for Non-Agricultural Products Outcome in the NAMA The most commercially meaningful benefits WTO members Korea believes; Korea supported a Swiss Formula with dual coefficients on a line-by-line basis.
  • 15. Swiss Formula S Greatly narrowing the gap between high and low tariffs is called harmonizing the tariffs. The “Swiss formula” is a special kind of harmonizing method. It uses a single mathematical formula to produce: ü a narrow range of final tariff rates from a wide set of initial tariffs ü a maximum final rate, no matter how high the original tariff was. S A key feature is a number, which is negotiated and plugged into the formula. It is known as a “coefficient” (“A” in the formula below). This also determines the maximum final tariff rate.
  • 16. Swiss Formula S The formula S Z = AX/(A+X) S where X = initial tariff rate A = coefficient and maximum tariff rate Z = resulting lower tariff rate (end of period)
  • 17. Swiss Formula Example, How a Swiss formula with a coefficient of 25 works over six years. The coefficient of 25 also defines the maximum tariff at the end of the period.
  • 18. Swiss Formula Mathematically speaking How the Swiss formula coefficient defines the maximum final tariff: From the formula, Z=AX/(A+X), as the initial tariff X rises to infinity, X/(A+X) approaches 1, resulting in Z=Ax1.
  • 19. Paragraph 45 Marker for Non-Agricultural Products S Korea is participating in discussions of electronics and electrical products sectoral initiatives as a co-sponsor. S With regard to NTBs, in 2004, Korea submitted a proposal related to the vertical approach for addressing NTBs of the electronics industry. S In 2005, Korea led plurilateral discussions on NTBs of the electronics industry.
  • 20. Paragraph 46 Services Key Infrastructure Services Construction Telecommunications Distributions Financial Services Maritime Transportation Korea has been focusing on the further liberalization of; Beneficiary not only to services themselves but to economic development and overall economic competitiveness.
  • 21. Paragraph 46 Services Korea has also tried to respond to the interests of other Members including those of developing countries. In May 2005, Korea tabled the first offer, which adds improvements, in the areas of entry and temporary stay of natural persons, Mode 4, among others, to it’s ambitious initial offer.
  • 22. Mode 4 S The movement of natural persons is one of the four ways through which services can be supplied internationally under GATS S Otherwise known as “Mode 4”, it covers natural persons who are either service suppliers or who work for a service supplier and who are present in another WTO member to supply a service. S It does not concern persons seeking access to the employment market in the host member, nor does it affect measures regarding citizenship, residence or employment on a permanent basis.
  • 23. Mode 4 S Overall, the degree of Mode 4 access that has been bound is quite shallow. S In most instances, members have scheduled an initial “unbound” and then qualified it by granting admission to selected categories of persons, with a marked bias towards persons linked to a commercial presence and highly skilled persons. S Duration of stay; quotas, including on the number or proportion of foreigners employed; “economic needs tests” or “labor market tests”, generally inscribed without any indication of the criteria of application; pre-employment conditions; residency and training requirements.
  • 24. What Natural Members Natural persons who are service suppliers of a Member Self-employed Natural persons of a Member who are employed by a service supplier of a Member At home,and sent abroad to supply a service In the host country
  • 25. The Annex The GATS does not cover; Natural persons seeking access to the employmentmarket Measures regarding citizenship,residence or employmenton a permanentbasis. Governments are free to regulate entry and temporary stay, provided these measures do not nullify or impair the commitments.
  • 26. Movement of Natural Persons S Mode 4: “supply of a service by a service supplier of one Member, through presence of natural persons of a Member, in the territory of any other Member” S Independent foreign natural persons as service suppliers S Foreign service suppliers through foreign natural persons S Annex on movement on natural persons S Exclusion on access to labor market, citizenship, employment on permanent basis S Mode 4 covers only temporary entry and stay in a Member’s territory to supply services S Does not interfere with government policies regarding entry and temporary stay of natural persons, flexibility in application of visa restrictions
  • 27. Paragraph 47 Rules Concerning rules on antidumping measures Urgent task; to prevent the misuse or overuse of antidumping measures Korea strongly argued for the prohibition of zeroing altogether in dumping margin calculations.
  • 28. Paragraph 47 Rules Concerning the disciplines on fisheries subsidies, while actively engaging in the talks so as to preserve the sustainability of fish resource, Korea cautions against unnecessary adverse effects the prohibition of subsidies may bring on the fisheries sector, particularly to socially and economically vulnerable groups. In this context, Korea stresses the importance of properly working fisheries management systems that would help avoid negative effects of fisheries subsidies on fish resources
  • 29. Paragraph 48 TRIPS While Korea supports the strengthening of intellectual 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 indications for wines and spirits. Korea believes that any system to be established should not impose undue financial and administrative burdens on Members.
  • 30. Paragraph 49 Trade and Environment Korea recognizes; S That the relationships between WTO rules and MEAs needs to be defined in order to enhance the mutual supportiveness of trade and environment S The importance of establishing procedures for information exchange between MEA Secretariats and the relevant WTO committees, and the criteria for the services granting of observer status. S Korea continues to believe 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
  • 31. Multilateral Environmental Agreements These negotiations aim to reaffirm how important it is for trade and environmental policies to work together for the benefit of both. They focus on how WTO rules are to apply to WTO members that are parties to environmentalagreements,in particular to clarify the relationship between certain trade measures taken under the environmentalagreements,and WTO rules
  • 32. Observer Status S Observer status is a privilege granted by some organizations to non-members to give them an ability to participate in the organization's activities. S Observer status is often granted by intergovernmental organizations (IGO) to non-member states and international nongovernmental organizations (INGO) that have an interest in the IGO's activities. S Observers generally have a limited ability to participate in the IGO, lacking the ability to vote or propose resolutions.
  • 33. Paragraph 50 Trade Facilitation S Korea supports the introduction of a multilateral rule on trade facilitation. Trade facilitation benefits
  • 34. Trade Facilitation S Trade facilitation looks at how procedures and controls governing the movement of goods across national borders can be improved to reduce associated cost burdens and maximize efficiency while safeguarding legitimate regulatory objectives. S WTO defined trade facilitation as: “The simplification and harmonization of international trade procedures” where trade procedures are the “activities, practices and formalities involved in collecting, presenting, communicating and processing data required for the movement of goods in international trade”.
  • 35. Paragraph 50 Trade Facilitation S Korea has actively engaged in the negotiations by submitting and co-sponsoring proposals on many specific measures of trade facilitations ü Inter-alia ü Single-window ü Release time of goods ü Risk management
  • 36. Single Window System S The Single Window System is a trade facilitation idea. S As such, the implementation of a single window system enables international (cross-border) traders to submit regulatory documents at a single location and/or single entity. S Such documents are typically customs declarations, applications for import/export permits, and other supporting documents such as certificates of origin and trading invoices.
  • 37. Paragraph 50 Trade Facilitation • Korea considers • Differentiated treatment • Technical assistance • Capacity building for developing and LDC to be important • Supports the current horizontal approach to these areas.
  • 38. SDT Treatment in the WTO Agreement S Developing countries could opt to establish their initial bound tariff levels using ceiling bindings at whateverlevel they chose, rather than being required to convert their existing border protection measures into tariffs. S They had lower reduction percentages and longer implementation periods for their tariff reduction, export subsidy reduction and domestic supportreduction commitments (and least developed countries were not required to make any reduction commitments). S Greater flexibility was provided in the use of certain policy instruments such as investmentsubsidies or export subsidies.
  • 39. Capacity Building S Capacity building is a conceptual approach to development that focuses on understanding the obstacles that inhibit people, governments, international organizations and non-governmental organizations from realizing their developmental goals while enhancing the abilities that will allow them to achieve measurable and sustainable results. S UN, World Bank, NGOs