___________________________________________________________________________ 2019/SOM2/HRDWG/SYM/008 Trade Adjustment Assistance Program and Free Trade Agreement Utilization Support for MSMEs - Case of Korea Submitted by: Korea Symposium on Trade and Human Resources Development: Capacity Building for Inclusive Trade Viña del Mar, Chile 3 May 2019
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– Study for FTA utilization/support(2009)– National program for supporting FTA utilization(2010)
• The Law on the Procedure of Trade Agreement Promotion(2011)
Korea’s TAA Program
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Korea’s Policy Package for FTA Utilization
인하대 FTA대학원 www.FTAschool.com 12
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TAA program and measure for losing sectors
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Domestic infrastructure for the promotion of FTAs
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• Presidential Directive on the Procedure of FTA Promotion(2004)• Procedure on FTA promotion/negotiation • Communication with interest groups• Domestic coordination • Supporting mechanism for losers from FTAs
• Manufacturing: Trade Adjustment Assistance Program • Agriculture: Agricultural Assistance Program
www.FTAschool.com
Complementary domestic measure for agriculture sector
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ImplementationOf the UR CommitmentsUnder the WTO Agricultural and Rural Integrated Measures
119T → 123.2T
2004 2020201720102008
FTA with Chile(’04)1.4T
FTA with US(’07, ’11, ’12)21.1T → 23.1T
FTA with EU(’10) 10.8T
2011 20252015
FTA with Australia and Canada(’14)11.6T
2014 20242013
FTA with China(’15)1.6T
FTA with New Zealand(’15)1.1T
FTA with Vietnam(’15)0.2T
Measures for improving the quality of living in rural area
Phase 1(’05~’09)
22.8T
Phase 1(’10~’14)34.58T
Phase 1(’15~’19)
46.5T
T: Trillion Won= US$870M Total support:
49.9T$43.33B
Source: Revised based on Moon, Hanpil(2019), “Market opening of agriculture sector and complementary domestic measure”, Presented at JRI-KREI seminar(Inha University, April 29)
www.FTAschool.com
US’ TAA: Pros and Cons
• Gains from trade liberalization vs. Pressure of structural adjustment "Those injured by (that) trade competition should not be required to
bear the full brunt of the impact. ... (T)here is an obligation to render assistance to those who suffer as a result of national trade policy." (John F. Kennedy in the Trade Expansion Act of 1962)
• There are arguments for TAA as Rosen(2006): First, job creation does not always take place at the same location
where jobs are lost. Second, the new jobs are in different industries than the jobs lost. Third, the burden of adjustment does not end when the worker gets a
new job, since the jobs lost due to trade pay higher wages and provide better benefits than in the new jobs being created.
• However, there are voices against the idea of the TAA. Unemployment insurance provides benefits for unexpected job losers Large portion of unemployment due to changes in technology and
consumer preferences, not trade. (Markheim and Sherk 2007, p.3)
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Korea’s TAA: EnactmentKorea’s TAA is substantially different from US’s, even though Korea
benchmarked US’ system.
Korea USYear of Implementation 2007 1962(TAAEA 2013)
Law Law on the TAA with the implementation of FTAs (April, 2006) The Trade Expansion Act of 1962
Coverage Manufacturing, Industry related Services Agriculture, Fishery, Manufacturing, Services
Focus of TAA Firms >> Workers Workers (farmers) >> FirmsAgency of Administration Ministry of Knowledge Economy for firms
Ministry of Labor for workersEconomic Development Administration
Department of Labor for workers
Managing Agency for firms Small & Medium Business Corporation(HQ, 22 regional center)
Impediments to FTA Use (percent of respondents by country)
Note: Survey based on 221 firm samples.Source: Cheong and Cho (2010)
35.83
4.17
34.17
10.8315.00
0
10
20
30
40
Low tariffpre ference
Lack ofin form ation
ROO-re la tedcos ts
Otheradm in is tra tive
cos ts
Rem ain ingNTBs
Survey : Impediments to FTA Use
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Export share with FTA preferences
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Source: Kawai, M. and G. Wignaraja (2014b), “Policy Challenges Posed by Asian Free Trade Agreements: A Review of the Evidence” in R. Baldwin, M. Kawai and G. Wignaraja (edited), A World Trade Organization for the 21st Century: The Asian Perspective, Cheltenham (UK): Edward Elgar. Based on data compiled by the national trade and industry ministries; IDE-JETRO
0
10
20
30
40
50
60
Korea, Rep. of Thailand Malaysia Viet Nam
% 2008
2009
2010
2011
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Control tower Policy maker and national coordinator
FTA Promotion and Policy Adjustment Authority (FTAPPAA
FTAPPAA
• FTAUC
• Assistance Centers
Implementation agency The National FTA Utilization Center (FTAUC) Regional (local) FTA Assistance Centers.
FTAPPAA
National FTA Utilization Center (FTAUC)
Regional (local) FTA Assistance Centers (13)
Organization for the Promotion of FTA UItilization
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www.FTAschool.com
Business demand survey
FTA business information
FTA expert, consulting
Direct assistance
for business
FTA system maintenanc
e
Majorcontents
Regular and special meeting and surveys for industrial agencies, representative companies
- FTA info for tariffs, rules of origin
- Seminars, workshops
- Guide books, pocket books, brochures
- Cyber-learning system on FTAs
-FTA classes in universities
-Courses for FTA consultants
- FTA business consulting
- FTA call center
- Local FTA Assistance Centers
- Integrated Business ROO center
- Integrated FTA Info Center
Official agencie
s
‐ FTAPPAA and national related agencies
‐ National FTA Utilization Center (New)
FTAPPAA and related agencies
FTAPPAA and related agencies, universities, business forum, academic associations
Related national agencies, customs brokers, FTAPPAA
Korea Customs Services, Center for ROO, Chamber of Commerce, KITA, etc.
Major Components of Korea’s FTA Support
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Better services for MSMEs(2018)
Policy improvement
‥ Focus: MSMEs ‥ National FTA center
✓Consultants for SMEs✓Professional consultants for micro firms✓Target by consultant and region
✓National – regional centers✓New role for FTA centers✓Capacity building
‥ Active support ‥ Efficiency✓Overseas FTA support centers✓Easy system for rules of origin✓On-site consultation
✓Better management✓Business friendly✓Close linkage between authority and agency
Goal:Enhance the utilization of
FTAs by MSMEs
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Integrated portal for preferential tariff rates under Korean FTAsIntegrated portal for preferential tariff rates under Korean FTAs
FTA information system
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Integrated portal for FTA rules of origin (ROO) Integrated portal for FTA rules of origin (ROO)
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FTA information system
www.FTAschool.com
FTA call centerFTA call center
Ask whatever on FTA utilization
FTA call centerNumber 1380 anywhere in Korea
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FTA information system
www.FTAschool.com
Consultation by FTA Call Center
Topics 2016 2017Proof of rules of origin 11,985 9,913
Rules of origin by product 1,864 1,273Classification, HS code 5,747 4,085