At the 1996 Singapore Ministerial Declaration it was agreed to provide the special trade preferences for LDCs, for example duty-free and quota-free (DFQF) market access on autonomous basis. This DFQF scheme is aimed at improving the overall capacity for LDCs to respond to the opportunities offered by the trading system. Since then, several developed countries have been undertaken to provide more favorable market access conditions for LDCs.
The DFQF scheme of Korea entered into effect on 1 January 2000 and Korea was the first developing country to provide duty-free access to all LDCs on 80 tariff lines at the 6-digit HS code level. In response to the Hong Kong proposal, Korea introduced the new DFQF scheme in January 2008 by expanding the product coverage up to 75 percent of the all tariff lines. Hence, LDCs enjoy tariff preference on 3,790 tariff lines at the 6-digit HS level. This study attempts to assess this new scheme by calculating the utilization rates, product coverages, and utility rates, and propose the possible improvements.

Mongolia, a country that hitherto remained on periphery of the international arena, has been turned into a strategic nexus that has caught the attention of Russia and China, as the two superpowers has initiated the New Multi-Lateral Diplomacy based on the third neighbor policy. Ever since the recent discovery of large-scale mines in Mongolia, other nations are also seeking to enter Mongolia for the mineral resources development. As Mongolia successfully established democratic institutions and transition to the market economy system in a manner comparable to countries in Eastern Europe, Mongolia’s international status is increasing, not to mention emerging as an attractive country for investment.
Since establishing diplomatic ties with Mongolia in March 1990, Korea has consistently expanded cooperation in various fields but the level of cooperation has not reached the expected level compared to political, social and cultural cooperation between two countries. This stems from a number of political and economic circumstances facing Mongolia including: Mongolia’s underdeveloped economy, relatively small domestic market, and limitations as a landlocked country surrounded by Russia and China. However, it is imperative that Korea recognizes the strategic value of Mongolia, by virtue of its location in the geographical center of Asian continent, with respect to the economic network emerging in the Eurasia as a whole. First of all, Mongolia is a strategic nexus that connects Korea with Siberia and China, and can be an excellent foothold for making inroads into the heart of Eurasia for economic cooperation. It also presents a great potential for Korea in terms of securing natural resources and food supply. Because Mongolia has the highest potential for economic growth as well as mutual cooperation, the Mongolia continues to rise in importance.

The governments erect trade barriers to protect domesticindustries by limiting or banning the imports of specific products. These can be categorized into two separate classes: tariff and non-tariff barriers. There has been a consistent decrease in the average tariff rate in the world as the number of free trade agreements have increased rapidly since the 1990s. This has led to an increasing number of countries that are beginning to use non-tariff barriers instead of tariffs. One of the more common and frequently-used non-tariff barriers is the technical barriers to trade (TBT).
Technical regulations are set in accordance with specific characteristics of a product concerning human and animal safety, environmentalprotection, national security and etc. Since technical regulations vary from country to country due to different social, geographical and cultural backgrounds, they can create unnecessary obstacles to trade. It forces exporters to incur additional costs of investigating foreign regulations, testing whether final products would meet those regulations, and building additional production facilities. The term TBT refers to these technical regulations which impede international trade.
The WTO requires its member countries to notify the WTO TBT committee of their new technical regulations beforethose regulations enterinto force. The total annual number of TBT notifications shows that the number of technical regulations has increased rapidly since 2004, implying that they are becoming increasingly useful instruments of protectionism.
Recently, there were greater increases in TBT notifications in developing countries than in developed countries. There are differences as to the major objectives of technical regulations: in developed countries, the motive seems to beenvironmental protection and application of new technology, while those in developing countries are adoption to new international standards and improvement in quality. As the former objectives of technical regulations are based to a greater degree on social, cultural and geographical backgrounds of nations, they have greater potential for turning into trade barriers.
Many problems related to TBT between WTO members have been raised at WTO TBT committee meetings. Specific trade concerns (STCs) refer to consultations on TBT between members at the meeting. The total annual number of STCs has been on the increasesince 2005, implying that there are more technical regulations becoming trade barriers. In addition, greater numbers of technical regulations with objectives of environmental protection and application of new technology are becoming subjects of STCs. Hence, we can hypothesize that a negative relationship between technical regulation and trade would be more prominent in developed countries and during the recent period.
Therefore, utilizing country-level data of the World Development Indicators (WDI) from the World Bank, we shall test empirically if technical regulations are indeed negatively correlated with international trade during the period 1995-2008, especially in developed countries and during the last 5 years. The empirical results will show that technical regulations are negatively correlated with international trade. In addition, we find that the negative relationship between technical regulations and international trade was even more prominent in developed countries and during the period 2004-2008. Hence the empirical results are consistent with our forecasts concerning the relationship between technical regulations and international trade, specifically in developed countries and during the recent period.
As a result, we are able to elicit four specific implications for Korea's trade policy on TBT: the necessity of further research on TBTs of main trading partners, the organization of a TBT experts group, the unification of three inquiry points and the acquisition of prior occupation in international standards.

As the importance of Food Security is becoming an international issue, Korea has to consider positive ‘Agriculture Cooperations’ with Central-Asia, Kazakhstan, Uzbekistan, and Kyrgyzstan for establishment of stable food supply foundation in Korea. There are promising measures to invest and cooperate with Central Asia in the agricultural sector, such as direct investment, export of farm machinery.
This study analyzes the current situation of agriculture in Central Asia, and provides strategic expansion ways for agricultural cooperation between Korea and Central Asia by intensifying established researches. Especially, we focused on 3 countries Kazakhstan, Uzbekistan, and Kyrgyzstan in Central Asia.
Central Asia has traditionally favorable natural environment for agriculture, and Kazakhstan and Uzbekistan are the most important agricultural nations in the world since the Soviet Union. According to FAO (Food and Agriculture Organization of the United Nations) analysis, Kazakhstan is the 11th wheat producer, and Uzbekistan is the 6th cotton producer, then they are classified into major agricultural countries.
Even though agriculture is of great importance in Central Asia, and food security is emerging as new issue in Korea, they do not cooperate each other in agriculture sector. The reason why political condition is unstable, and economic condition including investment environment is also poor in Central Asia, Korean government or corporations have no strong will to entry into Central Asia for investing agriculture or collaborate with Central Asia on agriculture sector. In these days, Korea has tried to cooperate with Uzbekistan by establishing Overseas Agri-Development Center and dispatching Agri- Research group at government level, so we can expect to enlarge the Agriculture Cooperation between Korea-Central Asia.
The most important thing for expanding agriculture cooperation with Central Asia is to establish the investment strategy considering their demands. Korean government policy to securing foreign food base in recent years, Cenral Asia is actually attracting national attention including government, private enterprises, and even individuals. However, they hardly ever invest in agriculture sector.
First of all, we have to understand the current situation and governmental policies in Kazakhstan, Uzbekistan, and Kyrgyzstan, then we have to promote to invest and cooperate in the priority field that Central Asia asks for collaborations. For example, Central Asia needs huge foreign investment in their irrigation facilities and agricultural infra because of lack of water resource and infrastructure for agriculture development. They have strategic policies such as development of rural area and farm modernization, so Korea can initiate them into farming techniques. These ways will be based on the improvement of agriculture cooperation and investment between Korea and Central Asia.

1. Main Findings of the Paper

Trade and industrial remedies became more frequently employed as the world economy suffered from the recent worldwide financial crisis. The multilateral rules of the WTO applicable to such trade remedies should be improved so that an unfair application of those measures is prohibited. In fact, the Doha Development Agenda (DDA) initiated in 2001 has been dealing with the WTO provisions on trade remedies as one of its core negotiation items. The paper examined the process of the rules negotiation and the diverse positions of major WTO Members. For this purpose it analyzed the comprehensive set of proposals submitted by the WTO Members, two Chair's drafts and other documents prepared by the WTO Secretariat. Based on this examination and analysis, the paper suggested strategic considerations the Korean government can draw when participating in the rules negotiation under the DDA.
Main findings of the paper are as follows. First, the positions of WTO Members in respect of the rules negotiation are quite different, similar to those found in other issues of the DDA. WTO Members are in particular sharply divided in rules negotiations on antidumping measures. Exporters that are likely to be subject to potential trade remedies would prefer tighter rules, in order to reduce the frequency and the intensity of those remedies. Importers would prefer loose rules on the application of trade remedies, with the view of avoiding an intensified competition from imported products. Considering these divergent interests and positions among the negotiating countries, it is expected that any successful conclusion of the rules negotiation would require a compromise in order to balance the interests of exporting and importing countries.
Second, the traditional distinction between frequent users of trade remedies and opposing respondents has recently become unclear. For example, China which used to be a frequent subject of trade remedies has now become an aggressive user of those remedies. Also, India has recently increased the use of trade remedies, and has emerged as one of most frequent users. In contrast, the United States, which used to resort most heavily to trade remedies, is now charged frequently by trade remedies of other importing countries. This new feature has made WTO Members difficult to take consistent positions over the specific issues discussed in the rules negotiation.
Third, fishery subsidies constitute one of most difficult items in the rules negotiation. A strong confrontation between developing WTO Members and developed ones is found to be one of the peculiarities of this negotiation. There would be no global rules specifically applicable to fishery subsidies if there is no agreement in the DDA. Considering that discussions and negotiations have been conducted based on a 'roadmap' rather than a Chair's draft, a successful agreement for this issue appears extremely difficult.
Fourth, the issues which are often subject to disagreement in the rules negotiation include zeroing, sunset clause, lesser duty rule in antidumping measures, and definition of fishery subsidies, coverage of prohibited subsidies and export credit in subsidies. As pointed out above, WTO Members often get together over particular issues without any forseeable and consistent direction. For example, the EU has taken different positions depending on the specific issues discussed. China and India have taken rather double positions since they have recently joined the user group. Accordingly, a traditional confrontation between 'Friends Group' and the United States may not often explain what has happened in the course of the rules negotiation.
Considering the four findings mentioned above, it is an observation of this paper that the rules negotiation is still not yet on a full track. Therefore, the authors expect that a successful conclusion of the rules negotiation may be influenced by the progress in the negotiation of other issues in the DDA, mainly due to the negotiating principle of a single undertaking.

2. Policy Recommendations

The paper has suggested the following four policy recommendations. First, as discussed in Chapter 2, during the period between 1995 and 2008, Korea was second most-frequently subject to antidumping measures just after China, while she ranked the 11th in imposing the measures. This statistics may suggest that Korea has been rather inactive in using antidumping measures against imports which may injure domestic industry. This relatively inactive attitude of Korea may be contrasted to that of India and China. India very recently ranked the first in imposing antidumping measures, while positioned the 8th in being subject to the measures. China was placed the 8th in imposing the measures, while ranking the first in being subject to the measures. Considering this contrast, Korea is advised to take more active attitude in using trade remedies, such as antidumping measures, in order to protect domestic industries.
Second, it should be acknowledged that Korea as one of the members of the Friends Group has been very active in improving the rules on trade remedies. Those issues, such as zeroing, sunset clause, lesser duty rule, which lead to a tighter application of antidumping measures, initially stood negatively in the first Chair's draft. However, they corrected rather positively in the second Chair's draft due to the efforts of the Friends Group including Korea. Korea along with other WTO Members of the Friends Group should make every effort in keeping the improvement in those issues, with the view of securing worldwide freer trade, which will eventually enhance the national interest of Korea.
Third, Korea has taken similar positions along with Japan and Taiwan in fishery subsidies. However, the Friends of Fish Group, composed mainly of developed countries such as the United States, Australia and New Zealand, has taken rather tougher stance by demanding a comprehensive ban on fishery subsidies. In order to effectively achieve the negotiation goals, Korea should take a lead among Asian countries which have a greater population depending on fishery.
Finally, it is reminded that WTO Members including Korea need a freer trading system with trade remedy rules which do not unfairly restrict trade. The rules negotiation is a very important element of the DDA for Korea and other WTO Members.

After 9-11 WTC terror incident, a critical need has arisen for a strategy endorsed by the World Customs Organization (WCO) to secure the movement of global trade in a way that does not impede but, on the contrary, facilitates the movement of that trade. The AEO was introduced to correspond to such changes in the customs environment. That is, Authorized Economic Operators who meet criteria specified by Customs should be entitled to participate in simplified and rapid release procedures upon provision of minimal information, but non-authorized company is managed intensively. Thus it is up to Customs to ensure in an effective manner the safety of cross-border trade. Recently, as AEO programs became a new customs barrier, Mutual Recognition between each country's AEO program is expanding.

In the case of Korea, MRA with USA and Canada will be made into a contract in the near future. But although MRA with China and Japan will be promoted pending resolution of certain issues, it will be made a reality considering their importance as trade partners. So, in this paper, we analyze the AEO program's characteristics and status of MRA promotion concerning Korea, China, and Japan, and to find a strategy for promoting an MRA between 3 countries.

Above all, we can find some characteristics, as specified in the following sentences, as a result of comparative analysis about AEO programs of the 3 countries. First, AEO programs of Korea, China, and Japan are altogether classified as "Customs compliance and security programmes" not just "security programs", leaving little possibility for incomplete mutual recognition like the USA-Japan MRA. Second, in terms of operator type, Korea's scope is the broadest, while China's is the narrowest. Third, requirements for AEO of Korea, China, and Japan is similar, because it is based on "WCO safe framework". Fourth, benefits from the AEO is similar in terms of trade facilitation and reduction of logistics costs, but benefits of being without an AEO is much greater for Korea than China and Japan. So, if MRA is made into a contract between the 3 countries, more benefits will accrue to Korean companies than Chinese and Japanese ones. Fifth, AEO was only lately introduced to Korea, which therefore has the least number of authorized companies. But the gap between China and Japan in this regard will be reduced speedily, because recognition and needs of companies about AEO continues to expand. Sixth, procedure for AEO authorization of 3 countries involves a 4 step procedure proposed by USA's CBP. Seventh, behavior of MRA promotion is similar, in that main trading partners like USA and EU receive consideration first as an MRA partner, followed by consideration of 3 countries as next targets of the MRAs.

We suggest an MRA strategy as follows. The first step is an evaluation process that includes a comparison of both nations’ programs to determine the similarities, differences, gaps, and challenges. At this phase, the three countries (CJK) should create a joint research council and promote regular interaction. The second step will involve operational planning and testing phase to determine the specific approach to how mutual recognition will be achieved, including the development of a pilot program. For minimizing the time required for this phase, research should be conducted on actual conditions by regular interaction, and check for complementary measures for problems to suggested in previous research. The third step is a process where pilot measures developed in phase two is implemented, and the fourth step concludes with declaration of mutual recognition. For effective arbitration between the countries, the last step must be performed through a joint research council.

Aside from the positions of three countries, given the fact that a country such as Korea are highly dependent on other foreign countries, we have to recognize the political importance of mutual recognition. Also, since the time for importation is relatively slow, we have to adopt following policy measures. First, we must establish a roadmap based on strategic priority for mutual recognition. Second, professionalization of human capital for AEO, securing related budgets, establishing and improving the supporting system are indispensable for effective pursuit of the mutual agreement. Third, we need to build a cooperative relationship with other countries based on stimulation of knowledge transfer activities through competitiveness in information and then lead the regional standardization in customs information and broad utilization of the AEO system. Fourth, as the AEO mutual agreement is considered an important agenda for APEC, it is necessary that we activate the AEO domestically and lead mutual agreement through improving the system and simultaneous mutual agreement.

List of Figures

List of Tables

Contributors

Preface

Introduction and Overview

Part I: Financing for Regional Economic Integration for Northeast Asia 
1. Currency and Financial Coordination in Northeast Asia (Eiji Ogawa)
2. Will Northeast Asia’s Functional Economic Integration Lead to Formal Regional Economic Integration? (Chang Jae Lee) 
3. Will China’s Rise and Functional Economic Integration Lead to Formal Regional Economic Integration? (Chung Lee) 
4. New Regionalism Across the Korea-Japan Strait: Cross-Border Region Between Busan and Fukuoka (Jung-Duk Lim) 
5. Global Financial Crisis and Policy Responses in Korea (Joon Kyung Kim) 
6. Macroeconomic Challenges and Russian Energy Policy in North-East Asia Cooperation (Pavel Minakir) 
7. China’s Thoughts on the Reform of the Global Financial System and Asia Financial Cooperation (Tong Jiadong) 
8. Financing Infrastructure Development Projects: Case History, Market Realities, and the Future of Financing Development (John Tichotsky) 

Part II: Mechanisms and Architecture to Actualize a Proposed Multilateral Financial Institution 
9. Steps Towards a Northeast Asia Bank for Cooperation and Development (Hiroshi Watanabe) 
10. China’s Efforts on Establishing the Northeast Asia Bank for Cooperation and Development (Wang Shuzu) 
11. Northeast Asian Development Finance Cooperation: The New Bank and the Support Network (Chiba Yasuhiro & Yamamoto Takashi)
12. Proposal for the Roadmap of the Northeast Asia Bank for Cooperation and Development (Zhang Xiaoyan) 
13. Economic Integration of Northeast Asia and the Function of the Northeast Asia Bank of Cooperation and Development (Ma Junlu) 
14. The Comparison of Large-scale Cross-border Financing and Project Management (Ma Junlu) 
15. Analyzing a Strategy for Development Finance Cooperation in Northeast Asia (Yamamoto Takashi) 

Part III: History, Roadmap and Strategy for Establishing a Northeast Asia Bank for Cooperation and Development 
16.  The Northeast Asian Bank for Cooperation and Development: From Rhetoric to Reality (Stanley Katz) 

Summary and Conclusions: Financing for Regional Economic Integration for Northeast Asia 2009 

Appendix: Agendas

The Northeast Asian region includes the major players China, Japan, and Korea, with productive linkages to resource-rich Russia and to the United States and is one of the most dynamic economic regions in the world. In contrast to the region’s robust economic growth, regional security has long been fragile, mainly due to the geopolitical conditions resulting from the Cold War era. If the countries in Northeast Asia wish to further their development and prosperity, they will have to learn to harness their dynamic economies and create a region in which peaceful coexistence and common prosperity prevail. Northeast Asia has a northern subregion that includes North Korea, Mongolia, the Russian Far East, and the northeastern provinces of China—an area that is well-endowed with latent natural and human resources. This subregion has the potential of becoming an important source of natural resources for the entire region, and what is needed is to realize that potential through infrastructure investment. Energy security and environment is for example, an important area of cooperation, as the three major countries are heavily dependent on energy imports and are highly vulnerable to energy crisis in the event of an interruption -- especially in the case of oil, natural gas and minerals imports. Financing requirements for this investment are likely to be large, and a regional development bank is a key in meeting that financing need. This volume presents the results of the project implemented in 2009 on financial cooperation in Northeast Asia aimed at supporting the establishment of a regional institution for financing infrastructure investment. This volume is comprised of papers, research reports and summaries of a main conference and several specialized meetings, as well as affiliated activities, that took place under this project. The results of this project represent a considerable benefit to the region and have been carried out in a spirit of cooperation that we esteem.

There are raising concerns on protectionism while global countries are recently implementing policies to protect their internal industries after economic crises. World leaders in two G-20 summits, which held both in November 2008 and April 2009, had arrived at an agreement on observing fundamental principles of trade liberalization and stopping protectionism measures. Korean government is strategically promoting commercial policies through FTAs in the respect of the even though Korean government is for the multilateralism through the WTO in principle. The FTA negotiation between Korea and Turkey is understandable in the context of our government's commercial policies, and it will begin sooner or later. Even though Turkey has maintained good ties with Korea for last 50 years after participating in the Korean War to outbreak in 1950, the economic relation between both countries has been below the expectation. Also Korea's trade with Turkey has kept the balance in black since 1992, therefore Turkish government has consistently asked the correction of trade imbalance to Korean government. Although Turkey asked the FTA between Korea and Turkey first, the FTA with Turkey is worth consideration in mid-term. The Korea-EU FTA will take effect in the near future as the FTA negotiation, which began in January 2007, was over and both countries provisionally signed a draft in October 2008. On the other hand, Turkey has to pursue the FTA with any countries to conclude the FTA with the EU according to the Custom Union. This study concentrates on supplying fundamental references to be needed in the FTA negotiation with Turkey which will be initiated in the near future by analyzing the feasibility and the economic effects of a Korea-Turkey FTA. Furthermore, this study tries to look for approaches to enhance the economic cooperation with Turkey for opening up new emerging markets. First of all, we analyze current political and economic issues in Turkey, the potential of Turkish economy as an emerging market, strengths and threats in order to raise the understandings of Turkish political and economic circumstances. And then we review trade and investment between both countries for the economic relation. This study use sources for comparative advantage, such as RCA, MCA, and TSI to analyze the industrial competitiveness between Korea and Turkey. In addition, this study estimates the economic effects of the FTA between Korea and Turkey by CGE model. Finally, this study is to seek some measures to enhance the economic cooperation between both countries in terms of the basic directions of the economic cooperation, trade-invigorating measures and the revitalization of investment toward Turkey. In Chapter 2, the FTA with Turkey is likely to benefit our national interest on the basis of geographical importance and the potential as an emerging market of Turkey. And it is a help to stimulate the expansion of both trade volume and investment, and furthermore to resolve the trade imbalance given that trade volume and investment have been very small in comparison with the economic power of both countries. Competitiveness analyses in Chapter 3 show that Turkey is a very important Korea's export market in terms of petrochemical and rubber products, general machinery, textile and clothing and other manufacturing. Therefore the Korea-Turkey FTA is able to play an active role in these industries. According to the CGE analysis in Chapter 3, the Korea-Turkey FTA is likely to minimize domestic production, or trigger the deterioration of the trade balance when considering that Turkey has been composed of the Custom Union with the EU. In other words, economic benefits that Korea will gain from the Korea-Turkey FTA seems to be very small or even negative on the assumption that the Korea-Turkey FTA takes effect after the Korea-EU FTA comes into effect. The CGE analysis, however, is likely to underestimate the economic effects of the Korea-Turkey FTA due to dealing only with the elimination of custom duties on goods. We can really recognize that the economic effects of FTA will trigger not only changes of GDP and welfare effect, but also investment increase between both countries, elimination of NTB, and improvement of economic relations. Therefore it is desirable that the FTA between Korea and Turkey may be the comprehensive FTA including NTB, services, investment as well as goods. In conclusion, this study suggests that the Korea-Turkey FTA should be comprehensive and high-level, as recently Korea has a comprehensive and high-level FTA approach to include not only goods but also service and investment liberalization. In Chapter 4, this study suggests some basic directions for the economic cooperation between both countries. First of all, among basic strategies to Turkey as an emerging market is the comprehensive economic cooperation to make it possible to advance into promising neighbor regions and countries such as the Central Asia, the Middle East, and Russia. Secondly, we can see a possibility of the win-win FTA approach by suggesting policies to facilitate trade between both countries as a resolution for a trade imbalance while strategically expanding Korea's export to Turkey. Thirdly, this study proposes measures to improve the economic cooperation through expanding governmental and civil exchanges between both countries. Finally, this study suggests in detail some measures to facilitate investment to Turkey in four areas of energy industry including natural gas, transport infrastructure, ICT and automobile parts, which are main investment projects of Turkey in the future.

I. Introduction

 

II. Enlargement of the EU toward the East

1. CEECs' Accession to the EU

2. Changes in Intra-European Trade and Investment in the Context of the Enlargement

 

III. Intra-industry Trade

1. Economic Integration and Intra-industry Trade

2. Measuring Intra-industry Trade

 

IV. Results: Intra-industry Trade in an Enlarged Europe

1. Intra-industry Trade at the Static Dimension (GL index)

2. Intra-industry Trade at Dynamic Dimension (MIIT)

 

V. Determinants of IIT

1. Hypothesis of Determinants of IIT

2. Regression Model

 

VI. Conclusion

 

References

 

Appendix

In this paper I examine the evolution of intra-industry trade (IIT) in intra-European trade in the period of accession of the Central and Eastern European countries (CEEC). In order to identify changes in IIT in intra-European trade, I calculate the Grubel and Lloyd index for the static dimension and Brülhart A index for the dynamic dimension. Based on Grubel and Lloyd index, I conduct gravity-type empirical tests to verify determinants of IIT at the intra-European level. I find that CEECs experienced considerable increase in IIT, particularly during transitional periods before their accession. However, the level of IIT between CEECs is still considerably low. Given that a trade-investment nexus exists to explain IIT in intra-European trade, IIT in CEECs can increase further, as they receive more FDI from their neighbors.