Posts tagged ‘trade’
As anticipated, on 22 November 2011, the National Assembly passed legislation to implement the Korea-United States (KORUS) Free Trade Agreement (FTA). The relatively peaceful passage of the legislation marks a significant step towards defusing the potential political impact of the FTA on the ruling Grand National Party (GNP) in the lead up to key elections in 2012. However, there remain several potential challenges.
President Lee Myung-Bak’s visit to Hawaii for the APEC Leaders’ Summit 2011 will involve some awkward moments. However, these moments may also reflect a sign that South Korea is about to lose the momentum it has gained in trade liberalisation.
During 26-27 October China Vice-Premier and Deputy Party Secretary to the State Council, Li Keqiang, will pay an official visit to South Korea. Read more
On 24-25 October 2011, South Korea and Indonesia held the third Joint Task Force on Economic Cooperation. The two sides made a number of announcements on improving what is already a rapidly growing and increasingly significant economic relationship. Read more
Analysts have long considered the Korea – United States (KORUS) Free Trade Agreement (FTA) to have an important strategic impact. In both countries, a degree of support for commencing negotiations towards an FTA was the hope that an agreement would restore increasingly strained bilateral relations. Read more
On 12 October 2011, Canadian Agriculture Minister, Gerry Ritz, announced that Canada would turn the issue of the South Korean ban on Canadian beef products over to the World Trade Organization (WTO) if the issue is not resolved by the end of 2011. Read more
United States Trade Representative (USTR) Ron Kirk has stated he remains hopeful that the Korea-United States (KORUS) Free Trade Agreements (FTA) will be passed in time for an announcement at the November 2011 Asia Pacific Economic Cooperation Leaders’ Summit in Hawaii. Read more
On 22 February 2011, in an event that went largely unnoticed, the Korea Trade Insurance Corporation (K-sure) and Nippon Export and Investment Insurance (NEXI) signed an agreement to coordinate the provision of trade insurance for joint projects undertaken by Japanese and Korean companies in third countries. Read more
At a press conference on 13 February 2011, Democratic Party chairman, Sohn Hak-Kyu, stated that the Democratic Party (DP) would return to the National Assembly.
The decision ends the DP’s two-month boycott of the National Assembly, which commenced 8 December 2010, after the ruling Grand National Party (GNP) forced through its 2011 budget bill. One of the key upcoming agenda items will be legislation to implement the Korea-United States (KORUS) Free Trade Agreement (FTA), after both sides signed the supplementary agreement on 10 February 2011.
Both the DP and Democratic Labor Party (DLP) oppose ratification, claiming the original FTA has been altered by the supplementary agreements, making it necessary to undertake a complete review of the FTA. However, the DP will find it difficult to rally wider public support in opposition to the KORUS FTA.
Throughout 2010-11, the DP has maintained a policy focus on social issues, including universal welfare services; such as school lunches, healthcare, and childcare; and the financial, taxation and regulatory reform required to support these policies. It will prove difficult for the DP to present opposition to the KORUS FTA in the same frame. In addition, anti-Americanism is currently at a low-level as a result of proactive USFK and US State Department measures, as well as increased public concern regarding North Korea. Wider public support for opposition to the KORUS FTA is unlikely to materialize.
On 8 February 2011, USD-KRW trade once again approached the psychological KRW1100 level, sparking rumours of covert intervention by the Bank of Korea (BOK).
The potential for interference in the market has attracted greater pressure from both Japan and the United States. The USD-KRW traded at a low of KRW1100.75 and at a high of KRW1105.60. The KRW1100 mark was last reached in mid-July 2008, two months prior to the start of the global financial crisis.
In 2010, the USD-KRW traded at an average of KRW1157.42. In April and November 2010, when trade did approach the KRW1100 level, the BOK has exerted a degree of control to avoid instability. The market currently expects the won to rise. The government affiliated think-tank, the Korea Development Institute (KDI) estimates the won will trade at an average of KRW1023 in 2012 achieving an average of KRW980 by 2014.
A stronger currency in the longer-term will impact Korea’s export driven economic recovery and will have a particularly deleterious effect on small to medium-sized enterprises (SMEs) with larger firms, such as Samsung and Hyundai Motor, already in a position to relocate production overseas.
This presents a dilemma for the Lee administration, which must balance calls from SME exporters to slow and/or delaying currency appreciation with increased pressure from Japan and the United States to limit interference in the market.
