RESTRICTED  WORLD TRADE  
ORGANIZATION  WT/TPR/G/137 
18 August 2004  
 
(04-3411) 
Trade Policy Review Body Original: English 
   
 
  
 
TRADE POLICY REVIEW 
 
REPUBLIC OF KOREA 
 
Report by the Government 
 
  
 
Pursuant to the Agreement Establishi ng the Trade Policy Review Mechanism 
(Annex 3 of the Marrakesh Agreement Establishing the World Trade 
Organization), the policy statement by the Government of Republic of Korea is 
attached. 
 
 
Note: This report is subject to restricted circul ation and press embargo until the end of the meeting 
of the Trade Policy Review Body on Republic of Korea. Republic of Korea WT/TPR/G/137 
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CONTENTS 
    P a g e  
I. KOREA IN THE GLOBAL TRADING SYSTEM 4 
II. ECONOMIC DEVELOPMENTS:  2000-2004 4 
 (1) D OMESTIC ECONOMIC SITUATION  4 
 (2) E XTERNAL TRADE AND INVESTMENT  5 
III. LIBERALIZATION THROUGH DOMESTIC REFORM 7 
 (1) S TRUCTURAL REFORM  8 
 (2) R EGULATORY REFORM  10 
 (3) F OREIGN INVESTMENT LIBERALIZATION  10 
IV. TRADE POLICY DEVELOPMENTS:  2000-2004 11 
 (1) K OREA AND THE WTO 11 
 (2) B ILATERAL TRADE RELATIONS  16 
 (3) F REE TRADE AGREEMENTS  18 
 (4) R EGIONAL ENGAGEMENTS  19 
V. FUTURE POLICY  DIRECTIONS 20 
 
 Republic of Korea WT/TPR/G/137 
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I. KOREA IN THE GLOBAL TRADING SYSTEM 
1. Korea strongly supports the rules-based multilateral trading system of the WTO. Since its 
accession to the GATT in 1967, Korea has learned fi rsthand that embracing an open and strong 
multilateral trading system is the best means to ac hieving economic growth a nd development. With a 
total value of trade equivalent to two-thirds of  its GDP, Korea also believes that further trade 
liberalization through the WTO offers the best chan ce for promoting greater openness in world trade, 
which will in turn create greater opportunities for fu rther economic growth an d development not just 
for Korea, but also for all other WTO Members. 
2. As one of the greatest beneficiaries of the ope n multilateral trading system, Korea has put that 
belief into practice and thus remains fully committed to the global effort to promote freer trade. As in 
the past multilateral trade negotiations, Korea is pl aying an active and constructive role in the ongoing 
Doha Development Agenda (DDA) ne gotiations. Korea has tabled over 70 submissions with a view to 
promoting further liberalization a nd strengthening the rules and disciplines of the WTO system for the 
mutual benefit of both develope d and developing countries. 
3. While Korea’s belief in the primacy of the multila teral trading system in safeguarding a freer 
global trading environment remains firm, it has recen tly been engaged in parallel efforts to utilize 
regionalism as a means to reinforce the liberalizati on efforts on the multilateral level. Korea’s first-
ever Free Trade Agreement (FTA) with Chile ente red into force on 1 April 2004, and negotiations are 
currently under way with Singapore and Japan, to  be concluded by the end of 2004 and 2005, 
respectively. Furthermore, Korea is conducting a joint study on the formation of a comprehensive 
economic relationship, including a Free Trade Area, with ASEAN as a whole. In addition, Korea will 
start a joint study on an FTA with EFTA in August 2004. 
4. Korea is also actively engaged in regiona l cooperation mechanisms, including the Asia-
Pacific Economic Cooperation (APEC), Asia-Eur ope Meeting (ASEM), and ASEAN+3 processes. 
Korea will be the host economy of APEC in 20 05, the year in which member economies are 
scheduled to conduct a mid-term review of the pr ogress towards the Bogor Go als to achieve free and 
open trade and investment in the Asia-Pacific region. 
II. ECONOMIC DEVELOPMENTS:  2000-2004 
5. Since the last trade policy revi ew, the Korean economy has continued to move in the general 
direction of recovery and growth, building on the post -Asian financial crisis recovery efforts. In the 
same period, however, there have also been some short-term fluctuations caused by new 
developments in the external and domestic ec onomic situations, incl uding the global economic 
slowdown that started in the latter half of 2000 and an increase in domestic household debt. Despite 
these difficulties, the strong performance of Korean  exports and the ongoing structural reforms across 
a wide range of areas, which have been the driving engine behind Korea’s growth, show that Korea is 
ready to bounce back to higher levels of growth once the external and domestic environment becomes 
more favorable. 
(1) DOMESTIC ECONOMIC SITUATION  
6. After suffering from the Asian financial crisis in 1997 and the post-crisis recession in 1998 
during which the economy contracted by 6.9 percent, the Korean economy achieved a speedy recovery with growth rates of 9.5 percent in 199 9 and 8.5 percent in 2000. Government policies to 
stabilize the economy, including wide-ranging structural  reforms, together with a favorable external 
economic environment, contributed to this remarkable recovery. WT/TPR/G/137 Trade Policy Review 
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7. Despite the slowdown in the world economy th at started in the second half of 2000, the 
Korean economy performed relatively well, regist ering a growth of 3.8 percent in 2001 on the 
strength of structural reform efforts of past years. However, in order to counter a prolonged worldwide slowdown, the government implemente d policy measures to support domestic demand, 
and the Bank of Korea (BOK) began to pursue a policy of  low interest rate, cutting the target call rate 
from 5.25 percent in October 2000 to 3.75 percent in July 2003. The resulting increase in domestic 
demand and robust export performance helped the Ko rean economy rebound to a 7 percent growth in 
2002 despite the continued slowdown in the world economy.  
8. However, much of the increase in demand in th e second half of 2001 and 2002 had been debt-
financed. This resulted in large debt accumulation in the household sector, which contrasted with the 
corporate sector in which the debt ratio ha d stabilized after undertaking rigorous corporate 
restructuring efforts following the Asian financial cr isis. In 2003, the Korean economy’s growth rate 
slowed to 3.1 percent as the household indebtedne ss held back the growth in consumption while 
investment continued its sluggish trend amid st continuing international uncertainties.  
9. In the period under review, inflation has been m ild and the foreign exchange rate remained 
relatively stable with some fluctuations. At the same time, the overall employment situation has seen 
much improvement, with unemployment rates falling from 7.0 percent in 1998 to 3.4 percent in 2003.  
10. In 2004, as the global security situation becomes more stable and the global economic 
recovery leads to increased demand for Korean produ cts, the Korean economy is expected to reach a 
growth rate of near or above 5 percent. During th e first quarter of 2004, the Korean economy grew by 
5.3 percent over the first quarter of the previous year. Indicators have also shown some improvement 
in the employment situation, while the current account  continued to record a surplus. Strong recovery 
in domestic demand, namely private consumption and investment, would help to make current levels 
of growth more sustainable. 
Table  1 
Major Korean Economic Indicators (1998-2003) 
 Real GDP 
Growth Rate Private 
Consumption Unemployment 
Rate Inflation Rate Won /US$ Current Account 
(US$ bn) 
1998 -6.9 -13.4 7.0 7.5 1207.8 40.4 
1999 9.5 11.5 6.3 0.8 1145.4 24.5 
2000 8.5 8.4 4.1 2.3 1259.7 12.3 
2001 3.8 4.9 3.8 4.1 1326.1 8.0 
2002 7.0 7.9 3.1 2.7 1200.4 5.4 
2003  3.1 -1.4 3.4 3.6 1197.8 12.3 
Source:  Korea National Statistical Office. 
(2) EXTERNAL TRADE AND INVESTMENT  
11. Due to the slowdown in the world economy since the second half of 2000, exports of Korean 
goods decreased by 12.7 percent to US$150.4 billion in 2001, in contrast to the previous year, which 
had seen an increase of 19.9 percent to US$172.3 billion. Imports into Korea followed a similar 
pattern. In 2000, imports swelled by 34.0 percent to US$160.5 billion, owing to the recovery in 
domestic demand in the wake of the economic uptur n in the first half of 2000 and the surge in 
international oil prices. In 2001, however, imports  dropped by 12.1 percent to US$141.1 billion.  Republic of Korea WT/TPR/G/137 
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12. In 2002, an increase in exports to China a nd a slight upturn in shipments to developed 
countries boosted exports growth to 8.0 percent, pushing up the total to US$162.5 billion. This 
upward trend in exports grew stronger in 200 3, marking an increase of 19.3 percent to 
US$193.8 billion. Imports increased as well, by 7.8 percent to US$152.1 billion in 2002 and by 
17.6 percent to US$178.8 billion in 2003. This increase is accounted for by a surge in imports of 
semiconductors, raw materials and fuel as a result of  expanding exports and increased world prices of 
oil and other raw materials. 
Table 2 
Korea Trade Statistics 
(US$ million) 
Source: Korea International Trade Association;  Bank of Korea. 
Table 3 
Trade of Major Products (%) 
 Export  Import 
 2000 2001 2002 2003  2000 2001 2002 2003 
Semiconductors 15.1 9.5 10.2 10.1 Crude oil 15.7 15.1 12.6 12.9 
Automobiles 7.7 8.9 9.1 9.9 Semiconductors 12.4 11.0 11.5 11.9 
Wireless Communication 
Devices 4.6 6.6 8.4 9.6 Petroleum Products 3.1 3.4 3.3 3.3 
Computers 8.5 7.5 8.0 7.7 Computers 4.9 4.2 3.7 3.2 
Vessel Parts/Ocean Structures 4.9 6.6 6.7 5.8 Natural Gas 2.4 2.8 2.7 2.8 
Petroleum Products 5.3 5.2 3.9 3.4 Iron Boards 1.5 1.5 1.8 1.9 
Source: Korea International Trade Association. 
13. The current account has maintain ed a surplus since 1998, with some fluctuations reflecting 
year-to-year changes in the economic environment. In  2001, the surplus shrank to US$8 billion due to 
the downturn in the world economy, which resulted in a sharper fall in exports than imports for Korea. 
While the current account balance worsened in 2002,  the trade balance improved with strong exports, 
resulting in an upward turn in the current acc ount to a surplus of US$12 billion in 2003. 
14. Since 2000, major Korean export items have b een automobiles, semiconductors, computers 
and mobile phones. Automobiles and wireless co mmunication devices have increased their respective 
shares in the total value of Korea’s exports, while the share of semiconductors declined abruptly in 
2001 and have yet to recover its past dominance. On  the other hand, major import items have been 
raw materials, including crude oil and natural gas, and semiconductors. The share of crude oil in the 
total value of imports continues to be the largest, even though it dropped somewhat to 12.9 percent in 
2003 from 15.7 percent in 2000.  Exports Growth Rate (%) Imports Growth  Rate (%) Trade Balance Current Account
2000 172,268 19.9 160,481 34.0 11,786 12,250.8 
2001 150,439 -12.7 141,098 -12.1 9,341 8,032.6 
2002 162,471 8.0 152,126 7.8 10,344 5,393.9 
2003 193,817 19.3 178,827 17.6 14,991 12,320.7 WT/TPR/G/137 Trade Policy Review 
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15. Korean exports to their major destinations – the United States, China, and Europe – have 
increased steadily after 2001. Even though the Unite d States remains a significant market for Korea’s 
exports, China for the first time in 2003 surpassed  the United States as the largest export destination 
for Korean goods. As for imports, goods from the United States, Japan and Europe have all registered 
steady increase since 2001, with Chinese share of imports to Korea gaining ground. 
Table 4 
Geographical Distribution of Korea Trade 
(US$ million) 
 Exports Imports 
 2000 2001 2002 2003 2000 2001 2002 2003 
Total 172,268 150,439 162,471 193,817 160,481 141,098 152,126 178,827 
Asia 81,093 69,930 77,327 99,312 70,262 63,085 72,306 87,069 
Japan 20,466 16,506 15,143 17,276 31,828 26,633 29,856 36,313 
China 18,455 18,190 23,754 35,110 12,799 13,303 17,400 21,909 
North America 40,037 33,247 35,121 36,902 31,349 24,198 24,854 26,674 
U.S. 37,611 31,211 32,780 34,219 29,242 22,376 23,009 24,814 
Latin America 9,369 9,730 8,864 8,802 3,263 3,445 3,743 4,594 
Europe 28,141 23,958 27,010 31,899 20,070 18,861 21,803 24,759 
Africa 2,240 2,966 2,867 3,118 2,814 1,679 1,686 2,006 
Oceania 3,522 3,297 3,643 4,906 6,898 6,410 6,822 6,765 
Source: Korean International Trade Association. 
16. After the financial crisis in 1997, the Korean  government has undertaken policy measures to 
significantly liberalize and enhance the environmen t for FDI inflows. These efforts, along with 
increased opportunities, such as cross-border M&As and privatizations, resulted in an historic peak of 
FDI inflow in 1999 and 2000. The decrease in FDI in flow in the following two years was mainly due 
to the overall decline in the total worldwide volume of FDI caused by the global economic downturn in the second half of 2000. Meanwhile, Korea’s out bound FDI increased after a sharp drop in 2001, 
driven mostly by renewed growth in Ko rean direct investment into China. 
Table 5 
Foreign Direct Investment in Korea  and Outward Investment by Kore a (On Registration Basis):  1990-2003 
(US$ million) 
 1990 1995 1999 2000 2001 2002 2003 
Inward FDI 788.5 1,775.8 9,333.4 9,283.4 3,527.7 2,392.3 3,222.0 
Outward FDI 1,051.6 3,552.0 4.197.8 4.998.9 2.420.1 2,616.5 3,429.2 
Source: Korea National Statistical Office. 
III. LIBERALIZATION THROUGH DOMESTIC REFORM 
17. Building on the successful structural reform in  the financial, corporate, labor and public 
sectors since the Asian financial crisis, the Kor ean government now aims to widen the scope of 
reform and liberalization efforts for the goal of transforming Korea into an advanced economy. As 
this requires, among others, expansi on of Korea’s growth potential, greater focus is placed on creating 
a more business-friendly environment by undertakin g various reform measures on the one hand, and 
strengthening R&D capacity by encouraging a more innovative science and technology base on the 
other. At the same time, decentralization and bala nced national development across regions and social Republic of Korea WT/TPR/G/137 
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strata are also being sought to further advance th e structure of the Korean economy. These efforts are 
closely related to Korea’s pursuit to become a Nort heast Asian business hub and to play a leading role 
in promoting peace and prosperity in the region.  
18. The ongoing government efforts include measures to  further strengthen the financial system 
and to ensure greater transparency and accountab ility in the corporate governance structure. The 
government is also promoting a more cooperative and constructive culture in the labor-management 
relations to achieve both greater flexibility and stabili ty in the labor market. At the same time, reforms 
are being carried in the public sector to strengthe n the elements of transparency, efficiency and 
competition. In addition, regulatory reform and fo reign investment liberalization are being pursued 
consistently as part of government efforts to create a more business-friendly environment and thereby 
promote further economic growth. 
(1) STRUCTURAL REFORM  
(a) Financial Sector 
19. The reform process in the financial sector has fo cused primarily on restructuring the banking 
industry, because the Asian financial crisis made it evident that an underdeveloped banking industry 
presented the greatest systemic risk to the entir e financial sector. As a result, the number of 
commercial banks in Korea was reduced from 33 at  the end of 1997 to 19 by the end of 2003, and 
merchant banks from 30 to 2 over the same pe riod. Significant changes in the operational 
management of banks have also taken place. A grea ter focus is now placed on profitability than on 
asset growth, and most banks have put in place formal risk management systems such as “credit scoring system” to reduce unexpected losses. Korean banks' new management strategies have helped 
to improve their financial positions in terms of su ch indicators as ROA, ROE, BIS ratio and NPL ratio 
to the level of the world’s leading banks.
   
20. Foreign investors have been encouraged to participate in the restructuring process. For 
example, the introduction of foreign financial ins titutions into the domestic market has helped to 
stimulate the domestic financial industry. Since the last trade policy review, almost all entry barriers 
against foreign banks have been removed. Foreign ba nks are allowed to open a branch or subsidiary in 
Korea, with only permission from the Financial Supervisory Commission (FSC). The recent approval 
rate for foreign bank branches that have passed the st andard fit and proper test is 100 percent. As of 
June 2004, there are 39 foreign banks operating in Korea, with 65 branches in total. 
21. While the banking sector showed improving profita bility, other financia l sectors posted low 
profits and even losses. The credit card industry, in particular, suffered losses of 10,474 billion won 
(US$ 8.7 billion). The government thoroughly re viewed the soundness of credit card companies’ 
loans to individual households, which were followed by  steps to prevent the difficulties in credit card 
companies from spreading to other sectors and i ndustries. In addition, the government plans to 
introduce a stricter set of guidelines for the credit card companies’ delinquency ratios in order to 
improve their financial standing. 
(b) Corporate Sector 
22. Alongside its efforts in the financial sector, the Korean government has also actively 
promoted corporate restructuring. One of the purpo ses of corporate restructuring has been to prevent 
financial institutions from accumulating new non- performing assets. The Bankruptcy Act was 
amended to facilitate and speed up the court-driven  process of liquidation or rehabilitation of ailing 
companies. At the same time, the Korea Asset Ma nagement Corporation (KAMCO) took on a major 
role in facilitating the liquidation or rehabilitation process by disposing non- performing loans through WT/TPR/G/137 Trade Policy Review 
Page 10 
 
 
M&A and sales to corporate restructuring companies (CRCs). In addition, the government established 
an ‘ongoing’ restructuring system by enacting the Corporate Restructuring Promotion Act in 2001. Under this system, creditor financial institutions re gularly assess the credit risk of debtor companies, 
so that any increase in credit risk is detected at an early stage, and prompt and self-driven corporate 
restructuring is set in motion. 
23. Since the last trade policy review, corporat e governance reform efforts have focused on 
improving the transparency of corporate manageme nt and intra-group relati ons, and strengthening the 
rights of minority shareholders as well as the responsibilities of the management and controlling 
shareholders. Furthermore, firms are now required to appoint more outside directors and retain 
independent auditing committees.  
24. Some of the improvements in corporate governance include a new requirement for 
corporations to release quarterly reports of their combined financial statements starting in 2000. The 
disclosure of information on intra-group transacti ons, shares held among affiliates and credit trading 
have now placed the shareholders in a much bette r position to oversee the management. At the same 
time, such corporate public disclosure, which provi des the public with fast and accurate information 
on corporations, has enabled investors to make ratio nal decisions and engage in securities trade more 
efficiently.  
(c) Labor Sector 
25. After the Asian financial crisis, the Korean gove rnment relaxed constraints on dismissals to 
improve flexibility in the labor market. At the same time, to improve the coverage of the social safety 
net, worksite-related health insurance and the Na tional Pension were extende d to non-regular workers 
in 2003. In addition, the Labor Standard Act w as revised in September 2003 to reduce the statutory 
working hours per week from 44 to 40. The new rul es regarding working hours will be implemented 
in stages from July 2004 according to t ype of industry and size of workplace.  
26. In September 2003, the government announced th e Roadmap for Industrial Relations Reform, 
which is intended to create the legal and institutiona l foundations for a more efficient labor market. 
The three central objectives for the industrial relatio ns reform are: minimizing the social costs from 
industrial conflicts; realizing a labor market whic h strikes a balance between flexibility and stability; 
and strengthening the social protection for vulnerable workers.  
27. The government’s current labor policy priority is  on job creation, especially for young adults. 
Reflecting this central concern, the Korea Tripar tite Commission, consisting of labor, management 
and government representatives, concluded the Soci al Pact for Job Creation in February 2004 to 
improve employment opportunities. Under the Pact, labor unions agreed to refrain from large wage 
hikes, cooperate to enhance produc tivity, and not engage in illegal union activities, while companies 
took on the promise to create more jobs through greate r investment and to enha nce transparency in the 
management, among others.   
(d) Public Sector 
28. In recent years, the Korean government has been  in the process of reforming its state-owned 
enterprises (SOEs) and government-affiliated public  corporations through privatization or 
management reform. By 2001, the government ha d sold 8 of the 11 SOEs identified in the 
privatization plan of 1998. In a short period of time, privatized SOEs ha ve greatly improved the 
quality of their services, while reducing the pri ce for consumers and increasing their profitability 
through autonomous management innovation. As for the network industries, including the electric 
power and gas industries, their restructuring and pr ivatization are being implemented with prudence, Republic of Korea WT/TPR/G/137 
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taking into account their effect on the public. As  for the non-privatized SOEs, transparency in 
governance was improved through new requirement s to make public disclosure of financial 
information. 
29. In 1998, the Korean government had launc hed a series of government reforms of 
unprecedented scope and intensity to create a “sma ll but efficient and better-serving government.” 
The goal was to enhance the level of efficiency , transparency, convenience and accessibility. As a 
result of these efforts, there we re 7 percent fewer public servants in 2002 than in 1997. At the same 
time, greater decision-making po wer was delegated to lower-level government bodies and more 
government positions were opened up to qualified people outside the government. The government 
also encouraged systematic and self-initiated refo rms within governmental bodies. Another important 
reform initiative was the creation of an “e-gove rnment” through the implementation of various 
measures, including the creation of an integrated government-wide information system.  
(2) REGULATORY REFORM  
30. In parallel with structural reform, Korea has also undertaken regulatory reform measures to 
create a regulatory environment that is conducive to greater efficiency in the market mechanism. The 
Regulatory Reform Committee (RRC), composed of 13 non-government and 7 government members, 
was established in 1998 as a central organ for the reform. In cooperation with  relevant government 
agencies, RRC overhauled the existing regulations, focusing first on deregulation. As a result, the 
total number of regulations was reduced by half in  1998 and 1999. The initial success of these efforts 
promoted greater market openness and competition, wh ich in turn contributed to the speedy recovery 
from the Asian financial crisis. At the same  time, the RRC also established a system of ex ante  
review, including the Regulatory Impact Analysis, for regulations that are newly introduced or revised. 
31. Building on the initial success of deregulati on, the RRC has placed greater emphasis on 
improving the substance of regulations. Various m easures have been taken to this end, including 
benchmarking international best practices, and rein forcing the Regulatory Impact Analysis. In 2003, 
the government identified 10 key areas for regulator y reform, including foreign direct investment, 
financial service, logistics and distribution, and la nd use. Greater efforts are being made to improve, 
ease or rationalize the regulations on these areas to construct a more business-friendly environment. In 
addition, there is now a greater emphasis on enhancing regulatory transparency as an essential component of economic reform programs.  
32. In April 2004, the Corporate Difficulties R esolution Center was established under the RRC. 
This Center aims to provide a one-stop service for resolving difficulties faced by businesses, 
especially in those cases where relevant government bodies might have divergent views. When necessary, a meeting is held by the Prime Mini ster to coordinate among the various government 
bodies to find a solution. In the three months sin ce the Center opened, it has already resolved 118 
cases out of the 146 cases it has received. 
(3) F
OREIGN INVESTMENT LIBERALIZATION  
33. After the Asian financial crisis of 1997, th e Korean government launched an aggressive 
policy to establish an open FDI regime, recognizing th at FDI would play an essential role for Korea’s 
recovery from the financial crisis and sustaine d economic growth and development. The Foreign 
Investment Promotion Act (FIPA), enacted in 1998, provides for FDI liberalization and protection. It 
also provides for various kinds of incentives and measures to improve the business and living 
conditions for foreign investors.  WT/TPR/G/137 Trade Policy Review 
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34. As of June 2004, 99.8 percent of all business se ctors classified under the Korean Standard 
Industrial Classification have been liberalized for foreign direct investment. Out of 1,058 business 
sectors, only two – radio broadcasting and television broadcasting – remain wholly restricted, and 26 
other sectors are partially restricted to FDI. All types of FDI are currently allowed including company 
establishment, M&As, acquisition of stocks, and long-term loan. Various kinds of investment 
incentives have been put in place. For example, with  the revision of FIPA in December 2003, site 
supports were expanded to cover not only the sites of foreign-invested companies, but also various 
foreign investor facilities such as schools, hospitals , drugstores and residence. Furthermore, foreign-
invested enterprises are allowed to take advantage of free land and various tax breaks in the Foreign 
Investment Zones and Free Economic Zones.  
35. Efforts have been made to improve the business environment by simplifying administrative 
procedures and establishing cooperative industrial rela tions. The Foreign Investment Service Center, 
whose main function was to provide investment support services for foreign investors, was 
reorganized into Invest KOREA in 2004. Invest KOREA provides a project-oriented one-stop service 
where a Project Manager supports foreign invest ors through the entire range of investment 
procedures. Furthermore, the Office of Inv estment Ombudsman (OIO) within Invest KOREA 
designates a Home Doctor who helps foreign-in vested companies reso lve any grievances or 
difficulties they may come across while operating in Korea.  In addition, a special support team for 
labor relations was organized at Invest KOREA in 2004 to help foreign-invested enterprises address 
labor issues. At the same time, establishing more  multi-language schools, f acilitating visa extensions, 
and improving medical services have improved th e living conditions for foreign investors. 
IV. TRADE POLICY DEVELOPMENTS:  2000-2004 
(1) KOREA AND THE WTO 
(a) Implementation of WTO Commitments  
36. Korea has faithfully implemented its Uruguay Round commitments and other WTO 
obligations for the past 10 years. Korea has been successful in bringing its laws and regulations into 
conformity with WTO norms. In some areas, Korea took voluntary liberalization measures beyond the level of its commitments, and undertook domes tic reform measures that underpin further 
liberalization.  
Trade in Goods 
37. Korea's national tariff schedule is based on HS 2002. 92 percent of all tariff lines are bound 
and the average applied tariff rate (12.83 percent fo r all goods; 6.59 percent for industrial goods only) 
is lower than the average bound tariff rate (17.27  percent for all goods; 10.04 percent for industrial 
goods only). Korea has continued to reduce the numbe r of items subject to adjustment duties from 27 
items in 2000 to 20 in 2004, as well as lowering th e rates of adjustment duties. With a view to 
achieving progressive improvement in market acce ss for products from least-developed countries, 
Korea provides duty-free and quota-free access for 88 products (HS 6-digit) from LDCs. These 
products are among the WTO-recommended list of 117 prod ucts of export interest to LDCs. Korea is 
considering an expansion of the preferential treatment to a larger number of products. 
38. The Korean government has provided support to farmers mainly through the Amber and 
Green Box provisions. However, in the context of  the DDA negotiations and implementation of the 
Uruguay Round commitments, Korea has gradually sh ifted away from the Amber Box to the Green 
Box, which has no or minimal trade-distorting effects. The total amount of the Aggregate 
Measurement of Support (AMS) will have been re duced from 2.18 trillion won in 1995 to 1.49 trillion Republic of Korea WT/TPR/G/137 
 Page 13 
 
 
won by 2004. Domestic subsidies that fall under th e Amber Box have been provided only for rice, 
barley, soybean, corn, and rape, with rice accoun ting for more than 90 percent of total product-
specific AMS. Moreover, in the context of DDA ne gotiations on agriculture, the Korean government 
has frozen its purchasing price of rice in 2003 at the 2001 level, and plans to reduce it in 2004. 
39. In compliance with the UR commitments on ag riculture, Korea has abolished import quotas 
on beef as of January 2001. Special treatment has been provided for Korean rice for ten years since 
the entry into force of the WTO Agreement in 1995 under Annex 5B of the Agreement on Agriculture. In order to continue the special treatm ent, Korea is negotiating with nine countries that 
have expressed interest in this issue, namely, Argentina, Austra lia, Canada, China, Egypt, India, 
Pakistan, Thailand and the United States.  
40. Technical barriers to trade have been si gnificantly reduced. The domestic regulatory 
framework has become more transparent and cons istent with international rules and norms. For 
example, the Korean government completed in 1998  a comprehensive review of Korean Standards 
(KS) for the purpose of harmonizing them with IS O/IEC standards. Since then, the government has 
endeavored to harmonize Korean Standards with international standards. As of December 2003, 
Korea has harmonized 9,784 of 9,856 Korean Sta ndards subject to harmonization with relevant 
ISO/IEC standards. Also, 1,800 Korean Standard s will be newly established and harmonized with 
relevant ISO/IEC standards by the end of 2004. 
41. Korea introduced the “system of prior-confirme d registration of imported foods" in August 
2002 to simplify inspection procedures for imported f oods by ensuring the safety of foods prior to 
importation. In addition, Korea introduced an Inte rnet-based reporting system on imported foods to 
ensure promptness and transparency. Also, Korea promotes harmonization of its regulations with international food standards. For instance, the F ood Code, Food Additives Code, and Foods Labeling 
Standards have been amended several times since 2000 for international harmonization.  
42. Korea has used a relatively limited number of contingency measures. Although there have 
been a few instances in which Korea resorted to  anti-dumping measures in response to unfair trade 
practices, Korea has not taken any safeguard measures since the last review. 
Table 6 
Number of Definitive Anti-Dumping (including price undertakings) and Safeguard Measures 
 2000 2001 2002 2003 Jan~Jun 2004 
Anti-Dumping 3 0 1 3 0 
Safeguards 1 0 0 0 0 
Source:  Korean Trade Commission. 
43. Korea has facilitated the movement of goods  and reduced clearan ce time through the 
operation of the Sea & Air One-Stop Transshipment System, and the 24-Hour Clearance System for express cargoes. At the same time, Korea has made  efforts to give greater autonomy to traders 
through a number of systems. Korea has implemented a self-assessment system, which allows importers to make reports on duties voluntarily to Customs, as well as providing the importers with a 
choice of making tariff payments on an individual or  monthly basis. In addition, Korea acceded to the 
Revised Kyoto Convention in February 2003 as part of the continued efforts to simplify and harmonize customs procedures.  
44. Korea is a member of the WTO Government Procurement Agreement (GPA) that came into 
effect for Korea in January 1997. In September 2000, Korea successfully completed the review of WT/TPR/G/137 Trade Policy Review 
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national implementation legislation. The Korean gove rnment continued to undertake greater efforts to 
enhance the transparency, effici ency and accessibility in the procurement system by launching the 
Government e-Procurement System (GePS) in September 2002. GePS is a cyber marketplace where 
public organizations and private firms make govern ment procurement-related transactions, including 
contract request, bid solicitation, e-bidding, e-contr act and e-payment. It provides all the procurement 
information for public organizations through the Internet on a real-time basis in each stage of the procurement procedures. A supplier, with a one-time registration with the GePS, can participate in all 
public tenders. GePS has dramatically enhanced transp arency and efficiency in public procurement. 
The Public Procurement Service received the Public  Service Award from the UN in June 2003 for the 
GePS.  
Trade in Services 
45. The Korean government has fully implemented th e specific commitments made in the area of 
services during the Uruguay Round and in the exte nded negotiations. Korea believes that continued 
economic growth depends largely on the free flow of trade in services, which facilitates foreign 
investment into Korea and Korean services firms' bu siness in foreign markets. Since its last review, 
Korea has consistently liberalized the services sect or, complemented by regulatory reform policies of 
the Regulatory Reform Committee (RRC). In the fi nancial sector, the Banking Act was revised in 
April 2002 to raise the ceiling of individual owners hip of a commercial bank from 4 percent to 10 
percent, and even to 100 percent with special au thorization from the relevant authorities. In the 
telecommunications sector, the ceiling on foreign ow nership in Korea Telecom (KT) was raised from 
33 percent to 49 percent in April 2001. Since 2000,  1,286 government regulations, including those 
related to the services sector, have been eliminated or relaxed. With the acceleration of liberalization 
and deregulation in the services sector, Korea’s tr ade in services increased from US$49 billion in 
1998 to US$73 billion in 2002, and the share of FDI inflow into the services sector rose from 33.2 percent in 1998 to 56.3 percent in 2000, and to 63.9 percent in 2003. 
Intellectual Property Rights 
46. Korea has brought its intellectual property rights  legislations into full compliance with the 
WTO TRIPS Agreement, and has gone even further to introduce stronger protection by becoming 
party to major WIPO treaties. Currently, Korea is pa rty to over 10 WIPO treaties and is continuing its 
efforts to implement newly evolving international ag reements in this field. For example, Korea has 
acceded to the Protocol Relating to the Madrid Agreement Concerning the International Registration 
of Marks in April 2003, and the Trademark Law Treat y in February 2003. Korea has also acceded to 
the WIPO Copyright Treaty (WCT) in June 2004, and is now preparing amendments to its Copyright 
Act to fully implement the WIPO Performances and Phonograms Treaty (WPPT). Accession to the 
WCT and the expected accession to the WPPT embody  government efforts to further strengthen 
copyright protection, especially on-line. This re flects the greater policy focus on IPR protection in 
light of the rapid development of digital technology.  
47. Since its review in the TRIPS Council in 2000, Korea has continued to revise its legislations 
on IPR to accommodate technological advances and strengthen enforcement. To coordinate and 
facilitate IPR protection policies among various  Ministries, the Consultative Committee on IPR 
Protection was established under the auspices of the Office of Government Policy Coordination. The 
Consultative Committee, which consists of offici als from government agencies responsible for IPR 
protection and non-governmental e xperts, convened its first meet ing in May 2004. The Committee 
identified 15 specific tasks in its Comprehens ive Plan for IPR Protection, which emphasizes 
strengthening the protection and enforcement of in tellectual property rights in a digital environment Republic of Korea WT/TPR/G/137 
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through such means as training of enforcement o fficers, public awareness-raising programs, and 
facilitation of international cooperation. 
Dispute Settlement 
48. Since the last review, Korea has been directly  involved in 13 WTO dispute cases. It was the 
respondent in three cases, and complainant in 10 cases. The Panel and Appellate Body Reports were 
adopted in one of the three respondent cases – M easures Affecting Imports of Fresh, Chilled and 
Frozen Beef. In this case, Korea completed th e implementation of the DSB’s recommendation. 
Technical Assistance and Capacity Building 
49. Bearing in mind the importance of technical a ssistance and capacity building activities for the 
promotion of development dimension of the multilate ral trading system as we ll as for the successful 
conclusion of the DDA negotiations, Korea makes its utmost efforts to devote substantial resources 
within its capacity. From 2001 to 2004, Korea contributed over US$940,000 to support the WTO technical assistance activities. Each year Korea pr ovides an increasingly broa der range of technical 
assistance programs to developing countries throu gh its official development assistance (ODA) 
operating agency, the Korea International Cooperatio n Agency (KOICA). KOICA invited 32 trainees 
annually on average between 1997 and 2001 to progr ams related to the WTO. The number of invited 
trainees increased to 92 in 2002 and 90 in 2003. 102 trainees will be invited in 2004.  
(b) DDA Negotiations 
50. With the firm belief that higher levels of trad e liberalization and strengthened rules will bring 
greater benefits for all countries, Korea has str ongly advocated the launch of the Doha Development 
Agenda with a comprehensive work programme. Kor ea has since played an active role in the ongoing 
negotiations, and remains firmly committed to its successful conclusion. 
Agriculture 
51. Korea is committed to the objective of establis hing a fair and market-oriented agricultural 
trading system. In the spirit of achieving progressive  liberalization of trade in agriculture, Korea has 
been faithful to its Uruguay Round commitment s by opening up its agricultural market and 
undertaking agricultural reform measures. At the sa me time, Korea has also been mindful of the non-
trade concerns (NTCs) of agriculture, such as f ood security, rural development and environmental 
protection. 
52. Since 1995, Korea’s position as a net importer of agricultural products has become more 
pronounced, with food self-sufficiency reduced to le ss than 30 percent. This trend accelerated since 
2000. In 2003, agricultural trade deficit soared to a record high as Korea imported US$10.50 billion 
while exporting just US$1.87 billion. At the same ti me, the income gap betwee n urban and rural areas 
worsened as the average per capita income of farm ers dropped to 73 percent of the average city 
worker in 2002 from 95.1 percent in 1995.  
53. Under such circumstances, th e Korean government has newly launched a comprehensive 10-
year agricultural reform programme to make the domestic agricultural sector more market-oriented 
and more responsive to liberalization in global agricu ltural trade. To ensure th e success of this reform 
programme, the pace of global agricultural liberali zation needs to be progressive, with certain 
flexibilities to make the transition as smooth as possible. WT/TPR/G/137 Trade Policy Review 
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54. In the DDA negotiations, the Korean government  has placed a strong emphasis on the need to 
attain a balance of interests between exporting and importing countries, taking into account non-trade 
concerns. In this regard, Korea has worked with other countries with similar concerns to address the 
need for flexibilities for those products whose high tariffs were  inevitable consequences of 
implementing the tarrification principle. While Kor ea believes that all trade-distorting support should 
be reduced, considerations should also be ma de to allow room for countries facing difficult 
circumstances to progressively move towards a domestic support structure with no or minimal trade-distorting effects.  
Services  
55. Korea has actively participated in the DDA ser vices negotiations, considering the important 
role that the services sector has played in its ec onomy. In particular, Korea places high priority on 
infrastructure services, such as financial, telecommun ications, distribution, construction, and maritime 
transportation services, which Korea considers vita l to the supply of other services and conducive to 
the enhancement of the overall economic comp etitiveness. In this respect, Korea submitted 
negotiating proposals regarding these five infrastructure services in November 2000. 
56. In the DDA negotiations, Korea is focusing its efforts on ensuring that various obstacles 
hindering the free flow of trade in services be substa ntially reduced through the negotiations. In this 
regard, Korea exchanged requests with a number of co untries in June 2002, and tabled its initial offers 
in March 2003, including specific commitments in a number of new sectors which were not included 
in the UR schedule. Based on the exchanged requ ests and offers, Korea has carried out dozens of 
bilateral consultations with  its trading partners.  
Market Access for Non-Agricultural Products 
57. Korea believes that non-agricultural market acc ess (NAMA) is one area that will bring the 
greatest immediate gains for all countries, and theref ore should be approached with a high level of 
ambition. In the NAMA negotiations, Korea aims to attain substantial market access by effectively 
addressing tariff peaks, high tariffs, tariff escalation and non-tariff barriers as set out in the Doha 
Declaration. Korea supports a non-linear formula on a line-by-line basis, which proposes greater tariff 
reductions for higher tariffs.  
58. Together with the tariff reduction formula, Korea recognizes sectoral tariff elimination as a 
key element of negotiating modalities. The specific sectors for the sectoral liberalization should be 
selected carefully and every Member should be required to participate in order to ensure benefits for 
the entire WTO Membership. With regard to non-ta riff barriers, Korea submitted in February 2003 
the list of non-tariff barriers confronted by Korean e xporters in foreign markets. It believes that the 
negotiating modalities for addressing non-tariff barrier s should be approached with pragmatism on the 
basis of a result-oriented methodology. 
Rules 
59. With regard to the negotiations on the Anti- Dumping Agreement, Korea believes that the 
current rules must be clarified and improved in order to prevent misuse or overuse of anti-dumping 
measures. Regarding the negotiations on the Ag reement on Subsidies and Countervailing Measures 
(ASCM), Korea supports the idea of providing further and detailed guidance to the current 
rules. Korea believes that any ru le on fisheries subsidies should be  based on the framework of the 
ASCM and the differences in various types of s ubsidies and the surrounding circumstances should be 
duly reflected in the negotiations. On the Regional Trade Agreements (RTAs) issues, Korea advocates 
higher levels of transparency as well as improvements in the substantive rules. Republic of Korea WT/TPR/G/137 
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TRIPS  
60. While a strengthened global regime for the pr otection of intellectual property rights will 
benefit all countries by fostering an environment conducive to innovation, there is also the need to 
accommodate development concerns. In this sense, Ko rea exercised flexibility and pragmatism in the 
course of negotiations for the historic Decisi on on Public Health and the TRIPS Agreement. 
Regarding the establishment of a multilateral system of notification and registration of geographical 
indications for wines and spirits, Korea believ es a pragmatic compromise should be found on the 
basis of voluntary participation and legally non-binding effect. 
Trade and Environment 
61. Korea believes it is important to enhance the mutual supportiveness of trade and environment 
policies through the ongoing DDA trade and environmen t negotiations. In this sense, specific trade 
obligations (STO) set out in multilateral environmen tal agreements (MEAs) should include only trade 
measures that are mandatory and specific, while excluding those measures that MEA parties can exercise discretion in its implementation. Korea further believes that successful negotiations on the 
liberalization of environmental goods and services coul d contribute to the achievement of sustainable 
development objectives. 
Singapore Issues 
62. Korea believes that multilateral rules on inv estment, competition, trade facilitation and 
transparency in government procurement will prom ote a more stable, predictable and transparent 
global trade and investment environment. This will in turn lead to further liberalization and growth of 
trade. While Korea remains committed to establishi ng multilateral rules on all four Singapore issues, 
it agrees to include only trade facilitation in the DD A single undertaking, in the spirit of facilitating 
forward movement in the overall DDA negotiations. Korea believes that, given their importance for 
trade, the remaining three issues should continue to be examined within the WTO work program. 
(2) B
ILATERAL TRADE RELATIONS  
(a) The United States 63. Trade with the United States has traditionally b een the most important pillar in Korea’s 
bilateral trade. Even though the share of trade with  the United States has decl ined slightly in recent 
years, the United States remains the largest tradi ng partner for Korea, with bilateral trade volume 
surpassing US$59 billion in 2003. With regard to bila teral investment flows, the United States was the 
largest source of foreign direct investment into Korea between 2000 and 2003, accounting for 
32.5 percent of total inward FDI into Korea during the period. Conversely, the United States has also 
been the largest foreign investment destination for Korean investors.  
64. Trade issues between Korea and the U.S. ha ve increased in both number and level of 
complexity, reflecting the continued deepening and maturing of trade and economic relations between 
the two countries. The two governments have been able  to resolve most of these issues in a mutually 
satisfactory and efficient manner through various  bilateral consultati on channels including, inter alia , 
the Quarterly Trade Meetings (QTM), which were in itiated in 2001. Even tho ugh there remain several 
trade issues, especially in the areas of intellectual property rights, telecommunications and 
automobiles, Korea remains pos itive that these issues will be resolved amicably through 
consultations. WT/TPR/G/137 Trade Policy Review 
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(b) The European Union 
65. In 2003, the volume of bilateral trade with European Union was US$44.3 billion, making the 
EU Korea's fourth largest trading partner, and Ko rea the twelfth largest for the EU. The European 
Union's investment in Korea, along with that of  the United States and Japan, accounts for a major 
portion of total foreign investment in Korea. In  2003, the European Union was the largest foreign 
investor with US$3 billion of investment into Korea.  Also, the EU became the largest foreign investor 
for Korea in terms of cumulative total since 1962.  
66. Since 2001, the Korea-EU Framework Agreemen t on Trade and Cooperation has become the 
basis for a future-oriented partnership by providi ng a comprehensive framework for cooperation in the 
areas of economy, trade, science and technology.  Korea expects the fifth EU enlargement in 
May 2004 to generate greater opportunities to further strengthen bilateral economic and trade 
relations. There remain a few pe nding bilateral trade issues, including automobiles, intellectual 
properties, cosmetics and pharmaceuticals. Korea a nd the EU continue to work together to find 
amicable solutions to these outstanding issues th rough bilateral consultati on channels, including the 
Joint Committee meetings and Ministerial meetings.  
(c) Japan 
67. Korea and Japan have been important trading pa rtners for many years. With the record-high 
trade volume of US$53.6 billion in 2003, Korea a nd Japan are each other’s third largest trading 
partner. Japan has also been the largest source of imports for Korea since 2000. Korea has been 
running trade deficits with Japan, posting anothe r record-high of $19 b illion in 2003, which accounts 
for 20.3 percent of Korea’s total imports for the same year. From 2001 to 2003, Japan ranked as the 
third largest source of foreign investment into Ko rea. In 2003, Japan’s shar e of Korea’s total FDI 
reached 8.4 percent or US$540 million in absolute value.  
68. Korea has been pursuing further development of  the bilateral economic and trade relations 
with Japan, which includes maintaining a balanced  expansion of bilatera l trade volume, further 
promoting FDI, and strengthening industrial a nd technical cooperation. In March 2002, Korea and 
Japan concluded the Bilateral Investment Treaty (BIT ) to facilitate freer flows of investment between 
the two countries. One important element in the Ko rea-Japan BIT is the national treatment and most-
favored nation treatment to investors of the other pa rty starting from the pre-establishment stage. In 
addition, the two countries signed the Social Security  Agreement in February 2004 to further promote 
exchanges of people and economic cooperation.    
(d) China 
69. Bilateral trade volume between Korea and China has grown at a surprisingly rapid pace since 
1992. From 2000 to 2003, Korea's exports to China incr eased at an annual rate of 24.0 percent, while 
imports from China increased at an annual rate of  19.6 percent. The bilateral trade volume reached 
US$57.0 billion in 2003 and thus Ch ina became Korea's largest export market and the second largest 
trading partner next to the United States. China has been Korea's favorite FDI destination starting 
from 2002. In 2003, the cumulative amount of Kor ea's FDI into China reached US$1.4 billion, second 
only to Korea’s FDI into the United States, which stood at US$1.5 billion.  
70. The cooperative trade and economic relationshi p between Korea and China is becoming 
stronger. So far, the two countries have establishe d a practice of resolving trade issues peacefully 
through bilateral consultations. At the same time, th e two countries have engage d in mutual efforts to 
expand the bilateral economic coopera tion. During the Presidential visit to China in July 2003, the 
two countries agreed to strengthen cooperation in various fields including advanced technology, Republic of Korea WT/TPR/G/137 
 Page 19 
 
 
energy, and environmental industry. In addition, th e two countries established a joint research team to 
formulate a roadmap to develop further a relationshi p of future-oriented bilateral economic and trade 
cooperation.  
(e) ASEAN and Others 
71. ASEAN is presently Korea’s fifth largest trading partner, making up 10.4 percent of Korea’s 
total trade volume in 2003. Korea’s exports increased slightly from US$20.1 billion in 2000 to 
US$20.3 billion in 2003, while imports also  increased from US$18.2 billion in 2000 to 
US$18.5 billion in 2003. Although Korean investment in ASEAN contracted sharply due to the Asian 
financial crisis, ASEAN remains th e third largest destination for FDI from Korea. In 2003, Korea’s 
investment to ASEAN reached US$1.2 billion, wh ich constitutes 22 percent of the total.  
72. Korea values other regions as newly emerging important trading partners, and is making 
efforts to further expand the trading relationship wi th Latin America, Russia and CIS, South Asia, 
Middle East and Africa. Since the last trade po licy review, Korea’s trade with these regions has 
expanded as they are gaining in importance as markets for exports and sources of imports.  
(3) FREE TRADE AGREEMENTS  
73. Korea is currently pursuing FTAs with trading partners to expand trade opportunities through 
greater levels of liberalization across a wider range  of issues in a WTO-plus manner. The pursuit of 
such FTAs is founded on Korea’s firm belief in the primacy of the multilateral trading system, and 
therefore is pursued in a manner that can comple ment the liberalization efforts on the multilateral 
level. The range of issues covered in the FTAs incl udes many within-the-border issues to ensure such 
complementary relationship, in the hope that those FTAs can be a stepping-stone for promoting greater economic integration on the b ilateral, regional and global levels. 
(a) FTA between Korea and Chile 
74. The Korea-Chile FTA, the first trans-Pacific FTA  ever, entered into force on 1 April 2004. 
The Agreement has achieved substa ntial liberalization in trade in goods and services. At the same 
time, the scope of the Agreement extends beyo nd goods and services liberalization as it includes 
provisions on SPS measures, technical regulations , investment, movement of natural persons, 
competition, government procurement, intellect ual property rights and dispute settlement.  
75. For the liberalization in trade in goods, imme diate tariff elimination granted by Korea to 
imports from Chile covers 87.2 percent of the total tariff line, while the same treatment granted by 
Chile to exports from Korea amounts to 41.8 percent.  Tariff elimination will be further expanded to 
the remaining products in stages over a timeframe of five, seven, nine, ten and sixteen years for 
Chilean products entering into Korea, and five, seven, ten, thirteen years for Korean products 
exporting to Chile. The only exceptions are rice, ap ples and pears for Korea, and refrigerators and 
washing machines for Chile. In 10 years, tariff elim ination will be extended to about 96.2 percent of 
imports originating from Chile and 96. 5 percent of imports from Korea.  
(b) FTA Negotiations between Korea and Japan  
76. Negotiations on the Korea-Japan FTA commenc ed in December 2003, with the aim of 
concluding the agreement by the end of 2005. Kor ea and Japan have held negotiations every two 
months, focusing on the following seven key areas of mutual interest: trade in goods, non-tariff 
measures, investment and trade in services, government procurement, competition policy, intellectual 
property rights, mutual recognition, dispute settlement  and cooperation. In the negotiations thus far, WT/TPR/G/137 Trade Policy Review 
Page 20 
 
 
both sides have reaffirmed the principle of compre hensive liberalization in the trade of goods and 
services to achieve substantial economic integr ation and maximize the benefits of the FTA. 
77. An FTA between Korea and Japan would be an  effective means not only for promoting free 
trade and enhancing economic transparency, but al so for further strengthening the future-oriented 
partnership between the two neighbors. The Korea-Jap an FTA is also expected to serve as a catalyst 
in strengthening regional cooperation in East Asia and a stepping-stone towards creating an East Asia 
Free Trade Area.  
(c) FTA Negotiations between Korea and Singapore  
78. The FTA negotiations with Singapore were launched in January 2004. It is expected that an 
FTA between Korea and Singapore would help to strengthen the competitiveness of both economies 
and to exploit emerging opportuniti es in the regional and global markets by allowing each country to 
deepen its economic engagement in  the other’s respective region. 
79. Korea and Singapore aim to conclude the negotia tions by the end of 2004, through a total of 
five rounds of negotiations. Nine working groups have been created to facilitate the work on the 
following key issues: trade in goods, SPS/TBT/MRA, services, investment, gove rnment procurement, 
competition, intellectual property right s, cooperation and dispute settlement. 
(d) FTA Talks between Korea and ASEAN 
80. As agreed among the leaders of Korea and ASEAN in 2003, a joint study has been launched 
to explore the possibility of an FTA. The final re port of the FTA Experts Group will be examined by 
the Economic Ministers’ Meeting (AEM+Korea) in  September 2004, which will in turn submit its 
recommendations to the Korea-ASEAN Summit near the end of 2004 for a decision on the commencement of the FTA negotiations. 
(e) FTA Talks between Korea and EFTA 
81. The Trade Ministers of Korea and EFTA countries (Switzerland, Norway, Iceland, and 
Liechtenstein) agreed at a meeting on the margins of the OECD Ministerial Meeting in May 2004 to 
establish a Joint Study Group to evaluate the feasi bility of an FTA between Korea and the EFTA. The 
first meeting of the Joint Study Group will be held in  August. The Group is expected to present a final 
report on its findings to the Trade Ministers by the end of 2004. 
(4) R
EGIONAL ENGAGEMENTS  
82. Korea values APEC, ASEM and ASEAN+3 as fo rums for upholding the multilateral trading 
system on the one hand and promoting greater ec onomic cooperation within and across regions on the 
other. Korea has actively participated in various efforts for further liberalization and facilitation of 
trade and investment, and played a leading role in  promoting cooperation in various fields to help 
achieve the goal of common prosperity on  both regional and inter-regional levels. 
(a) Asia-Pacific Economic Cooperation (APEC) 
83. Korea attaches high importance to APEC and its members. In 2003, APEC member 
economies accounted for 72.0 percent of Korea’ s exports, 68.6 percent of its imports, and 
62.2 percent of its inward and 68.6 percent of  outbound FDI. As these numbers clearly show, 
sustained economic growth in the Asia-Pacific regi on through expansion of trade, investment and 
economic cooperation is critical for Korea’s own gr owth and prosperity. As such, Korea has been Republic of Korea WT/TPR/G/137 
 Page 21 
 
 
deeply committed to the APEC process from its very  inception and has made important contributions 
to shaping its framework, and continues to be deeply engaged. 
84. Korea will be the APEC host economy in 2005, th e year in which the mid-term review of 
progress towards the Bogor Goals is scheduled. Ko rea is fully committed to the Bogor Goals of 
liberalizing trade and investment in  the Asia-Pacific region. It has been visibly engaged in the APEC 
process across its full range of activities, from tr ade and investment liberalization and facilitation 
(TILF) to economic and technical cooperation (ECO TECH). In 2003, Korea’s Individual Action Plan 
(IAP) Peer Review found that Korea was well within  reach of the Bogor Goals, and has especially 
made impressive progress in competition policy, cust oms procedures, standard , and regulatory reform. 
(b) Asia-Europe Meeting (ASEM) 
85. As the host country of ASEM Summit Meeting in 2000, Korea has been actively engaged in 
promoting various measures for trade facilitation and investment promotion between Asia and 
Europe. Korea has initiated the Tr ans-Eurasia Information Network endorsed at the ASEM 3 in 2000 
and the Trans-Eurasia Railway Network proposed at ASEM in 2002. Korea has also played an active 
role in various ASEM-related events, including ho sting the Eighth Asia Europe Business Forum 
(AEBF) meeting in Seoul in 2003.  
(c) ASEAN+3 
86. Korea has accelerated the effort s to promote regional integration in East Asia through the 
ASEAN+3 process. As proposed by Korea, the leaders of ASEAN+3 ag reed to establish the East Asia 
Vision Group (EAVG) in 1998 and the East Asia Study Group (EASG) in 2000 respectively. The 
EASG, composed of government officials, was established in March 2001. EASG’s final report, 
submitted to the ASEAN+3 Summit in Ca mbodia in 2002, made recommendations on 
26 implementable concrete measures, among which th e formation of an East Asia Free Trade Area 
was given high priority. As part of the implemen tation of the EASG recommendations, Korea held the 
inaugural meeting of East Asia Forum (EAF) in December 2003, wher e it was agreed that 
commitment of the political leadership is of vita l importance to creating common peace, prosperity 
and progress among countries in the region. 
V. FUTURE POLICY DIRECTIONS 
87. As a country whose economic growth and development were made possible through 
participation in the liberal global trading system, Korea has a strong stake in strengthening the multilateral trading system. Korea’ s commitment to open market and free trade, along with structural 
reform, has contributed to Korea’s prompt recovery  from the Asian financial crisis, which in turn 
reinforced Korea’s commitment to fu rther liberalization and reform. Korea will continue to strengthen 
its role as a constructive force in the DDA negot iations, with the firm belief that a successful 
conclusion of the Doha Work Pr ogramme will bring great benefits to the entire global community. 
88. While remaining a strong supporter for the multilateral trading system, Korea will pursue 
FTAs as a complementary tool to accelerate trade lib eralization. Korea will seek FTAs that are as 
comprehensive as possible to ensure that benefits  accrue from substantial liberalization in a WTO-
plus manner. In more specific terms, Korea’s FTA s will not only aim at liberalization of trade in 
goods but go much further beyond to also cover a comprehensive range of issues including services, 
investment, intellectual property rights and governme nt procurement on the one hand, and issues of 
economic cooperation on the other. As Korea explor es further possibilities for FTAs, especially with 
its major trading partners, Korea will pursue bilate ral agreements that can be building blocks for 
greater economic integration and can  complement the liberalization e fforts on the multilateral level.  WT/TPR/G/137 Trade Policy Review 
Page 22 
 
 
89. In order to support the multilateral trading system and promote economic cooperation on a 
regional level, Korea will continue to support AP EC’s work on trade and investment liberalization 
and economic and technical cooperation in the Asia-Paci fic region. In particular, Korea will make full 
use of the opportunity to host APEC 2005 to furthe r strengthen the APEC as a vehicle for achieving 
common prosperity in the region. In addition, Korea will continue to take active part in the collective 
efforts in the ASEAN+3 and ASEM fora to prom ote freer trade and greater economic cooperation on 
both regional and inter-regional levels.  
90. Nurturing more future-oriented and mutually be neficial bilateral trade relations with the 
trading partners has been one of Korea’s long-sta nding priorities. Korea will continue to proactively 
address any trade issues raised by its trading part ners through bilateral cons ultations, in accordance 
with international rules. Further expansion a nd promotion of economic cooperation with least-
developed countries and other developing countries is  another key area for Korea’s bilateral economic 
relations. Expansion of trading opportunities and strengthening of  investment relations will be 
accompanied by technical assistance and sharing of development experiences, particularly for the 
least-developed partners.  
91. To move toward an advanced market economy , Korea will continue to vigorously pursue 
liberalization and structural reform in a mutually re inforcing manner. Structural reform will be carried 
out to promote greater efficiency, market discip line, and fair and transparent competition in the 
Korean economy. In parallel, Korea will continue to pursue a greater opening of the economy through 
combined efforts on the multilateral, regional, and bilateral fronts. 
__________ 