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POLICY REVIEWS: SECOND PRESS RELEASE AND
The Trade Policy Review Body of the World Trade Organization (WTO) concluded its third review of Korea on 26 and 28 September 2000. The text of the Chairperson's concluding remarks is attached as a summary of the salient points which emerged during the discussion.
TRADE POLICY REVIEW BODY: REVIEW OF KOREA
TPRB'S EVALUATION Back to top
The review enables the TPRB to conduct a collective examination of the full range of trade policies and practices of each WTO member countries at regular periodic intervals to monitor significant trends and developments which may have an impact on the global trading system.
The review is based on two reports which are prepared respectively by the WTO Secretariat and the government under review and which cover all aspects of the country's trade policies, including its domestic laws and regulations, the institutional framework, bilateral, regional and other preferential agreements, the wider economic needs and the external environment. A record of the discussion and the Chairperson's summing-up together with these two reports will be published in due course at the complete trade policy review of Korea and will be available from the WTO Secretariat, Centre William Rappard, 154 rue de Lausanne, 1211 Geneva 21.
Since December 1989, the following reports have been completed: Argentina (1992 and 1999), Australia (1989, 1994 and 1998), Austria (1992), Bahrain (2000) Bangladesh (1992 and 2000), Benin (1997), Bolivia (1993 and 1999), Botswana (1998), Brazil (1992, 1996 and 2000), Burkina Faso (1998), Cameroon (1995), Canada (1990, 1992, 1994, 1996 and 1998), Chile (1991 and 1997), Colombia (1990 and 1996), Costa Rica (1995), C˘te dIvoire (1995), Cyprus (1997), the Czech Republic (1996), the Dominican Republic (1996), Egypt (1992 and 1999), El Salvador (1996), the European Communities (1991, 1993, 1995, 1997 and 2.000), Fiji (1997), Finland (1992), Ghana (1992), Guinea (1999), Hong Kong (1990, 1994 and 1998), Hungary (1991 and 1998), Iceland (1994 and 2000), India (1993 and 1998), Indonesia (1991, 1994 and 1998), Israel (1994 and 1999), Jamaica (1998), Japan (1990, 1992, 1995 and 1998), Kenya (1993 and 2000), Korea, Rep. of (1992, 1996 and 2000), Lesotho (1998), Macau (1994), Malaysia (1993 and 1997), Mali (1998), Mauritius (1995), Mexico (1993 and 1997), Morocco (1989 and 1996), New Zealand (1990 and 1996), Namibia (1998), Nicaragua (1999), Nigeria (1991 and 1998), Norway (1991, 1996 and 2000), Pakistan (1995), Papua New Guinea (1999), Paraguay (1997), Peru (1994 and 2000), the Philippines (1993), Poland (1993 and 2000), Romania (1992 and 1999), Senegal (1994), Singapore (1992, 1996 and 2000), Slovak Republic (1995), the Solomon Islands (1998), South Africa (1993 and 1998), Sri Lanka(1995), Swaziland (1998), Sweden (1990 and 1994), Switzerland (1991 and 1996), Tanzania (2000), Thailand (1991, 1995 and 1999), Togo (1999), Trinidad and Tobago (1998), Tunisia (1994), Turkey (1994 and 1998), the United States (1989, 1992, 1994, 1996 and 1999), Uganda (1995), Uruguay (1992 and 1998), Venezuela (1996), Zambia (1996) and Zimbabwe (1994).
We have had an open and informative discussion of Korea's trade policies. Members were impressed by Korea's strong and swift recovery from the 1997 crisis and recognized that this recovery was largely the result of prudent macroeconomic policies and far-reaching structural reforms. In addressing the crisis, Korea had, by and large, eschewed protectionist measures and had instead taken steps to further improve the competitive environment both through domestic reform, particularly in the corporate, financial and labour spheres, and through trade and investment liberalization. Members also recognized that the multilateral trading system had contributed to Korea's recovery, by ensuring that export markets remained open. Members pointed to the role played by Korea's social protection policies in mitigating the effects of the crisis and in facilitating reforms. Members took note of the extent of the involvement of the State and the chaebols in the economy as well as their impact on domestic competition. Members urged Korea to reduce state involvement and facilitate foreign participation in several sectors.
Members expressed their appreciation for Korea's active participation in the work of the WTO. Many Members underlined that their bilateral trade and investment ties with Korea had been strengthened over the recent period. They noted Korea's increased willingness to explore bilateral trade agreements and its involvement in regional groups such as APEC and ASEAN+3. In the light of Korea's interest in such arrangements, Members sought and were given reassurance about Korea's commitment to multilateralism. Certain Members applauded Korea's initiative in providing for duty free treatment of certain items originating in Least-Developed Countries.
Members commended Korea's efforts to enhance the transparency of its trade regulations, including their publication in English. However, concern was expressed on persistent administrative delays in customs clearance and certification procedures. Members noted both Korea's complex tariff structure and its use of adjustment duties, both of which reduced the predictability of the applied rates. Members acknowledged the decline in average tariff levels in line with improving Korea's binding commitments. Members noted that indirect taxes were borne disproportionately by imports of luxury items. In the light of the size of the Korean government procurement and the implementation of the WTO Agreement on Government Procurement, certain Members considered that the share of foreign suppliers could have been expected to be higher.
On sectoral policies, Members noted the wide range of measures used to protect and assist agriculture as well as the increasing level of spending on domestic support. Some sympathized with Korea's high and increasing level of agricultural support on the grounds of multifunctionality and food security. However, other Members expressed concern over the adverse impact of these policies on domestic efficiency and consumers as well as on developing countries; they encouraged Korea to reduce market distortions in agriculture. Members recognized that weaknesses in the financial system had contributed to the 1997 crisis and unanimously welcomed the remarkable opening of this and other service sectors. Nevertheless, they believed that further action to open up the markets in non-life insurance, telecommunications and transportation was needed.
Members also sought additional details in a number of areas, including:
Members expressed their appreciation of the written and oral responses provided by the Korean delegation and its undertaking to provide additional written responses as soon as possible.
In conclusion, it is my view that this Review has provided Members with a much better understanding of Korea's trade and related policies, particularly the far-reaching reforms undertaken to address long-standing structural weaknesses exposed by the crisis. Members have been impressed by the speed and strength of Korea's economic recovery from the crisis. Notwithstanding this recovery, in our Review we have not seen complacency on the part of Korea regarding structural reform. Members urged Korea to maintain the momentum of these reforms so as to ensure that the recovery is sustained. It is my sense that Members were reassured by Korea's reiteration of its strong attachment to the multilateral trading system, but they did urge Korea to make sure that plans concerning bilateral and regional arrangements were WTO-consistent. This would not only be in Korea's long term economic interests but also to the benefit of the multilateral trading system.