Ministry of Trade Industry and Resources

Framework for Korea-China FTA Service and Investment Negotiations Built at the 12th Korea-China FTA

The 12th Korea-China FTA negotiation took place at EXCO, Daegu, over a five-day period from July 14, 2014 (Mon) through July 18, 2014 (Fri). Chief FTA Negotiator Woo Taehee of the Ministry of Trade, Industry and Energy, led the Korean delegation team, which consisted of members of related government agencies. The Chinese delegation team, which consisted of members of related government agencies, was led by Shouwen Wang, Assistant Minister of the Ministry of Commerce. During this negotiation, the two countries discussed all areas of the FTA, including goods, services and investments, Rules and areas of cooperation. In relation to goods, the two parties exchanged views on and focused on narrowing the gap on the terms of early tariff exemption on China’s manufacturing sector and on agricultural and fisheries goods, a sensitive issue for Korea. The two countries reached an agreement on the approach to market opening, which has been the biggest issue in the services and investment area. In relation to the services sector, Korea has long supported the idea of a negative approach (listing the areas not opened), while China has supported positive approach(listing the areas to be opened). In relation to investment, Korea had supported reflecting the investment liberalization factors, while China had supported including only investment protection factors. This negotiation achieved fruitful results in terms of Rules and Economic cooperation. The two countries reached a full agreement on the chapter regarding competition and e-commerce, and made the substantial achievement on the environment chapter. There were meaningful improvements in customs procedures, economic cooperation and government procurement. The two countries agreed that the 13th negotiations would be held in China in September 2014, at a date and venue to be determined. Head Kim Young-moo (044-203-5780), Director Cho Soojung (02-734-1863), East Asia FTA Bureau date2014-07-21

MOTIE Will Create Six New Energy Businesses and Over 10,000 Jobs by 2017

The six new energy businesses are as follows: ● Demand Response business: Implement energy saving systems for businesses in their buildings and plants, collecting unused power for profitable sale in the energy market.  ● Integrated energy management service business: Build ESS, EMS and LED systems combining finance, insurance and energy management technology, and provide maintenance services.  ● Independent micro-grid business: On islands with a high unit price for power generation, replace diesel generators with a hybrid micro-grid combining new and renewable energy with ESS. ● PV rental business: Rent PV systems such as water purifiers to households, generating profit through energy savings. ● Electric vehicle servicing and charging business: Install systems and provide charging for electric car service providers including electric taxi service providers. ● Business using waste heat from thermal power plants: Make use of the massive waste heat from thermal power plants on adjacent farms. date2014-07-18

Korea Records USD 33.7 Billion in Contracts

Korea Records USD 33.7 Billion in Contracts for Overseas Plants in the 1st Half of 2014 The Ministry of Trade, Industry and Energy (Minister Yoon Sang-jick) announced that Korea had recorded a historic-high contract amount for overseas plants in the 1st half of 2014, amounting to USD 33.7 billion. It is even more meaningful that this achievement was reached considering the numerous challenges, such as political uncertainty in Middle Eastern markets including Iraq and the decline in contracts date2014-07-15

Korea’s Car Sales for 2014 1H and Outlook for 2014 2H

The Ministry of Trade, Industry and Energy (Minister Yoon Sang-jick) announced provisionally that the car industry had produced 2,342,578 units, sold 807,063 units in the domestic markets and exported 1,596,198 units in the 1st half of 2014, showing year-on-year growth of 2.6%, 7.3% and 0.4%, respectively. < Overview of the Car Industry Results (Unit: 1 unit, %, USD 0.1 billion) > ○ June 2014 - Production : 380,456 - Domestic Sales : 139,864 - Korean Cars : 122,061 - Imported Cars : date2014-07-11

Korea’s ICT Exports Reach Historic High in the 1st Half of 2014

* Adjusted Outlook for 2014 Global ICT Growth Rate (Gartner, %): : Outlook for September 2013: 3.6 → Outlook for May 2014: 3.2%, reflecting the slowdown in the growth rates of emerging economies and the smart devices sector ○ 2012. 2H - Overall ICT Export Growth Rate : 3.4% Key Items - Export Growth/Decline : 1.5% - Percentage of Export : 70.4% - Rate of Contribution to Export Growth : 32%   ○ 2013. 1H - Overall ICT Export Growth Rate : 10.9% Key Items - Export Growth/Decline : 9.8% - Percentage of Export : 69.2% - Rate of Contribution to Export Growth : 63%   ○ 2013. 2H - Overall ICT Export Growth Rate : 7.6% Key Items - Export Growth/Decline : 8.4% - Percentage of Export : 70.9% - Rate of Contribution to Export Growth : 78%   ○ 2014. 1H - Overall ICT Export Growth Rate : 3.2% Key Items - Export Growth/Decline : 6.2% - Percentage of Export : 71.2% - Rate of Contribution to Export Growth : 133%       date2014-07-10

Labor Productivity of All Industries in the 1st Quarter of 2014 Grew by 1.1% Year-on-Year

Ministry of Trade, Industry and Energy (Minister: Yoon Sang-jick) and Korea Productivity Center (Chairman Jin Hong) jointly analyzed the labor productivity index of all industries for the quarter. According to the analysis result, the labor productivity index of all industries for the 1st quarter of 2014 was 99.0 (2020: 100), a year-on-year increase of 1.1% and showing moderate growth for the third consecutive quarter. Prompted by the base effect, capital investment in the 1st quarter of 2014 grew by 7.3% (1st quarter of 2013: -12.7%), and both industrial production and labor input of all industries grew compared to the same period in the previous year, thanks to the moderate growth of consumption and export. In terms of industrial production, production of all industries grew by 1.6% year-on-year, thanks to the growth in production of major sectors including manufacturing (0.6%), services (1.8%) and construction (6.5%). As for labor input, the number of employees grew by 1.3% compared to the same period in the previous year, while the labor hours declined by 0.7% with labor input growth of all industries as 0.6%. Looking at labor productivity by industry, the service sector showed productivity growth of 3.0% compared to the same period in the previous year, thanks to production growth and labor input decline, while the manufacturing sector and the construction sector recorded productivity growth rates of -1.6% and -3.1%, respectively, as there was more labor input than production growth. Real value added of all industries grew by 4.2% year-on-year, as the gradual growth has continued since the 1st quarter of 2013 (2.2%). The value added labor productivity by industry of the manufacturing sector and the service sector grew by 3.3% and 3.2%, respectively, compared to the same period in the previous year, driving the growth of value added labor productivity of all industries (construction sector: -6.9%). date2014-07-04

5th Regional Comprehensive Economic Partnership (RCEP) Negotiations Completed

This round of negotiations was participated in by a total of 600 delegation members from 16 member countries. The Korean delegation, headed by Director-General for FTA Negotiations of the Ministry of Trade, Industry & Energy Kim Young-moo, included officials from the Ministry of Strategy and Finance, the Ministry of Agriculture, Food and Rural Affairs and the Ministry of Oceans and Fisheries. ※ 10 ASEAN countries + 6 AFPs (ASEAN FTA Partners, : Korea, China, Japan, Australia, New Zealand and India) During this 5th round of negotiations, discussions were held on Trade in Goods, Services, Investment, Competition, Intellectual Property Rights, Economic Cooperation and the Legal/Institutional Issues, with the aim of achieving visible outcomes for the 2nd RCEP Ministerial meeting to be held in Myanmar in August 2014. Discussions were also held on whether SMEs(Small and Medium Enterprises) , e-commerce, global value chain and government procurement will be included in the scope of negotiations. The Korean delegation actively involved in negotiations by releasing a paper on the Key elements to be explored in the Dispute Settlement Chapter, and submitting the joint non-paper on Government Procurement and SMEs with New Zealand as well. The next round of negotiations (the 6th round of RCEP negotiations) will be held in India in December 2014. date2014-07-02

Export and Import Trends for June and 1st Half of 2014

By contrast, exports to China declined due to China’s increased self-sufficiency in petrochemicals and oil products. Exports to Latin America were also weak, due to a sharp decline in the export of ships. In addition to a slight increase in imports of raw materials and capital goods, there was a significant growth in imports of commodities, due mainly to a growth in automotive imports. Despite the unfavorable conditions, Korea recorded historic-high exports in the first half, mostly attributable to the robust performance of SMEs. It is expected that Korea’s exports will continue to grow, especially in the ship and automotive sectors, as global trade volumes increase thanks to the recovery of advanced economies including the US and EU. Risk factors do exist, including uncertainty over the recovery of Chinese exports, which significantly affects the exports of Korea, also the strong Won and the situation in Iraq. Consequently the government will increase monitoring. Deputy Director Song Jeong-hun, Export and Import Division (044-203-4042) date2014-07-02