Contents 1 Multilateral Trading System 2 Re-emergence of

Contents 1. Multilateral Trading System 2. Re-emergence of Protectionism? 3. DDA negotiations

1. Multilateral trading system

Trade without discrimination : MFN, NT Freer trade : gradual liberalization through negotiations Predictability : binding commitment and transparency Promoting fair competition Development and economic reform

Enforcible DS, wide coverage, and detailed rules Operation Of Agreements Dispute Settlement Trade Policy Review Ministerials, 240 Panel & Trade Policy General Council, AB reports Adopted Review 3 Sectoral Councils, until 2008 (every 2, 4 or 6 Committees years) years Trade Liberalization DDA from 2001

Costs and Benefits Costs Adjustment costs for labor and industries Efficient distribution of resources Benefits Economies of scale, growth potential, competitiveness Dilemma : gap between the perceived costs & the real benefits

Adjusting the imbalance between costs & benefits Economic effect vs Political weight Domestic complementary measures support to injured import competing industries expansion of social safety net trade remedy measures ( AD, Safeguard ) Trade policy based on public opinion improving public access to information collecting & reflecting the public views

2. Re-emergence Protectionism?

The global recession following the financial crisis in the US in 2008 Increasing protective trade measures Contraction of trade volume mainly due to the global recession until now However, increased domestic pressure for protectionism As the protectionist tendency increases, need to keep monitoring

Trade related measures 78 : Proposed & implemented Trade restrictive measures implemented Source: World Bank Report ( March 2009 ) 66 47

Tariff Increase Non-Tariff barriers Anti-dumping & Safeguards Subsidies - a third of all protective measures - a half of all developing countries’ measures - import licensing requirements, restrictive requirements for import, etc. - sharp increase in anti-dumping measures in the second semester of 2008 - export subsidies on dairy products (EU) - subsidies on auto industry (the US, the UK, Sweden etc. ) - Buy American policy Others - Hire American policy - financial measures

Developed countries Subsidies and other support packages 100% Developing countries Subsidies and other support packages 31% Import ban 9% NTB 11% Source: World Bank Report ( March 2009 ) Import duty 49%

Lesson of the history : Hawley-Smoot Tariff Act Strengthened political will : peer pressure Global economic integration Strengthened international trade rules

G 20 Washington Summit ( Nov. 2008 ) - Rejecting protectionism & not turning inward - Refrain from raising new barriers ( standstill ) - Early conclusion of the Doha round APEC Summit ( Nov. 2008 ) WTO’s monitoring meetings ( Feb. 2009 and more ) G 20 London Summit ( April 2009) OECD Trade Committee · Ministerial Council meetings ( April & June 2009 )

G 20 leaders’ pledges : promote global trade and investment and reject protectionism, to underpin prosperity - reaffirm the commitment made in Washington (Standstill), rectify promptly any new barriers, and extend this pledge to the end of 2010 - minimize any negative impact on trade and investment of domestic policy actions, and not retreat into financial protectionism - notify promptly the WTO, and call on the WTO to monitor and report publicly on a quarterly basis - promote and facilitate trade and investment

3. DDA Negotiations

Market Opening Nov. 2001 Agriculture NAMA Rule Making Services 7 years Dec. (Failed) 2008 Reque st /Offer Modalities Trade Rules (subsidies, Antidumping, etc. ), Non-Tariff Barriers, Trade Facilitation, TRIPS, Environment, Dispute Settlement, Development Drafting Country Schedules negotiatio ns 6 ~ Mo nth 1 year s Multilateral Review Final Agreement (Single Undertaking) < Adoption of the Final Agreement in a Ministerial >

Agriculture 1. Substantial tariff reduction 2. Substantial reduction of domestic supports NAMA Tariff reduction Manufactured goods, Agriculture 3. Abolition of export supports fishery and forestry goods Non-tariff barriers Sectoral liberalization

MA : tariff reduction Tariff level Reduction 90 Developing Country Tariff level 50% 0~30% 33% 20~50% 57% 30~80% 38% 50~75% 64% 80~130% 43% 75% + 70% 47% Ø Sensitive products, Special products, Tariff cap Ø SSM 개도국 70 Reduction 0~20% 130% + 80 Final Tariff Developed Country Developing Country 60 50 선진국 Developed country 40 30 20 10 0 1 13 25 37 49 61 73 85 97 109121133 145 Domestic supports & export supports ØReduction or abolition of trade distorting supports Current Tariff

Tariff cut Formula ØTariff cut formula Coefficient×tariff Coefficient + Tariff Final tariff = ØCoefficient (Developed Country): 8 ØCoefficient (Developing Country) : (20, 22)+flexibilities, 25 Half reduction rate Developing Country Developed Country full exemption C. E Tariff line number% Imports % 20 14 16 6. 5 7. 5 22 10 10 5 5 25 0 0 Sectoral liberalization NTBs Current Tariff

Services ØBilateral negotiations based on requests & offers Rules ØRevising legal texts on Anti-dumping, subsidies including fisheries subsidies IP, Trade facilitation, Environment, Development, DS ØAlso important parts of the single undertaking

How has Korea been doing with it? Ø Defensive in Agriculture, fisheries subsidies Ø Aggressive in NAMA, services, anti-dumping rules What’s going on now Ø Stalled but active in Geneva Ø The Obama administration's view and political schedules in other major countries What will happen, then? Ø Maybe in the second half of 2009