1. 2013.11.15 KOTRA TRADE CENTER, JAKARTA Deputy Director Lee, Kyungseok ASEAN Market Strategy ~ by utilizing FTA ~

2. Contents 1. Current FTAs in ASEAN 2. Current Conditions for Cooperation 3. ASEAN Market Strategy

3. 1. Current FTAs in ASEAN

4. Framework Agreement (2005.12 Sign) Trade in Goods (in effect from 2007.6) Trade in Services (in effect from 2009.5) Investment (in effect from 2009.9) Dispute Settlement Mechanism Economic Cooperation The meaning of Korea-ASEAN FTA - The first FTA with Mega trade-bloc ※ Korea-EU FTA: 2011.7 in effect, Korea-US FTA: 2012.3 in effect ※ ASEAN is No. 2 in trade volume among major trade-blocs and countries China 1,681 > ASEAN 1,006 > EU 780 > Japan 710 (‘13.9, 100 billion) - Raising Competitiveness vs China and Japan in ASEAN Market ※ China-ASEAN FTA: 2005.7 effect, Japan-ASEAN AJCEP: 2008.12 effect 1. Current FTAs in ASEAN

5. Korean-ASEAN FTA Tariff Reduction Reduced to 0% until 2010 For ASEAN 6, reduced to with in 5% until 2012 Normal Track Reduced to 20% until 2012, to 0~5% until 2016 Reduced to 20% until 2012, to 0~5% until 2016 Sensitive List A. 50% rate capping B. Reduced by 20% C. Reduced by 50% D. Subject to TRQ E. Exemption (40 items) A. 50% rate capping B. Reduced by 20% C. Reduced by 50% D. Subject to TRQ E. Exemption (40 items) Highly Sensitive List SL Tariff Reduction Schedule - Normal Track (90%): Country’s economic status considered ※ Korea-ASEAN 6: Already abolished(’12), Thailand: until 2017 ※ Cambodia, Myanma, Laos: until 2020, Vietnam: until 2018 - Sensitive Track (10%): Reduced to 0~5% until 2016 ※ Highly Sensitive List: 50% capping, Exemption, etc. 1. Current FTAs in ASEAN

6. Korea-Indonesia CEPA (Comprehensive Economic Partnership Agreement) - Agreed on concluding until this year (Summit talk, 2013.10) - Discussion of concession of existing SL such as Car, Steel - Korea-Indonesia CEPA 6th Negotiation (11.4~8, Bali) Korea-Vietnam FTA - 2012.8 Start of Negotiation, 2013.10 3rd Negotiation (Busan) RCEP (Regional Comprehensive Economic Partnership) - 2012.11 Start of Negotiation, Target settlement at the end of 2015 - 16 Nations: Korea, ASEAN, China, Japan, Australia, New zealand, India TPP (Trans-Pacific Partnership) - Start in 2006 with Chile, New zealand, Singapore, Burunai. US added ’08 - Australia, Peru, Vietnam, Japan, Canada, Mexico are added afterwards Bilateral Economic Cooperation Multilateral Economic Cooperation 1. Current FTAs in ASEAN

7. 2. Current Environment for Cooperation

8. Emerging as the core “Shared Growth Partner” 2. Current Environment for Cooperation MarketExpansionMarketExpansion Rapid annual growth rate more than 5% More Middle Incomers, More purchasing power Infra Demand High High Rapid Industrialization, Urbanization Need to improve the Poor Infrastructure Young Country 60% of total population is under 35 Work(Produce) and Consume(Growth) coexist Rich Natural Resource Rich VIP-MTS 6 Countries possess 87% of world palm- oil, 80% of rubber, 44% of natural gas Many Korean Companies and related Markets - 5,500 companies Hire 1.5 million employees, investing, 4.3 billion U$ (‘2010) Rapid growth of Foreign Direct Investment - 47.4 billion (’09)  117 billion (‘11): Near to Investment to China (124 billion) Many Korean Companies and related Markets - 5,500 companies Hire 1.5 million employees, investing, 4.3 billion U$ (‘2010) Rapid growth of Foreign Direct Investment - 47.4 billion (’09)  117 billion (‘11): Near to Investment to China (124 billion)

9. Competitive FTA Cooperation 20072012 ASEA N FTA Status 2 ======================== China (‘05.7, China-ASEAN FTA effect) Korea (‘07.6, Korea-ASEAN FTA effect) 6 (+4) ======================= Japan (‘08.12, AJCEP effect) AFTA (‘10.8, ASFTA effect) India (‘10.1, India-ASEAN effect) Australia/New zealand (‘10.1, AANZFTA effect) The effect of existing FTA slows, due to NEW FTAs - Other Economic Cooperations by ASEAN (in progress)  ASEAN Economic Cooperation (AEC): 2015.12 effect  GCC, Parkistan: Governments discussion, Joint research  EU: Resume negotiation from 2016 (Suspended in 2009) 2. Current Environment for Cooperation

10. FTA effect slows due to NTBs ※ Expanding trend of world NTBs: TBT Notification reach record (1,560, 2012) (TBT: Technical Barriers to Trade) NTBs in major ASEAN countries - Indonesia: Protective policy in face of Trade deficit, Balance deficit ※ NTBs are 130~190% up, Target: fabric, Hot-rolled Coil, etc. - Vietnam: Entered WTO at ‘07, but still keeps protective barriers ※ import ban, Quota System, Limit of importers, Export duty, etc. - Philippines: Many safeguards such as import ban of Korean used cars ASEAN members are increasing protective measures after going through ’08 financial crisis and quantitative tapering More frequent use of TBT by ASEAN members ASEAN members are increasing protective measures after going through ’08 financial crisis and quantitative tapering More frequent use of TBT by ASEAN members No. of World TBT Notification: WTO Appearing New Barriers 2. Current Environment for Cooperation

11. 3. ASEAN Market Strategy

12. A. Improvement of Business Environment 3. ASEAN Market Strategy ① Economic Cooperation, reflecting recent changes ① Economic Cooperation, reflecting recent changes Bilateral Economic Cooperation with ASEAN members - Sensitive List items at AKFTA can be discussed individually ※ Sensitive items such as Cars, Steel are discussed for concession in Korea-Indonesia CEPA - Japan’s case: Bilateral FTA between each of ASEAN 7 ※ Malaysia(’06.7 effect), Singapore(’07.9), Thailand(’07.11), Brunei(‘08.7), Indonesia(‘08.7), Philippines(’08.12), Vietnam(‘09.10) ※ AJCEP(ASEAN-Japan CEP)is also in effect from 2008.12

13. Overseas Cases - US: USTR makes annual NTB reports - EU: Built MA(Market Access) DB, information exchange ※ Makes annual Trade & Investment Barrier Report (~’11) - Japan: Makes annual Unfair Trade Report (~’92) Overseas Cases - US: USTR makes annual NTB reports - EU: Built MA(Market Access) DB, information exchange ※ Makes annual Trade & Investment Barrier Report (~’11) - Japan: Makes annual Unfair Trade Report (~’92) ② Measures to maintain FTA effect Measures to cope with NTBs - Systemization of Information Collecting - Constructing Information Sharing system: Database - Total Countermeasure: Cooperation among ministries 3. ASEAN Market Strategy

14. Method to increase FTA utilization - Strengthening FTA Promotion (domestic & overseas) - Forming Cooperation System for resolving Customs Clearance difficulties between countries - Improving the form of certificate of origin ③ Public activities for improving FTA utilization ▷ Reason for low utilization ◁ - Lack of information for the agreement and schedules - Lack of understanding of preferential duty, origin certificate - Time and cost for issuing certificate of origin - Lack of interest by buyers ▷ Reason for low utilization ◁ - Lack of information for the agreement and schedules - Lack of understanding of preferential duty, origin certificate - Time and cost for issuing certificate of origin - Lack of interest by buyers Low FTA Utilization (Export 68.1%, Import 29%) 3. ASEAN Market Strategy

15. Korean Export to Upper 6 is 98.1% of Korean total export to ASEAN ※ KOR  ASEAN Export: 61.5 billion KOR  Upper 6: 60.4 billion ※ The best export 10 items for Upper 6 is the same with the 10 items for ASEAN Korean Export to Upper 6 is 98.1% of Korean total export to ASEAN ※ KOR  ASEAN Export: 61.5 billion KOR  Upper 6: 60.4 billion ※ The best export 10 items for Upper 6 is the same with the 10 items for ASEAN Economic difference among ASEAN Countries - Upper 6 VS other 4 (in trade volume)  2,351VS 64 billion (37 times diff.) - Comparison by GDP  207 VS 9 billion (23 times diff.) Economic difference among ASEAN Countries - Upper 6 VS other 4 (in trade volume)  2,351VS 64 billion (37 times diff.) - Comparison by GDP  207 VS 9 billion (23 times diff.) CountryGDP (2011) GDP per Capita (2011) Populatio n (2011) Trade Volume (2011) Singapore259.849,2715.3777,874 Thailand345.65,39464.1455,258 Malaysia278.79,70028.7415,033 Indonesia845.73,509241380,952 Vietnam122.71,37489.3214,393 Philippines213.12,22395.9108,337 Myanmar51.983262.421,601 Brunei15.536,5840.417,519 Cambodia12.985215.116,905 Laos7.91,2046.67,560 FTA effect for below 4 is weak  Besides Tariff Reduction and NTBs dealing, Capacity Building approach such as CSR is needed 3. ASEAN Market Strategy B. Discriminative Approach

16. ① From Factory to Market - Made in ASEAN  Made with ASEAN, Made for ASEAN - Development of Localized & discriminative product ② Project-based Strategy - Promoting PM, Developer - Cooperation with third power, by using consortium ③ Collaboration 3.0 - Expanding cooperation by exchanging people and idea - Visa cooperation, information exchange, building common infra 3. ASEAN Market Strategy

17. Thank you Korea Trade-Investment Promotion Agency Global Business Platform