The international trade policy environment has deteriorated continuously over the past few years. The world economy witnessed a continuous increase of protectionist trade policy measures in may countries, especially since the outbreak of the 2009 Global Financial Crisis. In addition, the still on-going Eurozone’s Sovereign Debt Crisis has led to substantial weakening of EU member states’ purchasing power, thereby contracting their overall import demand. The newly-launched Trump Administration of the US has consistently implemented ‘America-first policy’ and ‘unilateralism’ in its pursuit of external economic policies, thus further jeopardizing the international trade environment that had already been suffering from a number of threats mentioned above. Especially, the US cancelled its signature to the already negotiated Trans-pacific Partnership (TPP) agreement, and successively started to implement Trump’s promise of either cancelling or renegotiating a few seemingly unfavorable trade agreements, such as the NAFTA and KORUS FTA. All these have shattered the stability of the multilateral global trading system, which has long been supported by the strong leadership displayed by the open and liberal trade policy of the US.
  The ‘egoistic’ trade policy of the US has had deep impacts in the global trading system on the one hand, and the trade policies of many countries on the other. Partly influenced by the US move, many countries, regardless of their level of economic development, have resorted strongly to trade protectionism over an extended period, and did not yet come back to their traditional trade policy line. Even the G20 countries, that are supposed to show exemplary economic and trade policies, have been unable to keep their frequent promises to standstill and roll back protectionist trade policy measures. The soaring of ‘Isolationism’, which was expressed most impressively by the Brexit decision of the United Kingdom, is an additional factor that has the potential to further suppress the global economic and trade environment. The world economy will receive a big blow if more countries want to pull their membership out of the EU, and therefore has been watching the process of Brexit negotiation with great interest.
  On the other hand, the following two new developments are calling for more dedicated policy responses worldwide: Firstly, we have been observing an increasing fragmentation of production activities based on the expansion of 'global value chains'. Secondly, the policy of 're-shoring' with the view to expanding their economic growth potential has become increasingly prevalent in the world economy. The emergence of China as a leading economic powerhouse and ‘Make in India’ initiative of the Modi government are only two of many compelling outcomes of this new trend, which has therefore been posing enormous challenges to Korea’s road to achieving the path of sustainable development.  
  With the overall theme of 'Korea’s new trade policy direction under changing international trade environment,' this study pursued to provide policy consultation to the question of 'how can the Korean economy and more specifically Korea’s trade policy address the continuous weakening of locational advantages caused by the challenges mentioned above?' For this purpose, Chapter 2 of this study characterizes main features of recent changes in the world economic and trade order. A strong focus was given here to the analysis of the trends and implications of ‘global value chains (GVCs)’ and ‘re-shoring’, as well as the changes in the multilateral and regional trading system. Chapter 3 then was devoted to the detailed investigation of new developments in US trade policy and the proliferation of the new protectionism, which have been identified as most significant threats to the outward-oriented economies like Korea. Based on the analysis  of chapters 2 and 3, Chapter 4 identifies five challenges facing the Korean economy that bear relevance to trade policy. Based on the insights earned through the previous chapters, Chapter 5 developed the basic framework for the future direction of Korea’s trade policy. Especially, this study presented 3 long-term visions for Korea’s trade policy: ① establishment of an advanced structure of Korea’s trade policy, ② adoption of an inclusive trade policy, and ③ trade policy contributing to the stability of international trade order. Based on these three visions, the research team successfully derived five trade-policy tasks and 9 actions plans. Main rationales and contents are detailed in the report. 

  Urbanization is expected to accelerate in India in light of the rapid economic growth that has proceeded in recent years. The urban population in India is estimated to grow more than twofold by the year 2050. As urbanization progresses due to the urbanization policies carried out by the Indian government, the cities are expanding their power consumption, water supply, public transportation, communication, waste disposal, and residential convenience centers, as well as expanding their consumption markets. Against this backdrop, this research examines the process of urbanization in India and its urbanization policy, going on to analyze the relationship between urbanization and economic growth. Then this study looks into the changes in consumption and energy demand and the urban infrastructure investment that accompanies urbanization. Based on these analyses, this research suggests political directions and tasks in the urban development cooperation between Korea and India.
  The government of India is actively promoting urban development policies, such as building 100 smart cities by 2022 and rejuvenating existing cities (AMRUT), using urbanization as a driving force for economic growth. In addition, the Indian government is strengthening its efforts to resolve the existing problems of urban development by decentralizing power from the central government to the state and municipal governments, and engaging in a bottom-up style of urban development.  
  Analyses of the relationship between urbanization and economic growth indicate that urbanization causes economic growth, especially more so for medium-to-large size cities with more than 1 million populations, rather than megacities. This suggests that India needs a strategy oriented toward promoting urbanization in medium-to-large cities, as well as a strategy to resolve inefficiencies of urbanization in megacities such as Mumbai, Delhi, Kolkata and Chennai.
  The research analyzes the impact of urbanization on total household consumption, energy consumption and infrastructure investment in India based on the Divisia model and estimates market size by sector expected to be created by urbanization. The results show that in 2030, the market size for consumption, energy, and infrastructure is expected to reach about 470 billion in dollars. The consumption market, including residential and food, is expected to reach over 200 billion dollars; the energy market, including coal-fired power, will grow to about 260 billion dollars; and the infrastructure market, including communication and roads, is expected to reach over 7 billion dollars. All results are calculated by fixing the ratio of urban to rural income to the current ratio of 65:35. Therefore, in the case where the urban income rate grows bigger, or the urbanization rate faster, the size of new market creation by urbanization is expected to be even bigger. 
  As mentioned above, urbanization in India has generated enormous demand in various fields. In order for the Korean government and enterprises to utilize such demands, this study presents the following mid- to long- term cooperation directions. First, the two countries should strengthen their win-win cooperation in the urban development sector. India can utilize Korea's diverse urban development experiences to accelerate its own urbanization and economic growth, while Korean companies can take advantage of new Indian markets created in the process of urbanization. The two countries can utilize platforms such as bilateral summits, sector-based ministerial meetings, and Korea-India talks on improving the CEPA to strengthen cooperation in urban development. Second, different types of support should be used for different projects. In fields such as consumption markets, overseas expansion of hospitals, and product exports, the private sector should be at the center of cooperation. For projects that require large-scale infrastructure or huge financial procurement such as railways, construction of new town or nuclear power plants, 'Team Korea (a team including the government, public institutions, and private sector)' could take the lead in driving the project. Third, it is necessary to strengthen the Indian state and city networks. India is a continental country that consists of 29 states and 7 union territories. In order to utilize India’s urbanization in the forms of economic cooperation or business expansion, it is necessary to strengthen relationships with Tier-1, 2 cities, which have a high possibility of establishing new cities.
  In addition to the three cooperation directions mentioned above, this study proposes the following policy tasks. The first is the establishment of the 'Korea-India Urban Development Cooperation Committee.' Currently, the Urban Infrastructure & Smart Cities Committee, under the Federation of Indian Chambers of Commerce & Industry (FICCI), is in charge of facilitating the participation of private and foreign companies in urbanization and smart city projects. It is necessary to establish its counterpart organization in Korea, in order to circulate information on India’s urbanization and the smart city trend in Korea and promote Korean companies’ participation. A representative private organization with sufficient experience in overseas cooperation—such as the Korea Chamber of Commerce and Industry—would be a proper candidate for the Korean counterpart.
  The second is creating a task force for the early execution of the financial package including the EDCF. In 2015, a financial package amounting to $10 billion, including $1 billion of EDCF (Economic Development Cooperation Fund), was agreed on during the Korea-India summit meeting, but so far no projects have been implemented. The Ministry of Strategy and Finance and the Export-Import Bank of Korea should organize a task force to actively carry out related business projects.
  The third is the proposal to develop a 'Korean Industrial City' centered on manufacturing. In 2014 and also at the 2015 summit, Prime Minister Modi requested the Korean government to participate in the Smarty City Project. At the upcoming summit meeting scheduled for 2018, Prime Minister Modi will very likely repeat his request for Korea’s participation. In response, Korea should actively propose plans for a 'Korean Industrial City,' a new form of city development that is promoted as a collective effort (i.e. as “Team Korea”) between the Korean government, public entities and private developers. Towards this goal, as many stakeholders as possible should be included, such as international development banks and financial institutions, to minimize development risks. It is important to achieve success early on for a moderately sized city, and then spread the model far and wide throughout the whole of India. 

  Since the beginning of full-scale economic reform and open-door policies in China, it has utilized external opening policies to promote economic growth and integrate itself into the global economic system. In recent years, China has been actively utilizing external opening policies as a means of accelerating domestic economic reform.
  Even after the official launch of the Xi government in 2013, China is emphasizing the promotion of its external opening policy through major documents released by the Communist Party and the central government. In particular, in relation to the promotion of free trade agreements (FTAs), China has declared the basic principle of 'establishing a high- level global FTA network' in its 'Decision on Some Major Issues Concerning Comprehensively Deepening the Reform.' In 2015, the State Council issued its 'Opinions on Speeding up the Implementation of Free Trade Zone Strategy,' thereby maintaining an active stance on the promotion of FTAs.
  Korea is an important partner in China’s external opening policy and overseas economic cooperation, and the Korea-China FTA is considered the most comprehensive and highest-level FTA signed by China. In addition, the Korea-China FTA is the first FTA signed by China which provides for economic cooperation. In particular, the inclusion of provisions on local economic cooperation (Article 17.25) and the establishment of a Korea-China/China-Korea industrial complex (Article 17.26) enhances the possibility of expanding cooperation with local governments.
  While FTAs are international agreements between countries, their implementation is largely overseen by local governments. Therefore, if Korea can cooperate with local governments in China to promote bilateral pilot projects that meet the economic conditions of the region, this would boost intergovernmental cooperation between the two nations. China is already pursuing pilot policies where local governments lead efforts to expand economic cooperation with signatory countries of FTAs that have been concluded. In other words, regions such as QinZhou, the Guangxi Zhuang Autonomous Region (China-ASEAN FTA), QianHai, Guangdong Province (China-Hong Kong CEPA), Pingtan, Fujian Province (China-Taiwan ECFA), among others, are implementing pilot policies for expanding economic cooperation with local governments and other countries based on FTAs that have been concluded. In particular, in the case of the QinZhou industrial complex and the QianHai cooperation zone, a top-level consultative body led by the central government has been formed for the smooth construction of the joint industrial complex, and the sub-committees that lead the actual development of the joint industrial complex have been organized with systematic cooperation already taking place. In addition, in establishing enterprises to promote joint development, China is having its local governments take a leading role in the joint development zones, while another characteristic of these projects is that state-owned enterprises under the local government are put in charge of most of the development. However, the Pingtan Comprehensive Experimental Area differs in that it has no formal cooperation channels between the two governments, and thus cooperation projects with Taiwan have not realized any significant success.
  Korea may consider selecting Shandong as the priority area for cooperation when seeking ways to expand economic cooperation with local governments through utilization of the Korea-China FTA. Shandong Province is an area with abundant experience in economic exchanges and cooperation with Korea, and currently has various types of pilot policies for economic cooperation, including the Korea-China industrial complexes in Yantai. In particular, Shandong Province has been actively promoting the construction of Korea-China industrial complexes and a demonstration zone for Korea-China local economic cooperation in order to carry out system reform in various fields such as trade, investment service and industrial cooperation. Based on these experiences, the Shandong provincial government is striving to establish the Shandong Province Free Trade Zone. In addition, Shandong plans to promote economic growth through aggressive foreign opening measures and diversified international cooperation during the period of the 13th Five-Year Plan. Shandong intends to strengthen economic cooperation between Korea and Shandong by utilizing the Korea-China FTA, and to promote reform, industrial advancement and international competitiveness.
  Considering that Shandong province is the most active in economic cooperation with Korea and has already been conducting economic cooperation with Korea for a long time, Korea should formulate plans to utilize Shandong as a base area for expanding the performance of the Korea-China FTA, and further develop a successful cooperation model. This requires a transition to a cooperation paradigm that fits the new economic environment. Labor-intensive manufacturing and SME- oriented cooperation need to be rapidly shifted to high-tech industries, high-tech and service-oriented cooperation in accordance with the demand for cooperation and policy directions of Shandong Province. The trade and FDI of Shandong Province are mostly concentrated in low-tech industries, putting the region somewhat at odds with the policy direction of the Shandong provincial government, which is currently pursuing industrial advancement. On the other hand, the trade and investment between Korea and Shandong is centered on high-tech industries with a high level of technology, which is in line with the advanced industrial structure and export structure of Shandong Province. In recent years, the Shandong provincial government has been pursuing various cooperation pilot policies like the Korea-China industrial complexes and demonstration zone for Korea-China local economic cooperation. These policy changes are in line with Korea’s demand to promote its economic cooperation with China to a new level with the conclusion of the Korea-China FTA. In the future, Korea should use Shandong as a base and test bed for economic cooperation with China, and expand the cooperation achievements and models in Shandong Province to all regions of China. 

  The first objective of this research is to observe the changes in the global trade environment, focusing on the trade protectionism after the inauguration of the Trump administration in the U.S., while examining the Japanese government’s response to such changes, thereby drawing implications for Korea. To be more specific, this research focuses on how the Japanese government responded to U.S. unilateral trade pressures in the 1980s and 1990s, and how Japan, based on this experience, proposed and formed the U.S.-Japan Economic Dialogue. This objective is addressed in Chapter 2 of the study. The second objective of the study is to examine the competition between Korea and Japan from the perspective of free trade agreements (FTA), and analyze Japan’s FTA policy and strategy, focusing on the ASEAN-Japan FTA (AJCEP), RCEP, Korea-China-Japan FTA, the TPP 11, and the Japan-EU FTA. This discussion is covered in Chapters 3, 4, and 5 of the study.
  Chapter 2, “U.S. Protectionism and Japan’s Trade Policy,” covers the surge of trade protectionism in the U.S. during the 1980s and under the Trump administration, and looks into the responding policy adopted by the Japanese government. The results show that the U.S. trade pressure on Japan in the 1980s prompted Japan to shift its trade strategy from a “mercantilist” trade policy based on export expansion to one focusing on direct investment or strengthening business partnerships between companies. In the field of semiconductors, this pressure by the U.S. acted as a decisive factor in deteriorating the global competitiveness of Japanese companies. Regarding the trade environment under President Trump, the Trump administration’s protectionist trade policy can be summarized as: 1) prioritizing domestic law over the WTO, 2) expanding import restrictions, and 3) renegotiating FTAs. In response to Trump’s protectionism, Japan has proposed a new form of trade council to be called the U.S.-Japan Economic Dialogue, in an attempt to evade direct and unilateral trade pressure from the U.S. The Japanese government’s “TPP-oriented” trade policy or its tendency to exclude exchange rate in trade talks are noteworthy in that they show Japan’s willingness to press for its profits.
  Chapter 3, “Japan’s Regional Trade Policy in East Asia,” examines Japan’s FTA policy and strategy for East Asia, focusing on the AJCEP (ASEAN-Japan FTA), RCEP and the Korea-China-Japan FTA. First, this study predicts Japan will continue to compete with Korea in the area of FTAs, based on the fact that the KORUS FTA and Korea-EU FTA concluded in 2010 had the effect of expediting Japan’s process of concluding the Japan-EU FTA and the TPP. Second, an analysis of the trade effects of Japan’s FTAs reveals that the AJCEP and Japan’s bilateral FTAs with ASEAN had the effect of increasing (in average) the total exports and imports, and mitigating the decline of Japan’s total trade that became conspicuous after 2012. In particular, the steel and automobile sectors, which the Japanese government had focused on to expand the global value chain of domestic companies, experienced growth in exports. Third, the study reveals that Japan’s FTAs contributed to strengthening regional production networks of Japanese companies in ASEAN countries. Both the proportion of Japan’s sales to the ASEAN-4 (Thailand, Philippines, Malaysia, and Indonesia) and the proportion of Asian regional procurement and sales increased after Japan concluded FTAs with ASEAN countries. Fourth, regarding the RCEP, this study emphasizes the need to adopt common concession and agree on a broader and higher level of tariff elimination than the ASEAN+1 agreements. At the same time, it also calls for the implementation of cumulative rules of origin to help Korean companies build production networks within the ASEAN and RCEP regions. Fifth, in relation to the Korea-China-Japan FTA, this study emphasizes the importance of: 1) publicly communicating the need for concluding the Korea-China-Japan FTA through strong political leadership, 2) adopting an rather than single undertaking, and 3) eliminating non-tariff barriers for trade facilitation.
  Chapter 4, “Japan’s Asia-Pacific Regional Trade Policy,” analyzes what Korea should consider when entering the TPP negotiation, based on Japan’s trade strategy as well as TPP 11 basic agreement. First, the political and economic background of Japan’s “obsession” with TPP, even after the exit of the U.S., is the fact that the original TPP agreement had almost satisfied Japan’s demand to “sanctify” the five agricultural products in Japan, and that the economic benefits of TPP 16 (including Indonesia, Philippines, Taiwan, Thailand and Korea while excluding the US) surpasses that of RCEP. Added to that is the TPP’s trade norms—including rules of origin, e-commerce, state owned enterprise, and intellectual property rights. As such, it is predicted that the Japanese government will maintain a very tough negotiating stance in the RCEP and Korea-China-Japan FTA, based on the TPP model. Lastly, the study points out the need to review Korea’s current tariff structure, should the Korean government wish to embark on a bilateral FTA with Japan, or participate in TPP in the future. Korea’s current tariff rates is relatively high compared to Japan’s, and this could greatly restrict Korea’s negotiating power vis-à-vis Japan when entering a negotiation with Japan. In addition, such an “asymmetric” tariff structure will inevitably end up increasing Korea’s trade deficit to Japan due to the phase-in tariff reduction and elimination.
  Chapter 5, “Japan’s EU Trade Policy,” examines Japan’s EU trade policy, focusing on the Japan-EU FTA concluded in December 2017. The results of the analysis are as follows. First, the Japan-EU FTA, together with the Strategic Partnership Agreement (SPA), is important in terms of strengthening the strategic and economic relationship between Japan and the EU. Second, a comparison of the commodity market access between the EU-Japan FTA and the Korea-EU FTA revealed that the immediate tariff elimination rate was higher for Japan (96% of industrial products and 54% of agricultural products) than Korea (90.7%, 42.5%), while in regard to the period of tariff elimination for automobiles in the EU market, Japan agreed for 2 years more than Korea. Regarding the opening of agricultural markets in Korea and Japan, both FTAs reached similar level of agreements. Third, a comparison of the non-commodity market access between the two FTAs revealed that for the service sector, the Japan-EU FTA adopted a negative list approach, while the Korea-EU FTA adopted a positive list approach. Regarding investor protection, the issue was hardly raised at all during negotiations for the Korea-EU FTA, while in the Japan-EU FTA, various investor protection measures were discussed but the two sides were unable to reach a consensus, as Japan insisted on adopting the ISDS system while the EU wished to adopt the ICS system. It is estimated that the adverse effects of the EU-Japan FTA on Korea will not be large in macroeconomic aspects such as GDP, consumer welfare, employment, etc. In industries such as automobiles, automobile components and electronic devices, however, some adverse effects are to be expected. It is also noteworthy to remember that the Japan-EU FTA includes certain sectors that were not discussed in the Korea-Japan FTA, such as corporate governance, agricultural cooperation, and SMEs. 

  China, which has grown into the world’s second-greatest economic power through a sustained period of rapid growth, has decided to use innovation as its next growth engine, aiming to overcome the limitations of its existing growth model that mainly focuses on export and investment and to strengthen its global competitiveness. In the mid-2000s, China's innovation development strategy, which began with a focus on science and technology development, became more and more important due to changes in external conditions such as the global financial crisis and recession in developed countries. 
  In the nation’s 13th Five-Year Plan announced in 2016, which focuses on an innovation-led development strategy, it is stated that innovation is the core value of China's development strategy. The plan is to establish China as a world-class science and technology powerhouse by 2050 through innovation in the industrial sector, policies, management systems, business models, and culture sector. In other words, the government actively supports promotion factors within the economy by eliminating the obstacles to smooth operation of these mechanisms, ensuring that technological innovation leads to innovation in production technology and economic development through industrialization and commercialization. At present, China is pursuing a detailed innovation policy for each sector and region, in line with a mid- to long-term innovation development strategy as its national strategy. China’s science and technology innovation policy, and its Manufacturing 2025 (manufacturing innovation), Internet Plus (convergence innovation) initiatives, as well as programs to promote popular start-ups, global innovation (entrepreneurial policy) and innovation talent cultivation, are representative sector policies. Chinese regions have established mid- to long-term innovation development strategies that are tailored to the characteristics of local economies, industry, and resources, and are pursuing detailed policies in each sector.
  As China is both Korea’s largest economic partner and increasingly a competitor for Korean businesses as it catches up in its technology level, China’s strategy for innovation development offers Korea increasing opportunities for cooperation to enter new markets. These opportunities also have the double-sided nature of increasing risk by reducing opportunities for entry due to weakened competitiveness. On the other hand, regions with high levels of innovative development such as Beijing, Shanghai, and Shenzhen are relatively transparent in terms of their market environment, systems and procedures, but competition between global-level companies is fierce. In the case of Sichuan and Shaanxi, while these regions have relatively low levels of innovation, it will be necessary to select and concentrate in areas for practical innovation cooperation, when considering the government’s aggressive policies and determination to implement its policies in these regions, which will generate a relatively high entry capacity for Korean businesses through their comparative advantage against local companies. As such, this study selects regions where innovation cooperation with Korea is likely to be developed, and analyzes detailed cooperation fields and plans with the relevant regions in order to enhance the possibility and performance of cooperation in the future-oriented field of innovation. In order to identify promising areas for cooperation, we compare and evaluate the current innovation capacity by region and analyze regional innovation strategies and detailed policies to measure the possibility of future innovation development. In addition, by analyzing the mechanism of this innovation, which is a structural feature of the innovation strategy, we analyze the characteristics of the regional innovation development strategies centered on promising regions, through which we propose appropriate countermeasures by Korea and plans to further cooperation between Korea and China.
   In Chapter 2, we compute the total score of innovation competency for each of the 31 provinces using 24 sets of statistics that represent innovation competency. We compare the total scores for 2011 and 2014, and reflect existing economic relations with Korea into the results by first identifying regions with relatively high possibility of cooperation or possibility between the two countries. In Chapter 3, we use the results of our analysis and evaluation of the innovation policy, which determines the environment for innovation and has a significant influence on future innovation development, and the results of the evaluation of current innovation capacity conducted in Chapter 2, to select promising areas for innovation. In order to conduct policy analysis in a multi-layered and comprehensive way, we analyzed China’s technology innovation policy and industrial innovation policy (Manufacturing 2025, Internet convergence), i.e. the main and detailed policies for managing innovation development in each region. In Chapter 4, we examine the innovation mechanisms in each region by their respective types of innovation development, using the categories of innovation base, innovation actor, and policy improvements made to promote innovation. First, by analyzing the development of innovation resources, innovation and high-tech industries in each region, structural characteristics, and innovation clusters, we identify the characteristics of innovation infrastructure and the characteristics of innovation base. We also look into the actors driving innovation in each region (government, enterprise, university, research institute), and what kind of efforts are being made to strengthen the competency of innovation by region. Finally, we analyze the institutional and policy environment and ways to improve the innovation activities of innovative entities. Chapter 5 summarizes the characteristics of innovation strategies in the major regions of China, together with an analysis of the characteristics identified above, and explores cooperation plans associated with each type of innovation and region.
  Beijing serves as a role model for China’s innovation development, leading innovation in science and technology services, smart manufacturing, and cutting-edge ICT convergence. The fields of artificial intelligence, stem cell research, bio medicine, nanotechnology and environment are particularly promising areas for cooperation with Korea, as well as the various projects for technology application and commercialization centered on the Chung Kun Chun Innovation Center. The enterprises in Jiangsu show strong innovation capability and possess the largest number of innovation platforms. As a result the region focuses on industrial innovation rather than core innovation, and promotes industrial advancement and high added value through fusion mostly within the manufacturing industry. Technology cooperation in information and communication, automobiles, new materials, biopharmaceuticals, smart manufacturing, and the environment can be considered. Private enterprises are the primary actors for core innovation in Zhejiang, with these companies pursuing innovation in Internet convergence centered on Internet-related services, the promotion of small and medium enterprises in the field of science and technology, together with the establishment of a digital economic innovation center, next- generation ICT, industrial robot and smart manufacturing equipment, new materials, new energy, medicine-related convergence services and new industries. Chongqing, which is promoting innovation capacity through the cultivation of knowledge-intensive high-tech industries, is providing financial and financial support for science and technology enterprises and start-ups, increasing the R&D investment of companies and fostering excellent innovation talents in the Internet industry. It should be possible to utilize cooperation opportunities related to science and technology, Internet companies and talent centering on the Liangjiang New Area.
  China is utilizing innovation as a driver for growth, based on comprehensive national innovation policies, high technology demand, abundant financial power, huge domestic market and a stable start-up ecosystem. Therefore, the Korean government needs to improve the efficiency of innovation investment by selecting promising areas for innovative cooperation and concentrating in these areas, and by developing and propagating cooperation models and successful cases of cooperation through intergovernmental cooperation platforms and the protection of intellectual property rights. These efforts will thus reinforce the competitiveness of enterprises in terms of their innovative capabilities, by expanding platforms for innovative cooperation and supporting self-promoting efforts by the businesses themselves, such as through industrial education systems. In addition, it will be necessary to examine whether the government-led innovation model employed by China can play the role of a primer for inducing or expanding the participation of companies in the innovation development of the Korean economy. In order to understand the various innovation- related demands of China, we need to monitor specific policies related to the comprehensive innovation strategy, industries, companies, and institutions. We also need to invest in venture companies or innovative companies, exporters, and so on. In addition, innovation cooperation should reduce their initial risk by participating in cooperation projects based on bilateral cooperation channels between Korea and China. Lastly, it will be necessary to localize innovation through the development and modification of special products and services specialized in the various demands and preferences of innovation within China, thus improving inefficiency in local areas and generating new demand. 

  There has been an increasing trend in services trade due to technological development in ICT, transportation in addition to the international trade liberalization efforts. Although Korea, China and Japan has also experienced an increase in its services trade, the share of trade in services out of GDP remains small compared to that of developed countries. Meanwhile, as the importance of the service industry as a new growth engine is widely recognized in the three countries, each country has been actively implementing policies to promote the service industry, including deregulation and open-door policies utilizing the Special Economic Zones and FTAs. Thus, in this report, we analyze the regulatory factors that restrict the service trade of Korea, China and Japan and derive implications for Korea to enhance competitiveness in services sector by promoting services trade in the three countries.
  First, we examined the recent trend of trade in services in Korea, China and Japan not only in terms of trade value but also in value added using the World Input Output Database. We found that the services sector in value added accounted for nearly 30% of the total manufacturing exports of the three countries. Also the dependence of intra-regional value added services trade showed an increasing trend over the period from 2000 to 2014.
  While there could be multiple factors that contribute to the upward trend of services trade of China, Japan and Korea, regulatory reforms are pointed out to contribute to the increase. Measuring the restrictiveness of services trade with the OECD STRI (Services Trade Restriction Index), all China, Japan and Korea’s STRI exhibited a decreasing trend, indicating that the countries are liberalizing in trade in services. Comparing between the three countries, Japan’s STRI was lower in all 22 services sectors compared to OECD average while 5 sectors for Korea and 20 sectors for China recorded higher STRI than the OECD average. Using the STRI, we further conducted an empirical analysis to investigate how the level of services trade restriction and the difference in services trade regulation affect services trade. The analysis revealed that higher STRI is negatively associated with services trade of Korea and Japan.In addition, Korea’s FTA appears to have a significantly positive effect on service trade while there was no effect on Japan’s possibility due to the fact that Japan’s liberalization policy is on the most favored nation basis while Korea’s liberalization policy depends more on FTA. Also, the empirical result showed that the FTA effect is greater on service trade, the longer the FTA implementation period.
  We also chose four industries for an in-depth study: legal services, accounting services, courier services, and insurance services.First, in the case of the legal services market, Korea and China seemed to be less open than Japan. Japan’s liberalization of its legal services market to foreign lawyers remains a success story unlike the case of Germany, France and so forth where the countries’ domestic law firms gave dominance to English law firms. Thus, while foreign entry in the legal services market may lead to more domestic jobs, it may also accompany side effects requiring a detailed feasibility study before considering additional liberalization.
  The accounting service industry has been pointed out as one of the industries with the most restrictive service regulationin Korea. Such negative evaluation is attributed to Korea’s limited qualification for CPA examination. In order to take the CPA exam in Korea, it is necessary to complete certain credits in accounting courses, but Korea does not recognize the credits earned from foreign universities which contributed greatly to the rise of the sector’s STRI. It seems to be necessary for Korea to reorganize the related system. Meanwhile, Korea, which has concluded an FTA with the United States and the EU, has opened its legal and accounting services market to a large extent. Therefore, the OECD STRI, an index based on the most- favored-nation standard, seems to be undervalued in Korea. For example, under the KORUS FTA, as of 2017, Korea now allows the United States law firms to hire a Korean lawyer and this additional market access is not reflected in the STRI.
  In case of the courier services and insurance services industry, the Chinese market seems to be less open compared to Korea and Japan. Among the five policy areas within the STRI, the restrictions on foreign entry were the main factor contributing to China’s high STRI. Meanwhile, in case of Japan, barriers to competition were the main factor. This implies the importance to create a government level cooperation channel which focuses not only on foreign entry, but also on indirect market restrictions.
  In addition to the aforementioned industries, the report also studied the healthcare industry, an industry which all three countries are focusing on due to the industry’s significant growth potential based on the advanced ICT technology. China seemed to be the most active country to open its market compared to Korea and Japan. For example, China has granted permission to establish hospitals in seven areas including Beijing and the establishment of welfare facilities for the elderly under the China-Australia FTA while Korea and Japan has not made any additional commitments since the Uruguay Round. Meanwhile, the healthcare sector is included in Korea and Japan’s special economic zone plan and the two countries continue to make efforts for further deregulations in the sector.
  Based on the study results and its implications, this report suggests the following recommendations for the Korean government and enterprises. First, while the WTO debate is stalled, a comprehensive and high-level FTA can be the second best policy option to create new market access, generate the momentum for regulatory reforms and enhance regulatory transparency. In 2017, Korea is engaged in Korea-China FTA and RCEP negotiations which Japan and China also participate in, and the Korean government should continue to make efforts for a high-level FTA. In this regard, an in-depth research on the most recent market liberalization discussion within the country and between countries, especially with the advanced countries, is necessary. Second, an official government level cooperation channel is needed to discuss reasons behind the different service sector regulations between the three countries, to discuss possible elimination of discriminatory measures and to promote services sector regulatory harmonization. An in-depth discussion for services market liberalization can be burdensome for the three countries in the short term considering its relatively low sector competitiveness. However, noticing that enhancing the service sector’s competitiveness can also create spillover benefits to the goods sector competitiveness, the three countries can first start a joint study on the effect of services trade on each economy, and this report can serve as the starting point for further research. Third, the Korean government needs to develop a more updated, detailed, systematic information system to support the internationalization of the Korean firms. In particular, a more specific database of foreign companies would be helpful for Korean companies which seek for a potential business partner. Fourth, all three countries are utilizing the special economic zone strategy and Korean government could search for possible cooperation opportunities at the government level and provide relevant information to the Korean companies. 

  This study revisits and investigates the effects of non-tariff measures on trade flows from a theoretical and empirical viewpoint. First, the theoretical framework provided in the paper shows that the changes of trade patterns with regard to introduction of non-tariff measures by the importing country depend on the relative changes of compliance costs between importing and exporting countries. In particular, it is suggested that the introduction of high standards in developed countries may impose higher compliance costs on producers in developing countries than those in developed countries. In such a case, imports of developed countries from developing countries will decrease. The corresponding empirical analysis investigates the effects of non-tariff measures, primarily SPS and TBT, on imports in eight industries – agriculture/fisheries, mining, textile/garments/other, chemical, metal/non-metallic minerals, transport equipment, electronics and machinery, using the UNCTAD non-tariff measures database. The results are as follows. The effect of SPS measures on imports is significantly restrictive in the agriculture/fisheries and textile/garment/other industries. TBT measures are also trade-restrictive in most industries except for electronics. Further analysis to explain why the electronics industry poses such an exception shows that while TBT measures in electronics play a restrictive role in imports of developed countries from developing countries, they perform a promoting role the other way around. Such results are in line with theoretical predictions and imply with caveat that not all non-tariff measures in certain industries serve as barriers. 

  The year 2017 marks the 40th anniversary of diplomatic relations between Korea and Sri Lanka. Located in the Indian Ocean, Sri Lanka is a small island nation with a population of about 20 million. The country has seen high economic growth and poverty reduction since 2009, when the civil war ended after 30 years. Elected in 2015, President Sirisena of Sri Lanka is pursuing national development that focuses on sustainable growth. In this regard, President Sirisena recognizes climate change as a major challenge in the implementation of national development initiatives. In particular, atypical rainfall patterns have intensified over the last three years, causing damage to agricultural productivity, hydro power generation, and water-related health sectors.
  Since the opening of diplomatic relations in 1977, Korea and Sri Lanka have continued active human and material exchanges. Sri Lanka is also one of Korea’s ODA priority partnership countries. Thus, the Korean government has formulated a detailed strategy on cooperation with Sri Lanka. Sri Lanka is one of the top 10 ODA recipients for Korea. Likewise, Korea is the second largest bilateral donor for Sri Lanka. At the summit held in commemoration of the 40th anniversary of relations between the two nations, Korea pledged to expand its bilateral cooperation, in the form of EDCF assistance and grant activities through KOICA, with Sri Lanka by 2019.
  Under such circumstances, this study was conducted to guide further cooperation with Sri Lanka, mitigating the adverse impact of climate change and promoting sustainable development. The study focuses on Sri Lanka’s climate change policies and related needs, as well as its national development priorities. We also conducted a thorough review on major donors’ cooperation activities and policies, including those of Korea. Most importantly, detailed on-site interviews with major stakeholders were carried out. Through in-depth case analyses of major bilateral and multilateral donor organizations, we attempted to seek the policy direction for climate change assistance and formulate a performance management framework for Korea.
  The report is composed of the following chapters: In Chapter 2, we first provide an overview of Sri Lanka's national economic, social, and environment circumstances. We scrutinize recent development plans in Sri Lanka, such as the National Economic Development Plan for Sustainable Era, the Public Investment Plan 2014-2020, and Vision 2025. By reviewing the documents, we sought to observe how climate change is received and integrated into the policies. Our results indicate that Sri Lanka perceives climate change as a cross-sectoral issue. Sri Lankans recognize the adverse impact of climate change and are pursuing countermeasures in various areas.
  Chapter 3 identifies projections and vulnerabilities to climate change in Sri Lanka. We analyzed the climate policies and climate-related needs of Sri Lanka accordingly. Sri Lanka has drafted detailed climate change policy documents to implement the agreements made under the United Nations Framework Convention on Climate Change. Vulnerabilities and areas demanding support were identified through a rich analysis of documents, including national climate change policies, greenhouse gas reduction and adaptation plans, technology needs assessments, and Nationally Determined Contribution (NDC). We were able to conclude that Sri Lanka has a more urgent need to adapt to climate change than to reduce greenhouse gas emissions. The areas significantly impacted were the food sector – including agriculture and fisheries, water resources, health, coastal and marine environment – and biodiversity.
  In Chapter 4, we reviewed the status of international support to Sri Lanka and examined various related issues. The chapter first looks at ODA support to Sri Lanka, including in regards to climate change, through the OECD DAC Rio Markers. In the following section, we analyzed the assistance policies implemented by donors, namely Japan, the United States, Asian Development Bank (ADB), World Bank, and United Nations Development Program (UNDP). All of the donors recognized Sri Lanka as being vulnerable to climate change and identified climate change as a barrier to the country’s development. Furthermore, we observed that climate change is often addressed as a cross-sectoral issue which the donors treated with different weight, measures and strategies.
  Chapter 5 provides an overview of existing bilateral cooperation between Korea and Sri Lanka and examines performance in this area. Korea has identified Sri Lanka as a priority cooperation partner and, therefore, developed a dedicated cooperation strategy. The first and second Country Partnership Strategies (CPS) for Sri Lanka consider climate change as a risk factor. Nevertheless, climate change is supported in an ad hoc basis, without a systematic assistance framework. Consequently, the amount provided to climate-related aid is nominal.
  Building on the lessons gained from the previous chapters, Chapter 6 seeks to lay out a direction for Korea’s future cooperation with Sri Lanka, with emphasis placed on climate change. We also suggest that a proper performance management framework is essential to increase climate-related support to Sri Lanka. The main points of Chapter 6 include the following.
  First, we proposed agriculture, water supply and management, and disaster management as the most significant and prospective sectors for bilateral cooperation. We also suggested to consider a multi-sectoral and integrated approach where projects with a focus on mitigation and adaptation can merge with one another. Potential projects and programs can take the form of partnerships with active bilateral and multilateral donors in Sri Lanka. Such partnerships will facilitate the use of expertise and experience by these donors and also improve the accessibility of significant climate funds, such as the Green Climate Fund.
  Moreover, it will be necessary to establish a performance framework for climate-related aid, learning from the previous and current CPS for Sri Lanka, which lacked specific goals, baselines, targets, and climate consideration. Some donors, namely the United States, identified climate risks from the design-phase, carried out impact assessments, and took appropriate measures, if deemed necessary. In addition, indicators specific to climate change can be produced and utilized to enable effective management of performance.
  In the long-term perspective, Korea should progress toward the mainstreaming of climate change in its international development cooperation. Korea must also establish a system for performance management. Such actions are the starting point for quantitatively increasing climate-related aid to Sri Lanka. More importantly, it is a crucial transition that Korea must achieve in order to enhance the effectiveness of its activities in international development cooperation. 

  With an understanding that economic integration and reunification of North and South Korea should be accompanied by structural reforms of the two Koreas’ industries and industrial development of North Korea, this paper aims at drawing a competitive industrial map of the Korean Peninsula and exploring ways to restore North Korean industries and grow its economy.
  In order to maximize economic integration and economic benefits from unification, reforming disparate industrial structures of North and South Korea is necessary to create a synergy effect. In other words, as their economic power and institutions are different from each other, the two Koreas have to make industrial reforms in a reasonable way to create a favorable environment for unification and develop industries with growth potential in North Korea.
  North Korean industries are expected to face changes from three perspectives. Firstly, with economic sanctions from the international community rising, the North will continue to change its industrial policy depending on 'external factors'. Secondly, North Korea's industrial policy in the future will focus on normalization of leading industries and improvement of internal efficiency. Thirdly, with investments from other countries and Sino-North Korean economic cooperation limited, the North will face a dilemma between its planned economic system and a market-oriented economy.
  To restore North Korean economy and achieve its sustainable development, the following measures are required.

  a. Finding and nurturing industries that will lead economic growth
  b. Coming up with methods to attract investment to expand production and supply capacity
  c. Enhancing growth potential by expanding SOC facilities
  d. Fostering labor intensive industries to strengthen social safety net that lead to both economic growth and enhanced welfare
  e. Developing export and basic industries based on establishment of a special zone or an industrial complex of local specialization
 
  Directions for inter-Korean industrial cooperation and industrial reform in preparation for unification will have to focus on early economic recovery and industrial normalization of North Korea, while focus on strengthening competitiveness of South Korean industry through building a structure of division of labor that can make a win-win situation.
  From a mid and long-term perspective, these should be pursued with consideration of balanced land development of the Korean Peninsula, enhancing regional  cooperation, formation of an economic community and economic integration of North and South Korea. They also have to consider association with establishment of a Northeast Asian economic bloc.
  To this end, the North will have to implement comprehensive and vigorous reforms and make large-scale investments on most industries. It will also have to foster new industries through privatization of state- owned properties, while attract foreign direct investments to nurture new industries, and establish a division of labor system in relation to South Korea’s key industries.
  This paper points to promising industries in North Korea after unification. Firstly, light industry exports like textiles and clothing, ICT manufacturing and service industries, and food processing and daily necessities industries targeting expanded domestic markets will lead growth in North Korea.
  Secondly, the service industry along with the light industry will have to play a leading role in creating jobs in the North shortly after economic integration.
  Thirdly, with demands for construction rising, the construction industry and related industries including construction materials like machinery, cement and plastic products should be nurtured as one of short-term growth industries right after unification.
  Fourthly, the machinery industry will be one of key industries of North Korea for a mid and long term period based on a comprehensive industrial base. Fifthly, the materials industry such as steel and chemical industries have to experience a limited modernization through rapid and powerful reforms on relatively competitive sectors.
  Sixthly, while restructuring and fostering existing industries, industries of new or advanced technologies that have an advantage to enter into the North region have to be developed so that the foundation for North Korea’s mid and long term economic growth can be established. 

Acknowledgements

Notes on the Contributor

The Tourism Industry in Arab Spring: Effects and Perspectives
Chokri MAKHLOUF
Ⅰ. Introduction
Ⅱ. Tunisia and the Impact of the Jasmine Revolution
Ⅲ. Recommendations
Ⅳ. Conclusion

References 

   The disturbance of Arabic countries especially in the MENA region called the “Arab Spring” has had a direct impact on the tourism industry of the Arab region. Volatile events, instabilities, political turmoil and extremism present the tourism industry with significant challenges. But in any event, future developments will depend in any case on the security situation in the country, as tourism is certainly a sector with many advantages in terms of foreign investment and foreign exchange. At the same time, it is a very sensitive sector. The slightest social upheaval, the smallest popular movement, these all have incalculable effects on the sector.
  Tunisia is an excellent example of what can happen to the tourism industry in such cases. This paper explores first the effects that the Arab Spring has had on tourism industry performance. We aim to identify the influence that events of the Arab Spring had on tourism in Middle Eastern and North African States, namely by examining the cases of other countries such as Egypt and Tunisia in comparison with Morocco and the United Arab Emirates.
  Finally, the study examines the policies and strategies adopted by Tunisian governments in order to mitigate the crisis in the evolving tourism sector, and to develop recommendations on how the tourism industry can recover from the Jasmine Revolution.