Korea-EU FTA Now in Effect… Good News for Local Markets (July 1, 2011)

The motor and textile industries will benefit, but primary industry not so much 
Government focuses on enhancing the positive effects of FTAs

– The Korea-EU FTA will take full effect on July 1. The government has predicted a total of KRW 200 billion in industrial growth directly related to the FTA over the next fifteen years. The motor and electronics sectors will benefit by some KRW 442.6 billion. An employee on duty at the Ssangyong Motor plant in Pyeongtaek. (GNews Plus Hwang Jin-hwan)

The Korea-EU FTA will take full effect on July 1. The government has predicted a total of KRW 200 billion in industrial growth over the next fifteen years as direct result of the FTA. The government is devising strategies for each industry according to whether they look set to benefit or lose from the new policies.

According to the Gyeonggi Provincial Government, the Korea-EU FTA will increase manufacturing in the region by KRW 291 billion, based on the estimates of the Gyeonggi Research Institute. The motor, fabric, and electronics categories will enjoy an increase of KRW 442.6 billion, whereas the pharmaceutical, fine chemistry, and primary industries will lose out to the tune of KRW 251.4 billion.

The government will support the benefiting markets by boosting their exports, exploring new markets overseas, and enhancing FTA country-of-origin management policy as well as hiring consultation specialists. Gyeonggi Province will also assist lagging industries in the enhancement of their competitive advantages and the minimization of their losses.

Initially, the local government will enhance export competence by selecting certified exporters and managing the FTA country-of-origin scheme for small to mid-sized companies. 

This is because the EU gives tax benefits to any authorized exporter of over EUR 6,000. In cases where the rules of origin are not met, exporters will be fined three times the value of the exported products.

The local government opened the Gyeonggi FTA Business Center two months prior in order to establish a network among industries and cities. A tax specialist will be hired among other supporting personnel to provide hands-on assistance.

Each industry and category will receive certified exporter consultation and assistance in establishing the origin management system. Those overseeing the FTA will be given a chance to attend educational programs, and FTA-related courses will be available at universities. Those who complete the courses will also have an opportunity to learn more about the actual regulatory practice, an important step in becoming an FTA specialist.

Meanwhile, the local government has made plans to expand its export routes.

Gyeonggi Province will operate exhibition centers throughout the EU and support company attendance at overseas fairs. It also plans to invite EU buyers to Gyeonggi Province at the end of 2011.

Gyeonggi Province is also reviewing ways to penetrate EU markets by establishing a marketing center specializing in the region.

The local government has designated a specialized consulting service, the Gyeonggi FTA Business Center, to help small to medium businesses that, compared to much larger corporate bodies, are not fully prepared for the FTA.

Regarding the forecasted loss of KRW 37.6 billion per annum in production fees by primary industry, the local government is planning to expand its agriculture support funds, advance disposal of excreta process systems, implement a powerful anti-epidemic system, establish a professional stock-raising consulting service, and back livestock breeding industries.

The pharmaceutical and medical instruments industry, which is expected to suffer from the extended petition period that will delay generic medicine permits, will be assisted by the EU market expansion program, which consists of restructuring small and mid-size pharmaceutical companies, accelerating new medicine development, and developing related technologies.

Concerning the institute’s feedback, Gyeonggi Province Governor Kim Moon-soo said, “The Korean-EU FTA is both a curse and a blessing for us. I find it promising that we nevertheless have methods of addressing this great change. It is important that we find ways to support the industries that might suffer from the new policies so we can all benefit from the FTA.”

– GNews Plus News | Lim Jeong-seon isim123@hanmail.net

http://gnews.gg.go.kr/news/news_detail.asp?number=201107011310437055C052&s_code=C052