1. BILATERAL/MULTILATERAL ISSUES

 

European Products Hand-Carried into Korea by Korean Travelers are Subject to the Same Duty Reduction under Korea-EU FTA [Korean, OSY]

http://news.donga.com/Society/New/3/03/20110702/38483138/1

Summary: According to the Korea Customs Office, European products bought and hand carried by Korean travelers into Korea are subject to the same import tariff reduction under the Korea-EU Free Trade Agreement.  For example, European wine that Korean traveler hand-carry into Korea will get duty free immediately.  Travelers should present a receipt, document, or bottle label that confirms that the wine is European origin.

 

Majority of retailers to cut prices on EU goods[English, KJH]

61 percent of retailers will reduce prices to reflect a decrease in tariffs.

http://joongangdaily.joins.com/article/view.asp?aid=2938444

Full Text: More than 60 percent of Korean retailers plan to lower prices of imports from the European Union (EU) following the implementation of a bilateral free trade deal, a poll showed yesterday.

According to the survey of 619 retailers, wholesalers and manufacturers by the Korea Chamber of Commerce and Industry (KCCI), 61.3 percent of the retailers said that they will reduce prices of EU imports to reflect the decrease in tariffs eliminated or lowered by the free trade agreement (FTA) that took effect on July 1.

Nearly 50 percent of the wholesalers surveyed also said they will cut prices, with 50.3 percent of the manufacturers polled saying they will do the same.

The Korea-EU FTA calls for abolishing or phasing out tariffs on 96 percent of EU goods and 99 percent of Korean goods within three years after the accord takes effect.

The KCCI survey showed that 69.6 percent of the respondents believed imports of EU products would register a big increase as a result of the implementation of the FTA.

“The lowering or elimination of tariffs will lead to increased imports and tougher competition with local products, contributing to price stability and giving consumer spending a shot in the arm,” said the KCCI.

Korea’s consumer prices surged 4.4 percent in June from a year earlier, quickening from the previous month’s 4.1 percent gain.

The state-run Korea Institute for International Economic Policy said in a recent report that the FTA would help boost Korea’s exports by $11 billion and its economic growth by 5.6 percent.

Trade between the 27-member economic bloc and Korea totaled $92.2 billion last year, rising around 17 percent from 2009.

Korea aims to increase its market share in the EU to 3 percent within three years.

In a radio interview, Trade Minister Kim Jong-hoon said increasing market share from 2.6 percent at present is possible since the FTA gives local businesses an edge over rivals in other countries.

“It could take up to three years for rival countries vying for the EU market to have an FTA in place, which allows Korean companies a head start to grab the market,” Kim said.

The accord, which took effect on Friday, is the most ambitious trade deal that Korea has ever finalized, and is the first of its kind between an East Asian country and the EU.

Seoul has said that the FTA could help two-way trade with the 27-member economic bloc go up as much as 20 percent in the long run.

Kim said that as of July 1, 76.6 percent of all tariffs levied by the EU on Korean products have been abolished, which would exert positive influence on trade.

In addition, Kim said that while there is some concern of EU-made cars making inroads into the local market, such a development could be offset by a rise in locally made car exports.

 

2. MARKETING ISSUES

 

Fair Trade Committee Approves Merger of G-Market and Auction … New Company will Handle 70 Percent of Transactions in Internet Open Market [Korean, OSY]

http://www.yonhapnews.co.kr/economy/2011/07/05/0301000000AKR20110705086100002.HTML?template=2087

Summary: Fair Trade Committee announced on July 4 that it has decided to approve the merger between G-Market and Auction, the two leading Internet open market operators in Korea.  Both companies are owned by e-bay, the leading Internet open market operator in the world.  The new G-Market Auction will handle over 70 percent of all transactions in local Internet open market.  11st Street, under SK Group, is the third largest operator of Internet open market at 21 percent market share.

 

3. NORTH KOREA ISSUES

 

Despite EU, South won’t aid North[English, KJH]

http://joongangdaily.joins.com/article/view.asp?aid=2938453

South Korea ruled out sending any government food assistance to North Korea yesterday as the European Union announced a plan to give emergency aid to the impoverished communist country.

Seoul had been one of the largest donors to its northern neighbor, but it has suspended aid since a conservative government came into power in 2008 and made denuclearization efforts by Pyongyang as preconditions for resuming cross-border exchanges.

The North’s two deadly attacks on the South last year also heightened animosity against Pyongyang, sharply worsening public opinion on giving aid to the North.

“We have no plan to provide the North with large-scale government food aid,” Ministry of Unification spokeswoman Lee Jong-joo said.

Still, South Korea has selectively allowed civilians to travel to the North to give humanitarian aid to infants and other vulnerable groups.

The spokeswoman made the comment in response to the EU’s decision to provide the North with aid worth 10 million euros ($14.5 million) to help feed 650,000 people.

“Increasingly desperate and extreme measures are being taken by the hard-hit North Koreans, including the widespread consumption of grass,” the European Commission said in a statement.

The executive body of the EU said North Korea has agreed to a strict monitoring system to make sure the aid reaches malnourished children, pregnant and breastfeeding women, the elderly and other intended beneficiaries.

The aid comes months after the United Nations’ food agency appealed for 430,000 tons of food aid to feed 6 million vulnerable North Koreans, a quarter of the country’s population.

Washington sent a delegation to North Korea in May to assess the food situation, though no decision on food aid has been made yet.

The North has relied on international handouts since the late 1990s when it suffered a massive famine that was estimated to have killed 2 million people.

However, outside aid has dwindled following the North’s missile and nuclear tests and other provocations.

Inter-Korean trade fell by 14% since sanctions in ’10 [English, KJH]

http://joongangdaily.joins.com/article/view.asp?aid=2938393

Trade between South and North Korea shrank more than 14 percent in a year following economic sanctions imposed on the North in retaliation for the sinking of a South Korean warship, the Unification Ministry said yesterday.

Total inter-Korean trade dropped to $1.73 billion in the year spanning from June last year to May this year, declining 14.41 percent from $2.02 billion in the same June-May period a year earlier, according to the ministry.

The decline came after the sitting Lee Myung-bak administration declared on May 24 last year its resolution to bring the North’s March 26 sinking of the South Korean warship Cheonan to the United Nations Security Council.

The South also imposed economic sanctions on the North in reaction to the ship attack that killed 46 crew members. The North has denied responsibility for the attack.

General trade and processing trade, in which North Korea imports resources and manufactures them to re-export to the South or another country, plunged 76.45 percent to $165.9 million during the cited period, the ministry said.

Both trade types have been banned since the May resolution.

4. OTHER MISCELLANEOUS ISSUES

 

Output of makgeolli up 16 percent in May [English, KJH]

http://joongangdaily.joins.com/article/view.asp?aid=2938437

Production of makgeolli, traditional rice beer, has soared since a report was released claiming it contains anti-cancer compounds.

Production of makgeolli rose 12.8 percent on-year to 35,114 kiloliters (9.27 million gallons) in April. In May, the number jumped 16.8 percent to 39,543 kiloliters, according to data by Statistics Korea. Domestic shipments rose 9.1 percent from a year earlier to 32,544 kiloliters in April and 14.2 percent to 37,981 kiloliters in May.

The increases mark a turnaround from numbers in February and March, when output and domestic shipments both fell on-year, the first declines since the 2009 surge in the popularity of the rice beer.

Tests Find Sulfur Dioxide, 10 Times Higher than Safety Limit, in Imported Chinese Dried Mushroom [Korean, OSY]

http://www.yonhapnews.co.kr/society/2011/07/04/0701000000AKR20110704177000004.HTML?template=2089

Summary: City of Seoul announced on July 4 that its recent tests found excessive amount of sulfur dioxide in imported dried mushroom from China.  Among the 19 samples tested, 3 samples exceeded the safety limit, 0.03 g/Kg.  One sample contained 0.314 g/Kg of the substance, ten times higher than the limit.