Introduction

 

1. Trade Cooperation of the Russian Federation and the Republic of Korea
1.1. Trade in goods and services
a) Trade in goods
b) Trade in agricultural goods
c) Trade in services
1.2. Existing restrictions in mutual trade
a) Quantitative and tariff restrictions
b) Reduction of non-tariff barriers in mutual trade
1.3. The results of the survey of Russian companies doing trade with the Republic of Korea
1.4. Evaluation of competitiveness of industries in the Republic of Korea and the Russian Federation
1.5. Estimation of the potential and effects of the conclusion of Free Trade Agreement between the Republic of Korea and the States of EAEC

 

2. The Russian-Korean cooperation in the investment sphere
2.1. The investment policy of the Republic of Korea and Russia, the dynamics of mutual investment
2.2. Review of business activities of Korean companies in Russia
2.3. Assessment of the investment climate in Russia
a) Analysis of external factors
b) Analysis of internal factors
c) The main directions and possible strategies to attract Korean investors in the Russian market

 

3. The Russian-Korean cooperation on the development of the Far East region
3.1. Russia's policy in the Far East and Korea’s "Eurasian Initiative"
3.2. Prospects and existing restrictions of the Russian-Korean cooperation in the Far East of Russia
3.3. The geopolitical and geo-economic importance of the Russian Far East
a) The geopolitical and geo-economic features of the Russian Far East
b) Changes in the Far East of the Russian policy
c) The Advanced Territories of Development (TOR)
3.4. Perspectives, objectives and tasks of the Russian-Korean economic cooperation in the Far East of Russia
a) Prospects and cooperation goal
b) The main objectives of cooperation
c) A joint program of support and development

 

The basic directions and recommendations for the development of trade and economic cooperation between the Russian Federation and the Republic of Korea 

I. Trade cooperation
II. Investment cooperation
III. Cooperation in the Far East 

 

Summary (Russian) 

 

Executive Summary (English) 

 

References

Since the establishment of Korea-Russia diplomatic relations in September 1990, economic cooperation between the two countries has progressed rapidly. The fact that Russia’s industrial heartland is far away from Korea constituted an additional challenge in building close economic relations between the two nations. Despite the difficulties, Korea and Russia became “near top ten” trading partners. However, the fact still remains that the potential for economic cooperation of the two economies has not been fully realized.
Trade and economic cooperation between the Russia and Korea is strategic in nature. The Russian market is of great interest to Korean companies, as Russia can provide all the necessary types of industrial and agricultural raw materials in addition to energy. The Russian market remains attractive for many of Korea's products, and vice versa Korean market is of great interest to Russia’s products and resources. Korea can also contribute to Russia’s economic modernization and its regional development, particularly in the Far East and Eastern Siberia.
The Korean and Russian government acknowledged the need for systematic economic cooperation mid- and long-term, and decided to draw up mid- and long-term roadmaps for bilateral economic cooperation. KIEP and RFTA, representative institutes of Korea and Russia respectively, launched the joint research project, aimed at discovering cooperation issues and providing specific measures for implementation. This study evaluates the priority fields with greatest potential for tangible results and develops policy recommendations, focusing on cooperation in the three sectors of trade, investment and regional development.
For its part, Korea-Russia trade cooperation has been relatively vibrant. However, the trade structure is biased. The structure in which Korea exports manufacturing goods to Russia and Russia exports energy goods to Korea should be looked at as a starting point in order to maximize the trade potential. Decreasing Russia’s bias in exports of energy and increasing its trade of high-tech products can improve the trade structure, intra-industry trade should also be facilitated.
Russia aims at strengthening industrial competitiveness. For this, value chains between Russia and Korea need to be formed. This will be realized more effectively through collaboration of the two countries in determining industries that show promise, and implementing joint projects. Second, customs procedures need to be improved and non-tariff barriers need to be eased or lifted. Third, Korea and Russia could intensify collaboration of competition policy. Lastly, the two countries need to begin talks on Korea-EAEU FTA negotiations, in order to deal with all abovementioned points and seek ways for comprehensive and effective economic cooperation.
Significant Korean investment into Russia commenced in the late 2000s and reciprocal investment by Russia is minimal. Korea invests mostly in the manufacturing sector of Russia’s central regions, mainly Moscow and St. Petersburg. Due to economic situation in Russia, a number of Korean companies experienced sharp declines in sales profits. Providing financial support programs for Korean businesses and expanding Russian companies’ investment are currently important parts for facilitating investment and trade cooperation.
Establishing a Korea-Russia investment fund or increasing the availability of the Korean-Russian investment platform formed in 2013 could present good options. Second, setting a long-term joint plan for investment in promising industries and projects is necessary. There are only a few examples of Korea’s successful investment in Russia and vice versa. Investment risk needs to be lessened and a more systematic plan should be thought out through close cooperation.
Third, investment in Korea should be promoted among enterprises of Russia and EAEU members in order to raise the quality of investment cooperation. Russian companies can expand direct investment to Korean enterprises for import substitution purposes. Moreover, holding investment forums in Russian regions involving KOTRA’s Invest Korea, Korea-Russia Business Association, Chamber of Commerce and Industry of the Russian Federation, Moscow Business Association, etc. will be useful in attracting investment to Korea and Russia.
Fourth, a joint investment portal needs to be created in order for investment information to be easily accessible. This recommendation is supported by practical actions when entering the markets both Russian and Korean businesses tend to obtain information on investment from Korean companies that are already operating there.
Korea’s ‘Eurasia Initiative’ and Russia’s Far East development policy, cooperation in the Russian Far East are also studied in this report. Recent development policy for the Far East attempts to connect the Far East’s economy with the APEC’s value chains and strengthen transportation and logistics network between the regions. In order to increase efficacy regarding execution of the policy, the Ministry for Development of the Russian Far East was created and the special Deputy Prime Minister was appointed for this task.
All relevant organizations for development of the Far East - funds, investment agencies and human resources management, were newly established. Besides, new policy instruments such as tax incentives, the advanced development territories and related laws were adopted for its continuity.
Based on these, the following suggestions are proposed. First, Russia-South Korea-North Korea trilateral projects in transportation, logistics, energy network sectors must move forward. Second, it is desirable for Korean businesses to participate in the Advanced Development Territory in the Far East and the joint special industrial zones to be created in the territory over the long run. Cooperation can be fostered in the engineering sector as Russia can gain a new growth engine for economic development and Korea can obtain a new space for growth in the northern region.
Third, it is needed to establish a “Far East Development Committee” within the Korean Government. The committee can support Korean companies to invest in the Far East and coordinate all relevant joint projects between Korea and Russia and act as a counterpart for Russian Ministry for Far East development.
Implementation of these recommendation will move forward the cooperation between the Russian Federation and Republic of Korea, developing joint effective instruments of long term cooperation aimed at expansion of trade and investment and coherence of regional economic integration policies.
 

 

Since the establishment of Korea-Russia diplomatic relations in September 1990, economic cooperation between the two countries has progressed rapidly. The fact that Russia’s industrial heartland is far away from Korea constituted an additional challenge in building close economic relations between the two nations. Despite the difficulties, Korea and Russia became “near top ten” trading partners. However, the fact still remains that the potential for economic cooperation of the two economies has not been fully realized.
Trade and economic cooperation between the Russia and Korea is strategic in nature. The Russian market is of great interest to Korean companies, as Russia can provide all the necessary types of industrial and agricultural raw materials in addition to energy. The Russian market
Executive Summary remains attractive for many of Korea's products, and vice versa Korean market is of great interest to Russia’s products and resources. Korea can also contribute to Russia’s economic modernization and its regional development, particularly in the Far East and Eastern Siberia.
The Korean and Russian government acknowledged the need for systematic economic cooperation mid- and long-term, and decided to draw up mid- and long-term roadmaps for bilateral economic cooperation. KIEP and RFTA, representative institutes of Korea and Russia respectively, launched the joint research project, aimed at discovering cooperation issues and providing specific measures for implementation. This study evaluates the priority fields with greatest potential for tangible results and develops policy recommendations, focusing on cooperation in the three sectors of trade, investment and regional development.
For its part, Korea-Russia trade cooperation has been relatively vibrant. However, the trade structure is biased. The structure in which Korea exports manufacturing goods to Russia and Russia exports energy goods to Korea should be looked at as a starting point in order to maximize the trade potential. Decreasing Russia’s bias in exports of energy and increasing its trade of high-tech products can improve the trade structure, intra-industry trade should also be facilitated.
Russia aims at strengthening industrial competitiveness. For this, value chains between Russia and Korea need to be formed. This will be realized more effectively through collaboration of the two countries in determining industries that show promise, and implementing joint projects. Second, customs procedures need to be improved and non-tariff barriers such as TBT and SPS measures need to be eased or lifted. Russia’s customs procedures can be improved by expanded technological cooperation with Korea. An E-customs system will be a significant step in increasing transparency. Third, Korea and Russia could intensify collaboration of competition policy. Lastly, the two countries need to begin talks on Korea-EAEU FTA negotiations, in order to deal with all abovementioned points and seek ways for comprehensive and effective economic cooperation.
Significant Korean investment into Russia commenced in the late 2000s and reciprocal investment by Russia is minimal. Korea invests mostly in the manufacturing sector of Russia’s central regions, mainly Moscow and St. Petersburg. Due to economic situation in Russia, a number of Korean companies experienced sharp declines in sales profits. Providing financial support programs for Korean businesses and expanding Russian companies’ investment are currently important parts for facilitating investment and trade cooperation. Establishing a Korea-Russia investment fund or increasing the availability of the Korean-Russian investment platform formed in 2013 could present good options. Second, setting a long-term joint plan for investment in promising industries and projects is necessary. There are only a few examples of Korea’s successful investment in Russia and vice versa. Investment risk needs to be lessened and a more systematic plan should be thought out through close cooperation. Third, investment in Korea should be promoted among enterprises of Russia and EAEU members in order to raise the quality of investment cooperation. Russian companies can expand direct investment to Korean enterprises for import substitution purposes. Moreover, holding investment forums in Russian regions involving KOTRA’s Invest Korea, Korea-Russia Business Association, Chamber of Commerce and Industry of the Russian Federation, Moscow Business Association, etc. will be useful in attracting investment to Korea and Russia. Fourth, a joint investment portal needs to be created in order for investment information to be easily accessible. When entering the Russian market, Korean businesses tend to obtain information on investment from Korean companies that are already operating there. As a result, businesses with ties or affiliations in Russia can easily obtain needed information whereas enterprises without such links have difficulties in securing adequate information. The portal will provide sufficient information to any company from the two countries interested in the partner country.
Korea’s ‘Eurasia Initiative’ and Russia’s Far East development policy, cooperation in the Russian Far East are also studied in this report. Recent development policy for the Far East attempts to connect the Far East’s economy with the APEC’s value chains and strengthen transportation and logistics network between the regions. In order to increase efficacy regarding execution of the policy, the Ministry for Development of the Russian Far East was created and the special Deputy Prime Minister was appointed for this task. All relevant organizations for development of the Far East - funds, investment agencies and human resources management, were newly established. Besides, new policy instruments such as tax incentives, the advanced development territories and related laws were adopted for its continuity. Based on these, the following suggestions are proposed. First, Russia-South Korea-North Korea trilateral projects in transportation, logistics, energy network sectors must move forward. Second, it is desirable for Korean businesses to participate in the Advanced Development Territory in the Far East and the joint special industrial zones to be created in the territory over the long run. Cooperation can be fostered in the engineering sector as Russia can gain a new growth engine for economic development and Korea can obtain a new space for growth in the northern region.
Third, it is needed to establish a “Far East Development Committee” within the Korean Government. The committee can support Korean companies to invest in the Far East and coordinate all relevant joint projects between Korea and Russia. 

 

 This study looks at the current level of liberalization in services sectors among the OECD members and investigates the impacts of services liberalization on trade and GDP growth. In doing so, the gravity model and computable general equilibrium model are applied for the analytical work and the services trade restrictiveness index (STRI) developed by the OECD is included as an indicator for the liberalization of services sectors. This research provides four main outcomes as follows.
 First, the barriers in the services sectors consist mainly of the restrictions related to foreign entry and the movement of people among five policy areas of the STRI. In other words, measures on market access have been kept and remained more persistently than other measures.
 Second, the extensive differences in regulations and restrictions across countries are found in most services sectors. Since services trade liberalization does not mean the complete abolition of regulations or restrictions in services, one of the effective ways to reduce trade costs in services is to reasonably harmonize the regulatory differences across countries.
 Third, the empirical analysis using the gravity model provides an interesting outcome that domestic policy areas such as barriers to competition in public sectors or regulatory consistency and transparency have a relatively larger impact on trade than other policy areas such as restrictions on foreign entry or movement of people. Notwithstanding the domestic policy areas account less for the restrictions in services sectors, the empirical result implies that the regulatory reforms in those areas have a larger economic impact.
 Fourth, the CGE analysis using GTAP based on the TiSA(Trade in Services Agreement) scenario provides the outcome that further services liberalization lead most economies to grow faster in terms of GDP. Especially, relatively faster growth is identified in developing and emerging economies rather than advanced economies. Moreover, the output growth in manufacturing sectors in developing and emerging economies is more significant than in advanced economies as well.
 

 

 Russia achieved rapid economic growth till 2008, mostly as a result of high oil prices. The country proudly stood as a member of the G8 and a leading economy of BRICS group. However, the global financial crisis in 2008~09 ruthlessly battered the Russian economy, bringing about a 7.8% reduction in the GDP. The overdependence of the economy on energy resources was pointed out as the major factor in the GDP free-fall. The impact was so devastating that not even the recovery of oil prices could put Russian economic growth rates back on track. Rather, since 2010, growth rates continued to slowed down. Russia’s economic growth model, which led to high economic growth until the mid 2000s, was reaching its limit. Thus, securing a new engine of growth has come to the forefront of Russia’s economic policy agenda.
 Against this backdrop, then-president Medvedev announced the economic modernization policy as part of the industrial policy aimed at structural diversification of the economy. The five industries selected as key priority sectors include energy efficiency, nuclear technology, ICT, space technology, and medical and pharmaceutical technology.
 The goal of Russia’s economic modernization policy is to transform the economy heavily dependent on energy exports to an innovation-based economy. For this, the Russian government set up an advanced development strategy; intended to strengthen the lead in technology sectors where Russia has comparative advantage or development potential. At the same time, a catch-up development strategy - developing technologies through imports or technology-transfer was adopted.
 Institutional mechanisms of the economic modernization policy include a policy coordinating body and a number of implementing organizations. Specifically, the Council under the President of the Russian Federation on Economic Modernization and Innovative Development of Russia is responsible for coordination of these policies. The Agency for Strategic Initiatives, Skolkovo Foundation, Russia Venture Company, Vnesheconombank, and Rusnano; all implement and support innovation projects through cooperation among themselves and beyond.
 In December 2011 the Russian government presented a comprehensive direction for its economic modernization policy, with the ‘Strategy for Innovative Development of the Russian Federation for the period until 2020.’ Then, in 2014 government programs on the key five industries involved in economic modernization policy were confirmed. Those are ‘Energy efficiency and energy development’, ‘Development of Nuclear Power Complex’, ‘Information Society in 2011 2020’, ‘Space Activity of Russia in 2013-2020’, and ‘Development of the Pharmaceutical and Medical Industry.’
 There are diverse views as to achievements and limits of Russia’s economic modernization policy. However, experts do agree in general that economic modernization is a laudable policy direction for sustainable development, and that the government’s willingness, efficient operation of the constituent mechanisms, improving the investment environment through intensive structural reforms, and promoting innovation of SMEs through political and financial methods are critical factors for successful realization of the policy.
 The level of innovation in Russia is high compared to developing countries, however it falls way behind the level of developed economies. Russia still lacks efficient institutions and financial development that can utilize inputs adequately to produce quality outputs. Therefore, a more robust financial development is a must to facilitate R&D investment, and institutions in the innovation sector need to be realigned to manage resources efficiently.
 Among the five key industries selected for the economic modernization policy, the energy efficiency, medical/pharmaceutical technology and ICT sectors are steadily growing with government support and active international cooperation.
This is where Korea needs to develop strategies for the Russian markets. There is much room in terms of raising energy efficiency in Russia since the infrastructure is largely outdated. However, imported goods account for more than 70% of the domestic market due to low competitiveness of Russian products. In addition, global companies are beginning to localize production by establishing joint ventures with Russian companies.
 The medical and pharmaceutical sector grew nearly 10 percent in average in the last decade. Yet, the country is heavily dependent on imports for medical devices and medications. Responding to this, the Russian government implemented an import substitution policy for pharmaceuticals, to obtain advanced technology and know-how through promotion of direct investment from global companies. Since recently, medical devices produced outside the EAEU can no longer be included in government procurement. Thus, foreign companies are investing directly into special industrial zones in Russia to construct production facilities.
 The ICT services sector exhibits more dynamic growth than the ICT manufacturing sector in Russia. This is because Russia possesses competitiveness in developing software and programming. Foreign businesses tend to be more interested in outsourcing or in R&D cooperation than direct entry into the Russian market.
 Based on the findings of this study, measures for Korea-Russia cooperation in terms of Russia’s economic modernization policy are suggested as follows. First, a Korea-Russia business forum for innovative venture companies should be held simultaneously when the Korea-Russia Joint Committee on Economic, Scientific and Technological Cooperation convenes. The forum can enhance the efforts of the Joint Committee by generating tangible results, and examining achievements and forthcoming challenges for subsequent Committee meetings.
 Second, opening the Korea Innovation Center (KIC) in Moscow and setting up cooperative relations with implementing agencies of the economic modernization policy are necessary. KIC is expected to provide support for technological cooperation between companies, expand business activities and increase investment. So far, most of the policy implementing organizations in Moscow are collaborating with ministries and local companies only. In order for KIC Moscow to play a comprehensive and unique role, it should establish partnership with the implementing institutions of Russia’s economic modernization policy, such as the Skolkovo Foundation, Russia Venture Company, Agency for Strategic Initiatives, etc.
 Third, the next generation human resources should be nurtured to enhance scientific and technological cooperation between Korea and Russia. The Korean government need to make a long-term plan to nurture tech professionals with a profound understanding of Russian industrial technologies. This will be possible by sending out a number of students to Russia through the government scholarship program. Various forms of scholarship programs need to be developed. Those who are sent to Russia through such programs will become mediators for Korea-Russia cooperation particularly in the R&D sector and help overcome barriers of language, culture, information and network. In the long term, they will even play a crucial role in realizing the “Creative Continent” of the Eurasia Initiative.
 Fourth, Russia’s special industrial and innovative economic zones can be utilized as a platform for Korea-Russia cooperation related to Russia’s economic cooperation policy. R&D cooperation with skilled experts and use of business infrastructure in the zones can facilitate entry of Korean companies into the Russian market.
 Fifth, launching a Korean-Russian portal site for economic modernization and innovation will be helpful in strengthening bilateral cooperation. The governments and businesses from both sides can share information on policies and market conditions of the five key sectors and exchange industrial technologies through the site. This will eventually invigorate cooperation in the private sector. Moreover, providing consultation services with active participation of qualified consulting companies and governmental organizations in the technology sector from both sides will increase the synergy effect. 

 

In 2015 Korean government selected Myanmar as a new Priority ODA Partner Country. As western countries has eased the economic sanctions, Myanmar has opened its economy and made important reforms, including FX system. In addition to its strategic geopolitical location, Myanmar has abundant resources and young population which are important factors for future development.
Since Myanmar is newly selected, it is necessary to prepare Country Partnership Strategy(CPS). This study aims to provide the background information about Myanmar. As Myanmar is politically in the transition period, it is very important to understand the governance structure of Myanmar, including ODA implementing system. It is expected that National League for Democracy(NLD) will take over the political power next year. Economic liberalization is likely to be pursued more rapidly under NLD regime. Economic cooperation and investment from the western countries will increase, which will bring both more competition and more chance. Despite the political changes, the direction of economic policies is likely to be maintained.
This research has reviewed the Myanmar’s national economic development plans and economic indicators in order to figure out the ‘needs’ of Myanmar. Since the official documents occasionally do not reflect the true needs of Myanmar, the authors interviewed many local professionals, including Myanmar’s related ministries, donor agencies and local implementing institution. Basically, Myanmar’s Country Partnership Strategy should adhere to the rules and the framework that differentiates Korea’s ODA. The comparative advantage of Korea needs to be reflected. Also, the international norms, such as ownership, alignment, harmonization, mutual accountability, and managing for results should be considered. CPS should be compact and follow the guideline of International Development Cooperation Committee of Korea which emphasizes the priority areas of each CPS.
Korea needs to take the role as a ladder builder in ODA. Myanmar also wants to benchmark Korea’s economic development. However, successful experiences of Korea’s economic development should not be interpreted in a narrow sense. It does not mean just economic growth, rather it contains institutional capacity, education, and social cohesion.
The authors recommend the following as the priority areas: ①development of agriculture and rural sector, ②technical vocational education training (TVET), ③economic infrastructure, such as electricity, transportation, telecommunication, ④ capacity building of public sector. Even though the political leading party changes, the direction of Myanmar’s ODA policy is not likely to change. Union, inclusiveness, and industrialization would remain as key factors of Myanmar’s ODA. In that sense the above priority ares of Korea are still valid.  

 

From 2002 to 2011 China has maintained an average annual growth of over 9%, and North Korea as a result enjoyed economic stability benefiting from China’s growth. In the 2000s North Korea goes beyond overcoming economic difficulties in the 1990s through anthracite and iron ore export, and begins to utilize its economic cooperation with China as a tool for its economic growth.
Its dependency on Chinese economy quickly intensified due to the internal motivation for North Korea’s aspiration of economic growth through expansion of resource exports to China as well as external motivational factor of intranational economic sanctions. However, beginning from 2010, North Korea and China’s economic cooperation faced a turning―point. China’s economic slowdown induced a structural change in North Korea―China trade since 2012 and led to a new pattern of North Korea―China relations.
This research aims to analyze the effect that recently facilitated North Korea and China’s economic relations have on North Korean economy and find the implications this has on inter―Korean economic integration and the development of Northeast Asian economic community. For thorough analysis of the economic cooperation between North Korea and China, we defined what exactly international economic cooperation stands for, theorized various factors that create and facilitate this cooperation, and analyzed how changes in trade environment and China’s economic policy towards North Korea due to China’s economic slowdown impacts these various factors in terms of North Korea China trade and economic cooperation projects.
The originality of this research is in the data and methodology it adapts. The Chinese customs data from 2010 to 2014, consisted of 8 digit HS code product level list by year, country, import and export, custom districts, as well as customs regime categories enabled us to analyze the qualitative change in North Korea―China trade from simple trade to higher shares of process trade and intermediate goods trade. As for the methodology, we have provided a theoretical framework analyzing the division of labor between countries and fieldwork results. Our theoretical framework delineates the sectors and incentives where international economic cooperation occurs which is used in our analysis of the North Korea―China economic cooperation. As for the fieldwork, we tried to enhance the quality of the research by interviewing people who are indirectly and directly involved in trade and business with North Korea in the Chinese border region. In chapter 2, we analyzed the intensification and the developing process of economic cooperation between North Korea and China. The background of North Korea’s resource extraction export structure has a lot to do with China’s high level economic growth of over 9% from 2002 to 2011, serving as the world’s manufacturing base, vacuuming raw materials to feed its demand. This in turn fueled North Korea’s raw material export to China. This led to a steep increase of North Korea’s trade with China, and bilateral sanctions initiated by Japan in 2006 and by South Korea in 2010 also played a role in this increase. China’s share in North Korea’s total trade exceeded 50% in 2005 and reached 90.1% in 2014, and its share of North Korea’s total incoming net FDI exceeded 90% after 2008. Such statistics is an indication of the consolidation of economic cooperation between the two countries.
We assume that economic cooperation between countries is created when the cost of production or consumption domestically is more expensive than the cost of production or consumption out―sourced, using another country’s resources, coupled with gradual reduction of border regulations that prohibit cross―border movement of various resources such as labor, capital, merchandise, and technology through international conventions. In this research, we concluded that North Korea and China’s economic cooperation through trade is in its mature stage, and direct economic cooperation through business interactions is in the creation stage in the four stages of economic cooperation―formative stage, creation stage, mature stage, and declining stage.
In chapter 3, we explored determining factors that would facilitate North Korea and China’s trade in the future. First of all, recently North Korea’s exports of anthracite and iron ore to China which were the major export items has shown either stagnant or decreasing trends. Such changes in the previously major items of exports to China is predicted to bring about fundamental changes in North Korea and China’s economic cooperation.
Along with this trend, China’s shift of its economic development methods to domestic―centered policies, businesses’ costs are increasing due to increasing wages and social security costs. Specifically, the outflow of young labor in the Northeast China bordering North Korea is occurring in critical levels. In such situation the number of North Korean laborers that are dispatched to the Chinese border and engage in productive activities is predicted to increase.
Moreover, China’s Northeast region’s small and medium cities are actively engaging in economic cooperative projects with North Korea involving opening up of North Korea’s economy as a part of its own economic development policies. Especially, newly implemented projects such as the construction of the new Yalu river bridge, establishment of China―North Korea civilian border mutual trade market, implementation of outbound trade are leading the China―North Korea division of labor.
In the case of North Korea, despite its policy to enhance the livelihood of the people in order to maintain legitimacy, the difficulty of the so―called “self―reliant” economy led individual economic actors to rely more on trade with China. Also, North Korea is also putting effort into attracting foreign investment through development and usage rights of its natural resources in order to establish production infrastructure as well as expanding trade with China through its rich natural resources. However, underdeveloped investment infrastructure as well as political risks has been obstacles to foreign investment in production infrastructures that need big―scale investment. Therefore we predict that China’s investment will be focused in out―sourced processing trade which does not require a large scale investment.
Also, North Korea is showing active policy underpinnings to expand border area tourism as well as dispatch of its labor in China in order to earn foreign currency. Border area tourism is not a zero sum game and therefore is expected to increase and intensify economic cooperation between the two countries. However, labor dispatch can be a threat to the labor market stability of the two countries as well as to the maintenance of the North Korean regime which makes it difficult to forecast its future trend.
In chapter 4, we investigated economic cooperation in production, economic cooperation in consumption, economic cooperation in terms of provinces and comparative advantage items in North Korea China trade based on China customs data. We found that indeed there was a structural economic cooperation in production and consumption between the two countries. First of all, in terms of customs regimes, during the last 5 years ordinary trade and border trade in both exports and imports continuously increased and decreased a little in 2014. Processing trade continuously increased. In terms of North Korea’s import from China, trade for consumption, which are ordinary trade and border trade had the biggest shares and in shares of bonded trade and processing trade, which are consisted of transit trades and raw material trade for processing were bigger in terms of North Korea’s exports than imports. This indicates that the purposes of North Korea’s imports from and exports to China are different.
In terms of the economic cooperation in consumption, the main items of both countries were being traded, showing a stable trend. In North Korea’s import from China, industrial raw materials, construction materials, food products in ordinary trade, grains and household necessities under the category of border trade were mainly traded. Economic cooperation in the production side through processing and assembling trade was also conducted at a regular basis. main products that were imported from China by North Korea under the processing trade category included materials and energy sources required in production such as patroleum oil, rubber, plastic, special fabric, and main products that were exported to China from North Korea included nut products, fish, and clothing. Clothes were not traded as a major product for trade for consumption, but it was one of the main traded item for trade for production categories.
By customs districts, more than 70% North Korea’s imports from China goes through Dalian customs district (which includes Dandong). North Korea’s exports to China show less concentration in a single channel of entry. This shows that North Korea’s imports are mostly executed by land in small amounts while exports mostly by sea in bigger amounts. By analyzing revealed comparative advantage(RCA) between North Korea and the two Northeast Chinese Provinces we were able to find a clear patter of economic cooperation. Dalian’s RCA vis―a―vis North Korea was high in raw materials for clothing manufacturing or other fabric materials, as well as nonmetal materials, industrial raw materials and capital goods. North Korea’s RCA vis―a―vis Dalian was high in finished clothing, which indicated a production sharing network in clothing manufacturing in which Dalian supplies North Korea with raw materials and North Korea supplies Dalian with completed clothing products. North Korea’s RCA vis―a―vis Changchun was high in raw materials that are used in manufacturing apparel and other daily necessities, daily necessities, food products whereas Changchun’s RCA vis―a―vis North Korea was high in local specialties such as Ginseng, vegetables and fruits, and other food products as well as clothing. This indicates a similar production sharing network as in the Dalian case.
In chapter 5, we provide analysis based on in―depth interviews with people who engage in businesses related to economic cooperation with North Korea at the North Korea―China border. First, most interviewees agreed that there exists an economic cooperation relationship between the two countries. Specifically, interviewees that were more deeply involved in this cooperation had an easier time understanding and assenting to the concept of international economic cooperation. Meanwhile, there were some differences in perspectives among interviewees regarding the China factor as a determinant of the economic cooperation which we discussed in chapter 3. This was due to regional disparities, as well as different businesses the interviewees were engaged in. However, most of them agreed that the economic cooperation will expand due to North Korea’s cheap and reliable supply of labor to China.
In chapter 6, we analyzed the effect the intensification of North Korea and China’s economic cooperation has on North Korea’s economy. Positive effects included facilitation of North Korea’s marketization, reform and opening up, resolving North Korea’s economic difficulty, and economic development. Negative effects were China’s preemptive monopolization of North Korea’s economic resources, and setbacks to inter―Korean economic cooperation. To maximize the positive effects and minimize the negative effects of North Korea and China economic cooperation, we suggested policy recommendations for tripartite cooperative projects among South and North Korea and China, such as IT industrial cooperation, participation in China’s Rajin port development plan, entering the North Korea―China civilian border mutual trade market, inducing North Korea’s rejoining of GTI. For inter―Korean economic cooperation, we suggested that there needs to be more research on exchange rates between South and North Korea currencies as well as on plans for gradual removal of the 5.24 measures. 

 

This report suggests policy implications to enhance employment of youth, women and the elderly by researching and analysing the European Union (EU) and its member countries’ employment related policies. Currently, Korea is facing problems with employment, as the European countries did during the 1990s and 2000s. In response to the situation, the European countries enforced various policies to reduce unemployment and to increase employment rate.
At present, the employment rate of the EU is at around 69%, which is higher level than that of Korea. By implementing labour reforms and policies, several European countries have been successful in improving their employment rates beyond initial expectations.
The unemployment rate in Korea is 3.7%, which is the second lowest amongst the OECD member countries after Norway. It is also lower than the half level of the OECD’s average unemployment rate. On the other hand, employment rate in Korea is approximately 65.3%, which is slightly lower than the OECD average, and compared to those of developed countries the gap becomes even wider. Another issue is to improve employment rate of the vulnerable groups, such as youth, women, and the elderly. Accordingly, the Korean government is planning to boost employment rate to 70% by 2017 through the “Roadmap for 70% Employment Rate, 2014-2017” and the “Three year Economic Reform Plan.” In a related move, the Korean government aims to increase the number of jobs by 2.4 million through part time work, or so called flexible employment.
To this end, the government is planning to create approximately 930,000 part time jobs. Moreover, the Korean government is emphasising work life balance through child care leave and increased child care services, while improving the employment level of women by expanding social awareness on gender equality.
Then, what features do the EU’s strategies and policies have to lift employment rate, particularly considering youth, women and the elderly? The deepening of the EU integration has enhanced the role of the EU. In this sense, EU’s policies and strategies for employment became an important guideline to project the future direction of the EU member countries’ policies.
Based on research and interviews with the experts, the key features of employment in the EU are Active Labour Market Policy (ALMP), Vocational Education and Training (VET), and Apprenticeship. First of all, ALMP is an important method with respect to reducing the burden of employers and employees during the period of low economic growth. At the same time, it encourages the unemployed to return to the labour market as soon as possible.
In particular, social policies and employment policies are implemented complementarily. Services related to job offering, such as EURES, have been strengthened so that the EU could minimize the job mismatch between the jobseekers and the employers. VET is one of the key policy areas that the EU is focusing on to improve the employment conditions of the disadvantaged groups. However, we can further improve youth employment by implementing VET and Apprenticeship simultaneously. Moreover, it is important for the employers to show willingness to educate the employees. The possibility of an employee changing jobs within the same field would hamper the investment in apprenticeship by the employers, even though the effectiveness of apprenticeship has been fully recognised. Finally, in order to improve employment of the disadvantaged groups, social understanding should be made that a simple employment policy cannot act alone.
In other words, regarding the complexity of different social systems, economic structures, and legal systems, it is important to analyse the respective domestic situations comprehensively when formulating employment policies. Young people are more vulnerable to unemployment given their lack of professional experience, barriers to job markets and temporary employment position. OECD countries in general, youth unemployment rate is more than twice the level of overall unemployment rate and more sensitive to economic cycles, particularly during economic downturns. In addition to the business cycle, youth employment is affected by the level of protection for permanent/temporary workers, education level of youth, and the effectiveness of vocational/professional education. This study conducts several empirical analyses, taking youth employment rate, unemployment rate, and the ratio between youth and overall unemployment rate as dependent variables.
Economic cycle, labour protection level for both permanent and temporary workers, level of human resources, economic structure and education related indicators are considered as explanatory variables. The result shows that youth employment rate is positively correlated to overall education level and that of dual education based on apprenticeship. In particular, the share of apprenticeship in the overall education period shows high explanatory power on all dependent variables considered. This suggests that apprenticeship facilitates the transitional process from school to job, consequently contributing to higher employment rate of youth. Dual education can contribute to reduction of mismatches between education and professional qualification, and help young people to acquire skills and knowledge required for the jobs in the field.
Northern European countries have the highest rate of female employment. Germany and the Netherlands show higher female employment rates than the OECD average. The Northern European countries are the most exemplary in terms of narrowing the gap between employment rate for females compared to males, followed by Germany and France. However, unlike the Northern European countries, the increase in female employment in part time jobs in Germany and France actually led to a wider gender gap with respect to full time employment. According to previous studies, the determinants for the female employment rate depend on appropriate policy tools or policy combinations for different situations; in order for each society to achieve both the policy goals of female employment rate and birth rate, of which can run parallel to each other. However, most of the countries acknowledge that the services for childcare and child raising support are considered as effective policy tools to satisfy both policy goals. The policies for raising female employment rate in the respective European countries can be divided into the Northern European type, which executes active policy for work family balance, and the British type, which raises female employment rate by introducing flexibility in the labour market. Continental European countries, such as Germany and France, show a mixture of both. Part time employment in Sweden, which is actually a permanent position with flexible working hours, can be differentiated from part time employment in other European countries. In the German case, flexible labour market enabled the females, who had left the labour market due to the burden of childcare, to return. However, it also showed that the quality of employment has dropped while instability related to employment has risen. Although the increase of part time employment of females in France has led to instability in employment and degeneration of the working environment, the gender gap in terms of wage income has become narrower than that of other OECD countries, including Germany. In order to achieve the policy goals it is important to conduct in-depth analysis on the constraints.
When there are many differences in the background, such as in the family welfare system, the structure of the labour market, and the downward inelasticity of wages, the same means of policy may occur different consequences. As the average life expectancy increased in the EU, the burden related to the elderly has been increasing. Although the participation rate in the workforce of older people in the EU in general is showing an upward trend, as older workers’ unemployment has a higher chance of evolving into a long term unemployment. The factors that can affect the employment of the older people include obligatory retirement age, pension schemes, and working environment, as well as perceptions toward older workers. In the cases of Finland and the United Kingdom (UK), since these above mentioned factors can complicate the situation and prompt older workers to stop working, policies need to be managed more carefully. The employment of older workers in Finland is showing following characteristics. The government makes careful policy planning and execution with external assessment on the process, which later on spreads out to the whole economy. Various campaigns to reinforce positive image of older people and to recognise the necessity of older people remaining in the workforce allowed the effective functioning of other programmes to prepare for the ageing society. Moreover, programmes such as hygiene management among the workforce, as well as amelioration of education and communications are to improve overall working conditions. UK adopted policies that cover all age levels before adopting programmes specifically designed for the older workers. They are trying to minimise trial and error by being cautious with the policy, implementing new policies nationwide only when measures for the sample group turns out to be successful. Moreover, the changes in retirement and pension schemes aim for rejecting early retirement as well as campaigns to improve positive recognition on older coworkers. Both Finland and UK are raising the retirement age, providing incentives to remain in the labour market instead of choosing early retirement, and initiating campaigns to positively change the attitudes toward older workers. Among incentives to make the older workers remain in the labour market, the Finnish government are providing additional pension amount for the additional working hours and in the UK they are providing subsidies or tax benefit for the companies hiring older people.
Moreover, other cases such as the Finnish government’s active PR campaign to pull the older workers back to the labour market and the UK government’s campaign, providing information material on research that the productiveness of the older workers are not low, are recognisable as well.
This study provides implications for policies on youth, women and elderly employment. The implications for youth employment are as follows. First, it is necessary to develop active measures to reduce mismatch between education provided and the demand from the labour market. It is often mentioned that the high rate of university admission among Korean youth is one of reasons that youth employment rate in Korea is low. However, it is difficult to find empirical evidence from comparative analysis with OECD countries. It is a fact that the job market entry age for Korean youth is becoming progressively late. This is partly due to the fact that the job market requires increasingly high professional qualifications from the young job seekers, of which the schools, including universities, are unable to provide. Second, creating an apprentice system in accordance with the current situation in Korea is highly recommended.
Countries with well developed dual education system clearly show high employment rate as well as low unemployment rate of the youth. It is noteworthy that less than 10% of young people in Germany are jobless within 3 years of completion of dual education. Third, it is necessary to improve the situation regarding the dual labour market, in which temporary or irregular workers are not properly protected and have difficulty securing regular employment contracts. A number of studies insist that dualism in the labour market is a cause of high unemployment rate among youth. In Korea, the number of temporary or irregular workers among youth is higher than that of the middle aged groups. In this context, it is recommendable to improve working conditions for irregular workers, while taking measures to increase flexibility in the labour market for regular workers.
The implications in this study regarding employment of women are as follows. First, in general, European countries have pursued dual policy objectives, namely simultaneous increase of employment of women as well as the birth rate. Expansion of childcare services is one of the policies to facilitate employment of women and to increase childbirth. Second, increasing the share of part time workers can contribute to increased employment of women, however, cautious approach is required as it has been criticised for lowering the quality of employment. It is notable that flexible working hours in Sweden was widely introduced in order to achieve work family balance. Third, it is necessary to provide assistance to women who had their careers interrupted or discontinued due to childcare and invite them back to the labour market.
This study also provides implications for elderly employment. First, it is necessary to change the perceptions towards the elderly in the workplace and take active measures. The Finnish case is noteworthy in that the government of Finland began implementing measures in the 1990s, starting with analysis and assessment of working conditions of the older workers, followed by public promotions. Its government has continued to provide support programs and improved them through ex poste assessment. In the case of the United Kingdom, its government was less supportive in terms of fiscal spending in old age work than Finland, but its efforts have been concentrated in providing legal framework for old age employment, as well as creating favourable environment for the recruitment of and equal conditions for older workers. Second, it is recommended to develop a legal framework in order to increase retirement age. This is all the more necessary, because Korean society has been ageing rapidly and the gap between legally pensionable age and the actual retirement age from the workplace is widening. Third, it is necessary to develop incentives for old age employment both to workers and employers. The incentives can be designed to take various form such as education and public health services in the work place, as well as financial forms. Last but not least, active PR campaigns will be necessary to boost employment of elderly workers. In particular, it should be emphasised that increased employment of old workers do not reduce job opportunities for the younger generation.  

 

The aim of the research is to suggest policy implications for expansion of bilateral cooperation between Korea and Israel through examination of Israel's hightech startup promotion policies and international R&D cooperation.
Israel's hightech startup policies have been developed with the Office of the Chief Scientist (OCS). OCS is the core organization for startup policies of Israel, responsible for managing the Israeli government's R&D-related policies including raising of R&D funds, promoting programs for startup support, and international R&D cooperation. Technological Incubators and the Yozma fund, which are representative programs of the OCS, form the basis of Israel's startup policies. After the start-up system was firmly established and private sector participation increased, the OCS transferred the operation of these programs to the private sector to avoid the inefficiency and slow decision-making characteristic of the public sector.
In light of the inherent risks that accompany development of innovative technologies, products and services, Israeli government operates exclusive organizations and promotes R&D development through bilateral and multilateral cooperation with various countries. In particular, Israel established bi-national foundations with the U.S., Singapore, Korea and Canada to provide R&D projects with financial support including conditional grants of up to 50% of R&D expenses for joint projects. Moreover, bi-national funds provide an incentive for companies in both countries to participate in joint R&D projects by waiving repayments when the projects fall short in terms of commercialization. Israeli companies can also utilize European partners' networks through Europe's R&D cooperation programs when they attempt to enter the global market.
Israel, as a non-European associate member country, participates in the EU Framework Program (FP), the main R&D project in Europe. Israel is also engaged in bilateral agreements with various European countries in addition to EUREKA, an intergovernmental cooperation program involving nearly all European countries.
Based on diverse international cooperation programs, Israel has been able to create a global network and Israeli companies, which benefit from the programs, stand as some of the world's leading corporations. Moreover, these successes create a virtuous cycle by concentrating venture capital on Israeli companies.
For expansion of cooperation between Korea and Israel in hightech startups and the R&D sector, implications for government policy should be considered as follows. First, technology transfer from Israel to Korea should be activated through bilateral cooperation in the R&D sector. Collecting original technologies of Israeli universities or companies and transferring their technologies to Korea after evaluating the possibility of commercialization will contribute to development of innovative technologies in Korea.
Second, creating a manpower pool of evaluators like Israel will ensure fairness in the evaluation system. In order to implement this plan, retirees with extensive experiences and expertise or entrepreneurs who succeeded in the global market can be included in the manpower pool.
Third, efforts for entry into the global market should be strengthened for development of hightech startups in Korea. Toward this end, network platform for Korean startup companies should be constructed in Tel Aviv first, to network with Israeli accelerators and facilitate infusion of venture capital. In addition, organizing a joint Korean-Israel start-up festival can also be considered. 

Executive Summary

Chapter Ⅰ. Introduction

1. Background to the Research
A. Overview of Regional Development in Northern Vietnam
B. Collectivization and De-collectivization in Vietnam
C. Gender Relations in Ethnic Minority Groups in the Regional Development Process
D. Justification for the Research
2. Research Objectives
3. Theoretical and Conceptual Framework
A. Main Research Questions
B. Theoretical Framework
C. Research Design
4. Scientific Contributions and Innovative Aspects
5. Scope and Limitation

Chapter Ⅱ. Overview of Korea’s ODA to Vietnam

1. Current Status of Korea’s ODA to Vietnam
A. Bilateral Grants
B. Bilateral Concessional Loans
C. Effect of Korea’s ODA on FDI
2. Performance of Korea’s ODA to Vietnam under the CPS
A. An Introduction of the Country Partnership Strategy for Vietnam
B. Achievements
C. Limitations and Experiences
3. The Importance of Korea’s CPS in the Context of Regional Development in Northern Vietnam

Chapter Ⅲ. Literature Review

1. The Nature of Intra-household Gender Relations
A. Households
B. Factors of Intra-household Differences
2. Existing Economic Conceptualizations of Intra-household Gender Relations
A. Neoclassical Models of Intra-household Distribution: Unitary Models
B. Bargaining (Power) Models: Non-unitary Models
3. Empirical Views of Intra-household Relations and the Role of Women in Decision-making Process

Chapter Ⅳ. Methodology and Data

1. Research Design
A. Rural De-collectivization, Economic Integration and Ethnic Minority Groups in the Northern Uplands of Vietnam
B. Research Approach
C. Research Model
2. Selection of Sample
3. Data Collection
4. Data Analysis
A. Descriptive Statistics
B. Econometric Analysis

Chapter Ⅴ. Impacts of Rural De-collectivization and Economic Integration on Intra-household Gender Relations in Northern Vietnam

1. General Background of the Respondents
2. Comparison Analysis of Differences in Decision-making
A. Analysis of Differences in Decision-making: Household Gender
B. Analysis of Differences in Decision-making: Geography
C. Analysis of Differences in Decision-making: Ethnic Group
3. Factors Affecting Household Decision-making
A. Results of the Model
B. Analyzing the Results
4. Discussions

Chapter Ⅵ. Conclusions and Policy Implications

1. Conclusions
2. Policy Implications

References

Appendices 

Ethnic minorities are concentrated in upland and mountainous areas in Vietnam where access to infrastructure, health, and educational facilities is limited. Being physically, economically, and culturally isolated from the rest of the nation, these groups are the most neglected and benefit the least from the development process of Vietnam brought about by the reform program. Among them, women were the poorest and most disadvantaged.
In the period of collectivization, the traditional norms on gender relations were challenged both in ideology and in practice. Women were mobilized to contribute to the war against America by stepping up production and handling family affairs, and show devotion to their responsibility for national defense. In the period of 1980s and onward, the intra-household gender relations were changed through a combination of traditional gender norms, residual legacies of socialism, and new socio-economic reform policies. The roles of social expectation on men’s and women’s “proper” sphere have been redefined and provide ideological grounds for a solution.
It is against the background delineated above that this study investigates the impact of rural de-collectivization and economic integration on intra-household gender relations in the Northern Uplands of Vietnam. This study examines relatively unexplored questions on gender and development in comparative regional studies: How have intra-household gender norms and relations in the cultures of ethnic minority groups been redefined in the period of rural de-collectivization and economic integration? To what extent can changes in intra-household gender relations among ethnic minority groups influence the development of household economies in the Northern Uplands of Vietnam? What are the determinants of household decision-making for ethnic minorities in the Northern Uplands of Vietnam?
In order to answer to research questions above, this paper first reviews the rural de-collectivization and economic integration in Vietnam and their effect on gender relations among ethnic minorities in Northern Vietnam. We also develop a theoretical framework to measure factors affecting the intra-household gender relations in ethnic minority groups in the Northern Mountainous Area of Vietnam.
Based on this theoretical framework, we estimate the important factors that affect women’s decision-making within households. The household survey of 480 households living in Thai Nguyen and Son La provinces is uniquely designed to measure the intra-household gender relations. The survey includes questions that measure household decision-making, such as making of decisions related to healthcare, household purchases, childcare etc., and other individual and household characteristics. The regression analysis tell us that women’s decision-making in the household is affected by factors such as women’s years of schooling, income contribution to the household, assets given when getting married, and whether there is a male family member working far from home.
These factors are also positively related to the economic integration and de-composition in Vietnam. The results of multiple regression analyses also indicate that husband’s years of schooling, gender of household head, the household’s current assets and the husband’s granted asset as major factors deterring women’s autonomy in Northern households.
With focus on gender relations within ethnic minorities in Northern Vietnam, there are several policy implications for both local authorities as well as the policy makers: (i) In order to increase ethnic women’s autonomy in decision-making in Northern Vietnam, it is necessary to organize professional training courses for ethnic minority women to enhance labor participation of women. (ii) Besides, local authorities should create favorable environments for ethnic minority women to actively participate in projects and/or programs which help to increase their income. (iii) Strengthening the cooperation between many organizations, individuals and communities to improve gender equality in remote areas, especially in areas where ethnic minorities live. (iv) Diversifying resource mobilization from the State, enterprises, communities, and donor countries to implement the plan, in which the local authorities will prioritize the allocation of state budgets for implementation of national targets on gender equality. 

 

Since the Global Financial Crisis, there is a clear trend that the implementation of non-tariff measures has become more prevalent, implying the possibility of countries’ usage of non-tariff measures to protect their domestic economy. The three Northeast Asian countries, China, Japan and Korea (CJK) are not an exception, where firm survey results identify TBT and SPS measures as major obstacles to trade. Although many non-tariff measures have legitimate, non-economic objectives such as human health, safety and environment, some non-tariff measures create unnecessary obstacles to trade where these non-tariff measures are called “non-tariff barriers.” Hence, it is important for these three countries to build a cooperative system to identify TBT and SPS measures which unnecessarily impede trade. In this report, we analyze the pattern of international trade and non-tariff measures of CJK, and devise an effective counterplan for these three countries to cooperate in order to identify and lower non-tariff barriers.
To examine the trade patterns of CJK, we looked at the World Input-Output Tables (WIOT), along with the gross trade statistics which has been generally used in the literature. The rationale behind this owes to the fact that the region has been one of the areas actively forming global value chains (GVCs). By calculating the three countries’ value added trade based on the WIOT, we reveal a deepening of GVC ？ all three nations experienced an increase in the foreign value added embodied in goods with decreasing domestic value added. By looking at CJK’s tariff and non-tariff measures, we observe a drastic increase in the three measures (particularly TBT and SPS-related measures), while average tariff rates have decreased for each country. This highlights the importance of non-tariff measures ？ specifically TBT and SPS ？ in facilitating intra-regional trade among CJK.
With both theoretical and empirical analysis, we attempt to study the effects of non-tariff measures on intra-regional trade. Theoretically, non-tariff measures can facilitate trade by alleviating the problem of incomplete information; in the meantime, compliance with TBT or SPS measures may increase costs and adversely affect trade. Thus, the net effect of implementing either TBT or SPS measures on trade depends on the two opposing effects. To examine the effect of TBT and SPS measures on trade of CJK, we first calculate the coverage ratio (share of import value exposed to non-tariff measures) and frequency index (share of the number of import products exposed to non-tariff measures) by year and by industry for CJK. For all three countries, we find a clear pattern where the coverage ratio and frequency index of both TBT and SPS measures have increased since the Global Financial Crisis. Also, food and agricultural imports of the countries exhibit higher coverage ratio and frequency index than imports of other ries. The coverage ratio and frequency index however does not tell us in which direction and how much TBT or SPS affects trade. To examine this, we conduct an empirical study based on the calculated coverage ratio and frequency index. The empirical result tells us that TBT measures of CJK negatively affect manufacturing trade from the world to CJK, while SPS adversely affects food and agricultural trade. Restricting the analysis to intra-regional trade, we find that only SPS measures decrease the trade flow of food and agricultural products between countries. The effect of TBT measures on trade is insignificant, possibly due to the fact that trade between the three countries mostly consists of intermediate goods trade which is less likely to be affected by TBT or SPS measures. Next, we complement our quantitative analysis with qualitative analysis on TBT and SPS measures of CJK. In addition to the explanation on certification procedures and systems of TBT and SPS measures in the three countries, we compare the TBT and SPS provisions in the commonly agreed FTAs of the three countries. For TBT agreement in these FTAs, China seems to have more or less conservative tendency towards International Standards and Transparency. With respect to the provisions of Conformity Assessment Procedures within the TBT agreement, both China and Japan have stricter criteria in acceptance of mutual recognition of results and procedure of Conformity Assessment than Korea does.
In terms of SPS provisions, China’s FTA included the most detailed, concrete provisions in terms of depth and scope, while South Korea and Japan were reluctant to include provisions other than the WTO SPS Agreement. The only provisions in common that all three countries included were the cooperation provisions (which includes information exchange) and the SPS committee provisions. Meanwhile, CJK seek mutual cooperation to promote protection of the health of their citizens, animals, and plants as well as to facilitate safe trade not only at the multilateral level but also at the bilateral level.
Despite its well-known restrictiveness on trade, CJK lacks a mechanism to regularly discuss and cooperate on non-tariff barrier issues between the three countries. Thus, in this report, we suggest the three countries to utilize the Pan-Yellow Sea Rim Economy and Technology Exchange Meeting. Within the meeting, harmonization of standards, mutual recognition of conformity assessment and enhancement of transparency can be discussed to lower non-tariff barriers to trade relevant to TBT and SPS measures. Regarding the first issue, for instance, we argue for creating a sustainable network system which includes annual experts` meeting on Korean-Sino food standards to build mutual understanding among the three countries. In a long-term perspective, the three countries can consider creating a common food regulation standing committee of CJK, benchmarking the Food Standards Australia and New Zealand (FSANZ), to promote food standards harmonization among the three countries. With respect to the second issue regarding the mutual recognition of conformity assessment, three methods are worth a consideration; ① an introduction and expansion of SDoC(Suppliers Declaration of Conformity) product list ② a delegation of authority to the assessment bodies located in the partner country ③ an establishment and management of a foreign-owned certification authority in domestic country, in addition to an extension of MRA within regional cross-border or a mutual recognition of the result on test certification between conformity assessment bodies.
Lastly, to enhance transparency, we propose to create a common website on TBT and SPS measures of CJK which alerts stakeholders about the changed or introduced TBT/SPS measures and provides information about cases of failure in complying with customs regulations.