Since the 2000s, service trade has steadily risen due to the progress in global science and technology, alongside the growth of each country’s service industry. Over the past two decades, countries have persistently worked on liberalizing service trade through negotiations and agreements within the WTO system, as well as through bilateral and multilateral trade agreements. The rapid acceleration of digital transformation, particularly since the onset of COVID-19 pandemic, is anticipated to further elevate the contribution of service trade to the economies of major countries worldwide.

Services and the global value chain are intricately interconnected. Services not only serve as a significant input in the manufacturing sector, which is the most complex component of the global value chain, but they also facilitate both forward and backward linkages in the production process. The recent movement undertaken by Latin American countries to open their service markets might be driven by a policy goal to increase involvement in the global value chain, especially focused on the manufacturing industry, while aiming to enhance the competitiveness of their service sector.

Currently, Korea’s exports remain predominantly centered on manufacturing-based product trade, posing challenges in enhancing competitiveness within the service sector. This pattern is notably reflected in Korea’s trade with Latin America. Exports from Korea to Latin America primarily revolve around manufacturing-oriented product trade, with limited engagement in service-related trade and collaboration between Korea and Latin American nations. As global economic recovery stalls due to increased protectionism and a sluggish export environment for Korea, there’s a shift in approach by both the government and companies. They are moving away from the previous Korea-Latin America cooperation model, which was primarily focused on manufacturing-centered product trade, to instead expand into service trade and innovate new solutions within the service sector.

While the expansion of global services trade and the movement to open service markets in Latin American countries offer opportunities for Korea to engage in trade and collaboration within the service sector, there is a dearth of comprehensive studies detailing the extent of service industry openness in these nations. This scarcity extends to both policy frameworks and academic research that could logically support trade expansion in the service sector and foster cooperative efforts with Latin America.

The anticipated opening of service markets in Latin American countries is poised to increase global value chain participation by enhancing the input of services both regionally and internationally in product trade. As these countries embark on this movement, it’s foreseeable that there will be structural changes in their global value chain participation. Given this impending shift, there’s a necessity to anticipate and plan for the future.

Against this backdrop, the primary aim of this study is to assess the level of service market openness in major Latin American countries and to establish the rationale for economic cooperation between Korea and Latin America within the service sector.

In Chapter 2, service import statistics categorized by mode are presented for eight Latin American countries. Among these nations, Brazil and Mexico, owing to their sizable economies, stand out in terms of Mode 1 and Mode 2 imports, with similar dominance observed in Mode 3 imports within the distribution and other business service sectors. Upon analyzing bilateral service imports across these eight countries, it was evident that the United States notably leads in Mode 1 and Mode 2 imports, particularly in usage fees related to intellectual property rights, finance, transportation, and other business services. Korea ranks among the top countries only in Mexico’s Mode 1 and Mode 2 imports, specifically in the transportation sector and intellectual property royalties. However, Korea contributes to a considerably lower proportion of service imports of Latin American countries.

In contrast to goods trade, China’s presence in Mode 1 and Mode 2 service trade within Latin America appears relatively low. While it is a leading country in construction, maintenance and repair, other business services, transportation, and financial services, this predominance is observed in a few Latin American nations. However, given the consistent rise in China’s investments in Latin America, there’s an expectation that China’s share of Mode 3 service imports is likely to increase substantially.

Chapter 3 identifies the level of service market openness and significant constraints within the Pacific Alliance and MERCOSUR member countries. This evaluation is based on an analysis of the STRI created by OECD, laws and regulations of each country, and the extent of concessions in both multilateral and regional trade agreements. Examination of the domestic laws in major Latin American countries reveals actively seeking inward foreign direct investment, resulting in a reduction of regulations in the service sector. For the most part, there’s no discrimination between local and foreign investors in most service sectors, with few areas prohibiting or imposing restrictions on investment, except for specific cases.

By contrast, in sectors such as coastal transportation, maritime transportation, air transportation, road transportation, and banking services, all eight Latin American countries restrict foreign investment. Consequently, the degree of investment liberalization is notably high in business services, construction services, and distribution services, excluding transportation services.

However, the analysis reveals that the level of service concessions in these countries is notably lower compared to the degree of investment liberalization based on domestic laws. According to the WTO service concession, seven countries (excluding Uruguay) exhibit low concession levels in the computer and related services sector. Notably, in the DDA service concession, only Mexico, Chile, and Peru demonstrate significant improvements in this area. Analyzing the changes in concession content between the Best FTA and the WTO service concession, a distinctive trait in the Pacific Alliance countries is a marked promise of significantly expanded openness, particularly in the business service sector.

Broadly, there are noticeable improvements in concessions, especially in other business services, real estate services, and rental/lease services. Among professional services, enhancements in concessions are evident in legal services, accounting and tax services, as well as architecture and engineering-related services. However, in MERCOSUR member countries, although some partial concession improvements are occurring in business services, the overall level remains very low. Similarly, in transportation and logistics services, while there’s gradual improvement, the level of concessions still lags significantly behind other service fields, indicating limited expectations for substantial improvements in the future.

Chapter 4 aimed to empirically address whether the establishment of additional services trade agreements, alongside the existing goods trade agreements, impacted the forward and backward linkages of Latin American countries. The analysis scope was also extended beyond Latin America to examine which sectors’ regulatory levels in the service industry significantly influenced GVC participation of the respective countries.

The empirical analysis revealed that when a Latin American country, either from the Global North or South, engaged in a bilateral service trade agreement with a Global North country, the backward linkages of Latin American exporting nations were notably reinforced. Moreover, among Latin American countries, when a Global North nation finalized a service trade agreement with another Global North country, the forward linkages of Latin American exporting nations also increased.

This trend suggests that the signing of service trade agreements between Latin America and developed country might have facilitated the entry of competitive service firms into Latin America. It’s possible that this enhanced connectivity between the service industry and manufacturing is likely to result in an increase in offshoring, thereby further fortifying forward linkages.

Based on the estimated results under the hypothesis that the impact of GVC might differ across various service sectors, it was observed that in the country’s textile and clothing industry, an increase in backward linkages occurred as regulations were relaxed in the telecommunication service, logistics service, and transportation service sectors. Similarly, in the crude oil, chemical, and non-metal industries, the easing of regulations within the logistics service sector contributed to reinforcing the country’s backward linkages in these specific industries.

Particularly within the crude oil, chemical, and non-metal industries, the relaxation of regulations in professional services led to a decrease in the forward linkage of the relevant country. Further analysis is necessary to understand why this outcome was notably evident in these specific industries. One plausible explanation could be that professional services, such as engineering services, play a more crucial role in these industries compared to others. Therefore, the effect of substituting services due to market opening might have been more pronounced, particularly as competitive professional services in these technology-intensive sectors are utilized. In addition, this shift might have prompted a tendency for exported goods to move closer to the downstream sector of the value chain, potentially leading to a rise in direct processing of these goods into final products consumed within the importing country.

For a significant duration, a trade structure has been established where Korea exports manufactured goods to Latin American countries, while these countries predominantly export primary products to Korea. This structure has led to heightened competition for Korea against other competitive manufacturing countries in Latin America, notably China, resulting in a continuous decline in Korea’s manufacturing exports to this region. Recognizing this challenge prompts the need for a new economic cooperation model between Korea and Latin America.

One potential avenue for such cooperation involves penetrating the national service markets in Latin America. This could offer a mutually beneficial model that not only enhances Korea’s exports to these regions but also supports Latin American countries in their efforts to strengthen participation in GVCs. Therefore, it’s crucial to identify areas where Korea can collaborate with Latin America in service sectors where Korean companies hold a comparative advantage. These areas include construction services, distribution services, logistics services, business services, and transportation services required across various stages of production.

The empirical analysis in this study indicates that the liberalization of information and communication, logistics, and transportation services bolsters the involvement of exporting countries in GVC within the textile and clothing sectors. This finding carries significant implications for certain Latin American nations with pivotal textile and clothing industries. Middle- and low-income countries in Central America are currently grappling with the challenge of establishing a stable and efficient textile and clothing supply chain. To meet the efficiency standards expected by global buyers, the provision of high-quality services that enhance the entire production process becomes essential. Consequently, the significance of logistics, transportation, and communication services utilized across the production process is growing. The rise in demand for services in the textile and clothing industry within Latin America may present an opportunity for Korean service companies.

Furthermore, continuous monitoring becomes crucial as investment opportunities in Latin America are anticipated to grow in the future. The empirical analysis results of this study suggest that the opening of the service market in Latin America or the signing of a service trade agreement did not significantly impact the forward linkages in the Latin American manufacturing industry. This outcome could be attributed to the situation where although the service market opening theoretically reduced offshoring costs to Latin America, it did not translate into increased offshoring practices in reality.

A significant reason behind this could be the persistently inadequate human and physical infrastructure in Latin America, a concern raised consistently in the past. Despite the increased potential for offshoring, the region’s participation in global value chains continues to remain below anticipated levels due to the longstanding issue of underdeveloped infrastructure.

Should Latin American countries collectively recognize this critical need, it’s highly probable they will prioritize enhancing human and physical infrastructure as an increasingly crucial task. Particularly, amidst the rising interest in Latin America during the ongoing global supply chain reorganization, addressing these challenges becomes even more imperative. Consequently, future investment opportunities in Latin America are likely to emerge, particularly in sectors such as education, construction, and communications. Consistent monitoring of these developments becomes more essential than ever.

국문요약

제1장 서론

1. 연구의 배경 및 목적

2. 선행연구 및 연구의 구성

제2장 중남미 주요국의 Mode(모드)별 서비스 수입

1. 서비스 수입: Mode 1과 Mode 2

2. 서비스 수입: Mode 3

제3장 중남미 주요국의 서비스 시장 개방

1. 서비스 시장의 규제

2. 서비스 부문 개방 약속 수준 검토

3. 중남미 서비스 시장 개방 수준 평가와 시사점

제4장 중남미의 서비스 시장 개방과 GVC 참여

1. 분석 데이터: Deep Trade Agreements 2.0

2. 분석 모형

3. 분석 결과

제5장 결론

1. 연구 결과 요약

2. 정책 제언

참고문헌

부록

Executive Summary