Press release: Further trade liberalization and structural
reforms, the key to sustained growth
This fourth Trade Policy Review of the Republic of Korea has
significantly contributed to an improved, informed understanding of
recent developments in Korean trade and related policies. Our
discussion has greatly benefited from the comprehensive engagement of
the Korean delegation, led by Ambassador Choi Hyuck, the insightful
comments from our discussant, Ambassador Muhamad Noor Yacob, and many
thoughtful interventions by Members.
Members noted Korea's impressive economic performance, underpinned by
generally prudent macro stabilization policies, on-going trade
liberalization and corporate and financial sector restructuring. Korea
was encouraged to continue these market oriented reforms. A major
challenge was to ensure continued economic improvements, given the
economy's reliance on exports to compensate for weak domestic demand;
this is a potential source of vulnerability.
Members welcomed Korea's active participation in the multilateral
trading system, including the Doha Development Agenda. It was
important that Korea's increasing involvement in bilateral/regional
trading arrangements be compatible with the multilateral system, and
that such agreements be sufficiently comprehensive to liberalize
Korea's trade regime in difficult areas, such as agriculture, where
most protection exists. While some Members noted that high
agricultural protection reflected food security and other
multifunctional concerns, other Members urged Korea to reform its
agricultural policies, commenting that continued high levels of price
support and tariffs as well as other forms of protection undermined
economic efficiency and penalized Korean consumers. The contrast
between low industrial and high agricultural tariffs was also noted.
Many Members thought that the multiplicity of rate bands, various
flexible tariffs and other types of duties made the Korean tariff
structure somewhat complex, and encouraged its simplification.
Agricultural tariff quotas were of particular concern, including the
possible restrictive impact on imports of their administration. Korea
was urged to reduce high tariffs on some industrial products and to
raise the coverage of tariff bindings and narrow the gap between bound
and applied levels.
Many members noted that Korea had made substantial efforts to further
liberalize its foreign investment regime; this was important at a time
when FDI inflows had fallen. Some Members inquired about the range of
tax and other incentives provided to attract investment, including the
use of various types of ôzonesö.
Members appreciated Korea's moves to harmonise standards and other
technical barriers to trade with international norms, but also
encouraged it to do more in this regard, especially in the areas of
food-related standards, labelling provisions as well as duplicative
inspection and testing requirements, including for pharmaceuticals.
Some Members worried about the possible trade restrictiveness of some
Korean SPS measures and encouraged Korea to review them.
Members welcomed efforts by Korea to improve the transparency of its
government procurement and to strengthen corporate governance and its
competition legislation and enforcement, including on the operations
of chaebols. Steps to strengthen intellectual property rules and their
enforcement were also recognized and complemented, including Korea's
recent accession to the WIPO Copyright Treaty and streamlining of
patent applications. Services liberalization, especially of the
financial and telecommunication sectors, was welcomed, although
several Members noted that certain possible weaknesses remained in the
regulatory regime for telecommunications.
Members sought clarification on a range of other issues, including:
regulatory reform, particularly of customs procedures, and contingency
measures, state trading, subsidies, privatization, services
liberalization, future agricultural reforms, trade arrangements for
rice, rules of origin, reforms in fisheries and labour markets.
Members appreciated the oral and written responses to their questions
provided by the Korean delegation, and looked forward to receiving
answers on any outstanding questions.
This successfully concludes our Review of Korea. The wide interest
shown by Members, with many advanced questions, interventions and high
attendance, reflect the important role that Korea plays in the
multilateral trading system. We now have a much better and current
understanding of its trade-related policies and measures, and
appreciate the challenges facing Korea, along with efforts to address
them in a way that is consistent with the multilateral trading system.