Office of Commercial Affairs,
Royal Thai Embassy in Korea
Date: December 6, 2010
Source: Mail Economic Newspaper
Korea and the United States completed a third consecutive day of talks on Thursday but could not settle differences over auto tariffs, as they aim to present a free trade agreement to their respective legislatures early next year.
An aide for U.S. Trade Representative Ron Kirk said discussion may continue late into the night, but added, “You cannot expect any readout or anything else tonight.” Asking for anonymity, she did not confirm whether or not the talks will continue Friday but said she may be able to confirm it early Friday.
Emerging from a late afternoon session at a hotel in Columbia, Maryland, Trade Minister Kim Jong-hoon said, “We need some time before finalizing a deal, and we will continue discussing with the U.S. side.” Kirk, watching a baseball game on television in the hotel lobby during a recess, told reporters, “We are working hard,” without giving any further remarks.
Kim and Kirk had several negotiating sessions during the day. They were scheduled to conclude the talks on Wednesday, but extended them in a last-minute effort to strike a deal that the sides can present for ratification early next year.
Seoul officials said it will take a month for the sides to draft the wording of an agreement, even if one is reached this week. Kim said Tuesday that the U.S. side may have to visit Korea later for additional discussions.
Autos and beef have served as the major hurdles to the ratification of the Korea-U.S. FTA, signed in 2007 during the Bush administration.
Focus, however, has been on autos as Korea has refused to discuss the key beef issue: possible shipments of cuts from cattle older than 30 months.
Fears of mad cow disease led to weeks of street rallies that almost paralyzed the Lee Myung-bak administration in early 2008 after Lee’s decision to resume U.S. beef imports.
The U.S. beef industry recognizes the sensitivity of the issue and does not want to jeopardize the rapid increase in beef exports to Korea since 2008.
Beef was not discussed during the talks that began Tuesday, Kim said. Instead, the talks have been focused on to what extent Seoul will ease safety and environmental standards and delay the elimination of the 2.5 percent tariff on Korean autos and auto parts sold in the United States, as well as a phaseout of the 25 percent tariff on Korean light trucks sold in America.
The U.S. exported 5,878 automobiles to Korea last year. Korean auto shipments to the U.S. totaled 476,833 last year, according to the United Auto Workers. Sources said Korea is resisting U.S. demands for a longer phaseout of the U.S. car tariff on Korean vehicles, while Korea is insisting the U.S. make concessions in agriculture to compensate for any extension of the elimination of auto tariffs.
U.S. President Barack Obama said in Seoul early last month that auto trade poses a bigger obstacle than beef and pledged to complete the talks “within weeks, not months,” although he missed his earlier, self-imposed deadline of mid-November.
The Korea-U.S. FTA is seen as a barometer for Obama’s commitment to free trade as he seeks to double exports within five years as a means of creating jobs.
Date: December 6, 2010
Source: Mail Economic Newspaper
Korea’s retail scene is dominated by a select few. And in the department store sector, things are no different. Korea’s three biggest department store chains have consistently topped the field in revenue and scale.
Once again, Lotte, Shinsegae and Hyundai Department Store have left their competition in the dust, as the list of outlets with the highest revenue from January to November only consists of stores from these three chains.
Four of Shinsegae’s outlets, three from Lotte and three from Hyundai make up the top 10. The top eight outlets remained solidly in place from last year.
Lotte’s flagship store in Sogong-dong, central Seoul, is the undisputed leader in single-store revenue with 1.45 trillion won ($1.27 billion) from January to November.
The data were compiled by information released by each company. Aekyung Group’s Bundang outlet marked one of the few changes.
Last year’s No. 10, the outlet of Aekyung Group’s AK Plaza, fell off the list, making way for Shinsegae’s Centum City outlet in Busan at No. 9. The meteoric rise of Shinsegae’s Centum City outlet in Busan in revenue after opening in March of 2009 is notable.
The outlet - which made the Guinness book of records as the biggest department store in the world - reported the biggest climb in sales, with a 21.9 on-year jump in revenue from January to November of this year.
Shinsegae’s Gangnam outlet, which ranked second in overall sales, has shown the second-largest on-year growth so far this year, with a 16.9 percent jump in revenue to 958 billion won during the period. Only two department store locations among the top 10 were established since 2000.
With the remaining top outlets being mostly long-standing landmarks - such as the flagship stores of each rival chain - experts say that Shinsegae’s Centum City outlet has exceeded expectations.
AK Plaza’s Bundang outlet, Shinsegae’s Gwangju and Gyeonggi outlets as well as Galleria Department Store’s Luxury Hall in Apgujeong-dong, southern Seoul, occupied the No. 11 to No. 14 positions in revenue, respectively.
- Experts skeptical of companies’ attempts at diversification
Date: December 7, 2010
Source: JoongAng Daily
Korea’s food industry has gone topsy-turvy. Dairy manufacturers are entering the beer market, instant coffee manufacturers are making confectioneries, while makers of instant noodles are churning out breakfast cereal.
Food companies are increasingly diversifying their product lineups to battle listless growth. But experts question how effective such gambits will be in an industry where newcomers find it difficult to get a foothold.
Leading the diversification trend are manufacturers of dairy products. Maeil Dairies, one of the three leading milk manufacturers in Korea, has thrown its hat into the beer market.
Maeil signed a memorandum of understanding with Sapporo Breweries of Japan at the end of October to import and distribute Sapporo’s beer lineup starting in February.
Namyang Dairies, another leading milk manufacturer and competitor of Maeil, is on the cusp on releasing its own brand of instant coffee mixes. “Namyang Dairies has outfitted its manufacturing facility in Cheonan, South Chungcheong, and is set to release some 10 instant coffee mixes as early as next week,” said an industry insider who wished to remain anonymous.
The reason Maeil and Namyang have sought other revenue streams has to do with the nation’s dwindling birthrate. “The main consumer demographic of dairy products - 4- to 12-year-olds - is falling, which is hitting the milk and powered milk markets hard,” said an industry expert.
Consumption of domestic dairy products has fallen incrementally in recent years, from 2.31 million tons in 2006 to 2.11 million tons in 2009, according to the Ministry for Food, Agriculture, Forestry and Fisheries.
Other makers of food are looking to diversify as well. Dongsuh Food, the domestic leader of instant coffee mixes, began locally manufacturing Oreo cookies in late November.
Food manufacturers most associated with ramen are branching out. One such firm, Samyang Food, has created a new brand of cereal called Orange-go, adding to its lineup of instant noodles and confectioneries.
Some experts remain skeptical that branching out will end well. As the firms segue into other sectors occupied by long-term leaders, most will find it hard to gain traction, they say. “In the case of the food industry, there isn’t a lot of room for new companies to gain a foothold in terms of consumer taste or distribution channels,” said the industry expert.
“It remains to be seen whether recurring diversification of operations will lead to results.”
Date: December 9, 2010
Source: DongA Ilbo
The Korea Chamber of Commerce and Industry signed yesterday a memorandum of understanding with eBay, the world’s largest Internet auction and shopping company, to facilitate the export of goods from domestic small and midsize enterprises.
Under the deal, U.S.-based eBay will start a “One-stop Consignment Sale Service.” It will allow SMEs to use eBay’s warehouse in Los Angeles, helping with distribution, which had been a roadblock for local SMEs’ online overseas sales.
It will also provide consultation services for SMEs and bridge the language gap. The two parties plan to extend the deal to include warehouses in Europe and Oceania in the near future.
The KCCI will hold a business information session for SMEs by the end of the month and receive applications from SMEs until the end of January.
“We have already seen successful cases of SMEs reaching monthly sales of over 10 million won ($8,700) through a demonstration project that was held along with eBay in 2006,” said Lee Dong-keun, vice president of KCCI, in a press release.
He added that they will “fully support domestic SMEs to successfully enter the global e-commerce market through the project and help reach sales of over 200 billion won by 2012.” Local SMEs are said to have been unable to enter global e-commerce markets due in part to a lack of overseas personnel, shipping limitations, problems with payment procedures and the language barrier.
Date: December 10, 2010
Source: Hanykyung Economy
Korea and Chile are forecast to post the highest economic growth rates among Organization for Economic Cooperation and Development members over the next five years, a report showed yesterday. Korea’s real Gross Domestic Product is expected to grow at an average rate of 4.3 percent through 2010-2015, compared with the OECD average of 2.7 percent, according to the report by the OECD.
The figure tops the list that includes 32 countries, along with the South American nation, which is also forecast to grow 4.3 percent in the period.
Mexico and Australia were also predicted to grow rapidly at an average rate of 4 percent and 3.6 percent, respectively, according to the report. The growth rates of advanced economies, however, are expected to slow, with the United States at 2.8 percent and Japan at 1.6 percent, it added.
Korea’s solid growth comes amid robust exports and sturdy output of local manufacturers, particularly from major products of semiconductors and automobiles. In November, Korea’s trade surplus came to $3.6 billion, staying in the black for the 10th consecutive month.
Exports reached a record $423.4 billion as of the end of November. Additionally, in 2015, Korea is expected to have the lowest unemployment rate after Mexico among the OECD countries at 3.5 percent. The growth of Asia’s fourth-largest economy, however, is forecast to lose steam after 2015, mainly due to the declining birth rate and rapidly aging population.
Seoul’s average real GDP is likely to grow at an average rate of 1.8 percent from 2016 to 2025, compared with the OECD average of 2.1 percent, the report showed. Korea’s economic growth rate would be ranked at 17 among the 32 countries.
The country’s fertility rate, which is the average number of children born to a woman over her lifetime, has been steadily falling.
In 2009, Korea’s fertility rate stood at just 1.15, which is lower than the OECD average of 1.71. The report also said that Korea’s potential employment growth rate is forecast to inch up 0.4 percent in the 2010-2015 period. From 2016-2025, however, it will shrink 0.7 percent, it added.
“Korea from 2016 will be changed to a country with low economic growth,” said a finance ministry official. “In order to keep the Korean economy growing, the government plans to find new growth engines and promote domestic demand by fostering the service industry sector,” the official added.
Date: December 12, 2010
Source: Yonhap News
The supplementary free trade agreement concluded between Korea and the U.S. is expected to benefit stocks in the auto parts, textile and shipping industries, while equities for automakers may suffer slightly.
Under the revised FTA, tariffs on auto parts will be eliminated immediately while tariffs on autos will remain in place for four years instead of three years, as agreed upon under the original agreement. Analysts expect that local manufacturers of auto parts will see a boost from the trade pact.
They say that Hyundai Mobis and Mando will increase supplies to U.S. automakers, including Ford, General Motors and Chrysler. Hyundai Mobis has been supplying various modules to Chrysler for the past few years and concluded another contract earlier this year to supply chassis modules for Chrysler’s two new 2011 car models.
Mando has received a contract from GM to supply car parts starting from 2012. Hyundai Mobis closed up 2.96 percent at 295,500 won ($259) on Friday, while Mando ended up 1.93 percent at 132,000 won. Auto companies, including Hyundai Motor and Kia Motors, could see slower sales in the U.S. as a result of the adjustments in the FTA.
Analysts believe the impact will be limited and only for the short-term. “Although the U.S. demands have been accepted, it’s not too unfavorable for automakers,” said Lim Eun-young, an analyst at Dongbu Securities.
The textile industry welcomed the agreement as exports to the U.S. are expected to increase to around $180 million a year as tariffs of up to 32 percent will be eliminated, “This is another FTA that opens a huge market for us after the deals concluded with Asean and the EU,” said an official at the Korea Federation of Textile Industries.
“It will not only boost exports, but it should improve manufacturing quality. Stocks that could benefit from the deal include Cheil Industries, LG Fashion and Handsome.
Stocks in the transport sector, including shipping companies and cargo airlines, could also rise because of the promise of increased export volume with the U.S.
Date: December 12, 2010
Source: Mail Economic Daily
In the end it was a trade-off between cars and pork that broke the impasse on a revised Korea-U.S. free trade agreement.
For months, the two countries sought to revise the original FTA signed in 2007 in order to win U.S. Congressional support, but Korea was also looking at last-minute concessions of its own to avoid criticism that it was bowing to U.S. pressure.
The final compromise was reached on Friday in Columbia, Md., after four days of negotiations between Korean Trade Minister Kim Jong-hoon and U.S. Trade Representative Ron Kirk.
“To some who say that this was a one-sided concession, I cannot agree because I feel that the agreement was a win-win situation for both countries,” said Kim yesterday as he presented the deal to the media. The FTA changes focused on auto standards and tariffs, which U.S. lawmakers claimed amounted to unfair trade barriers under the 2007 trade pact.
Under the revised agreement, both countries will eliminate all tariffs for cars in the fifth year after the FTA is ratified.
In the meantime, Korea will reduce tariffs on U.S. cars from 8 percent to 4 percent, while the U.S. will maintain the current 2.5 percent tariff. “South Korean car sales to the U.S. will see limited impact from the revision,” said Kim, explaining that many Korean cars sold in the U.S. are already manufactured there.
In addition, each U.S. automaker will be allowed to export to Korea 25,000 cars a year that meet U.S. safety standards.
These cars would be exempt from separate Korean standards that U.S. automakers claimed amounted to a nontariff barrier. U.S. automakers will also be given flexibility in meeting South Korean emissions and environmental requirements.
The U.S. will maintain a 25 percent tariff on truck imports for seven years instead of beginning to phase it out immediately. The earlier agreement called for a gradual phasing out of truck tariffs over nine years.
The tariffs will now be cut in the last two years. In return for Korean concessions on autos, the U.S. agreed that Korea could maintain higher tariffs on U.S. frozen pork products until 2016, when the 25 percent tariff will be eliminated - two years after originally planned. The Korea Swine Association welcomed the move.
The U.S. also agreed to extend L-1 visa validity for Korean workers in the U.S. from the current one year to five years. In addition, the sale of Korean generic medicine in the U,S, will not be subject to patent or other disputes for three years instead of 18 months.
Korea also managed to fend off attempts by the U.S. to allow the import of U.S. beef from cattle older than 30 months to curb the spread of mad cow disease.
Kim had repeatedly stated that the beef issue was nonnegotiable because it was not included in the original FTA. Some U.S. lawmakers from western cattle-breeding states had demanded the issue’s inclusion in the FTA to win their support for the trade pact.
Source : http://www.depthai.go.th