5-Year Evaluation of the Korea-EU FTA Implementation

Transcription

1 5-Year Evaluation of the Korea-EU FTA Implementation From Korea s perspective EU-Korea Business Forum "The EU-Korea FTA after five years: What s been achieved and what s next?" September 22 nd 2016, Seoul Yoo-Duk Kang (ydkang@hufs.ac.kr) Language & Trade Division Hankuk University of Foreign Studies

2 Content 1. General overview on trade statistics 2. 5 years after Korea-EU FTA 3. Factor analysis 2

3 Ch. 1. General overviews on trade statistics 3

4 Korea s trade with EU Increasing trade between Korea and EU Korea has recorded trade surplus with the EU since Largest trade surplus 19.1 billion US$ in 2007 among any other trade partners EU is Korea 3rd trade partners in 2011(2nd in 2007) Trade surplus has been reducing since 2009 Main reasons: Economic recession in EU, changes in Korea s import structure, relocation of Korean firms production base Korea recorded trade deficit with EU in 2012 (1 billion US$) and much more in 2013 (7.4 billion US$) and in 2014 (10.7 billion US$) 9.1 billion US$ in 2015 Korea s Trade with EU Monthly trade balance with EU Source: Korea International Trade Association 4

5 Korea s Trade with EU members (2014) (Million USD) Korea s Trade Balance with EU members (2014) Source: Korea International Trade Association 5

6 Korea s Trade with Germany Korea s Trade with France Korea s Trade with UK Korea s Trade with Italy Source: Korea International Trade Association 6

7 Korea s Trade with Poland Korea s Trade with Czech Rep. Korea s Trade with Slovakia Korea s Trade with Hungary Source: Korea International Trade Association 7

8 Ch years after Korea-EU FTA 8

9 5 years after Korea-EU FTA: trade [Export] Korea s export to the EU reduced by 17.6% for 5 years after the FTA (from Korean statistics). The export to the EU fell in 1 st and 2 nd years of implementation and rebounded in 3 rd year. But it reduced again in 4 th year. EU is only trade partner for which Korea s export reduced for two consecutive years. Fall in exports to France, Germany and Italy is salient. Korea s export to the EU fell by 7.65 billion US$ in During the same period, the exports to the ASEAN (by 16.6%), US (by 26.4%) and China (by 1.5%) increased. Korea s export to the EU increased in 5 th year, while its export to most of trading partners fell. (base effect + low oil) Korea s export to EU Members Changes UK 4,969 7,390 2,421 Denmark 438 1, Slovenia 1,277 1, Czech 1,713 2, Spain 1,857 2, Croatia Lithuania Romania Austria Ireland Greece 1,350 1, Estonia Luxembourg Bulgaria Latvia Portugal Belgium 2,255 2, Malta 2,458 2, Sweden 1, Finland Hungary 1,476 1, Slovakia 4,103 3, Italy 4,107 3, Netherlands 4,627 4, Cyprus Poland 4,101 2,807-1,294 France 5,707 2,581-3,126 Germany 9,501 6,220-3,281 Source: Korea International Trade Association 9

10 Korea s export change during the implementation of Korea-EU FTA (1 billion USD) One year before EU 57.9 China 1,25.6 US 54.2 Japan 34.3 ASEAN 62.2 Korea s total export st year 2 nd year 3 rd year 4 th year 5 th year 5 years total (-12.3) (-4.7) (6.7) (-7.8) (0.3) (-17.6) (6.1) (5.5) (3.8) (-1.4) (-11.3) (1.5) (9.1) (0.2) (9.2) (11.7) (-5.1) (26.4) (16.8) (-8.8) (-7.7) (-13.1) (-19.0) (-30.8) (21.3) (9.9) (1.8) (-7.2) (-7.4) (16.6) (8.7) (2.1) (1.4) (-4.3) (-5.0) (-2.3) Note: 1) One year before: July 2010~June 2011, 2) 1 st year: July 2011~June 2012, 3) 2 nd year: July 2012~June 2013, 4) 3 rd year: July 2013~June 2014, 5) 4 th year: July 2014~June 2015, 6) 5 th year: July 2015~June 2016, 7) 5 years total: : change in exports from one year before (July 2010~June 2011) and the 5 th year (July 2015~June 2016). Source: Korea International Trade Association (KITA). 10

11 5 years after Korea-EU FTA: trade [Import] Korea s import from the EU increase by 24.5% for 5 years of the FTA, while Korea s overall import decreased. The import from the EU increased by 13.1% for the 1 st year of the FTA and has been increasing continuously. 1 st year s increase rather conforms to the general trend of Korea s increase in imports from all over the world (10.5%). From 2 nd years, increase in import (% change) from the EU is much larger than increase from the rest of the world. During 4 th and 5 th years, the FTA seems to allow the import from the EU fell less than those from the rest of the world. Imports have been increased particulary from Germany, UK, Italy and Spain. Korea s import from EU Members Changes Germany 16,963 20,957 3,994 UK 3,818 6,127 2,309 Italy 4,374 5,825 1,451 Spain 1,162 2,335 1,173 Poland Ireland 719 1, Denmark Hungary Romania Greece Finland 935 1, Portugal Slovakia Malta Czech Estonia Lithuania Latvia Luxembourg Slovenia Croatia Belgium 1,450 1, Bulgaria Netherlands 4,426 4, Austria 1,330 1, France 6,315 6, Cyprus Sweden 2,144 1,

12 Korea s import change during the implementation of Korea-EU FTA (1 billion USD) One year before 1 st year 2 nd year 3 rd year 4 th year 5 th year 5 years total EU 43.4 중국 81.0 미국 42.4 일본 67.6 아세안 48.8 총수출 (13.1) (8.1) (13.2) (0.7) (-10.6) (3.4) (-2.9) (5.6) (5.5) (-3.5) (7.8) (-10.7) (6.9) (1.1) (-1.9) (-1.2) (-6.9) (-9.4) (-9.8) (-13.3) (9.7) (-3.4) (4.2) (-9.0) (-10.7) (9.3) (1.8) (-0.9) (-7.9) (-12.7) (24.5) (8.0) (2.1) (-34.8) (-10.3) (-11.3) Note: 1) One year before: July 2010~June 2011, 2) 1 st year: July 2011~June 2012, 3) 2 nd year: July 2012~June 2013, 4) 3 rd year: July 2013~June 2014, 5) 4 th year: July 2014~June 2015, 6) 5 th year: July 2015~June 2016 (9 months), 7) 5 years total: : change in imports from one year before (July 2010~June 2011) and the 5 th year (July 2015~June 2016). Source: Korea International Trade Association (KITA). 12

13 Korea s export destination (billion USD) (Share, %) Korea s import from partners (billion USD) (Share, %) Source: Korea International Trade Association (KITA). 13

14 5 years after Korea-EU FTA: trade [Comparative view] Korea s export to the EU has been growing during the 5 years of Korea-EU FTA, while some East Asian countries have experienced a marked decrease in exports to the EU except China (Eurostat data). According to Eurostat, Korea s export to the EU increased by 6.3% for the 5 years. Some East Asian economies experienced a decrease in export to the EU. Specialized in export in manufacturing sectors Sharp fall in domestic demands of the EU negative influence on the export EU s import from trade partners (Korea-EU FTA period) Partners Note: 5 th year: July 2015~Janauary 2016 (7 months), 5 years total: : change in exports from one year before (July 2010~Jan 2011) and the 5 th year (July 2015~Jan 2016). Source: Eurostat. Total 5 years changes Korea 6.3% China 16.1% Hong Kong 27.5% Japan -13.7% Taiwan -1.4% Singapore -1.9% US 32.5% India 10.0% 14

15 5 years after Korea-EU FTA: trade [Comparative view] Korea experienced the highest increase in import from the EU among Asian economies during the FTA period. In all years, Korea s import from the EU increased the most among East Asian countries. Positive effect of the FTA (tariff cut) to the import is obvious. Import from the EU increased without fluctuations except 5 th year. Specific reasons to Korea + Europe wide reasons (exchange rate etc) Tariff cut, change in consumer preference, oil EU s external export increased by 22.5% during 5 years. EU s export to trade partners (Korea-EU FTA period) Partners Total 5 years changes Korea 54.9% China 40.9% Hong Kong 16.9% Japan 27.0% Taiwan 14.9% Singapore 14.5% US 42.1% India -2.6% Note: 5 th year: July 2015~Janauary 2016 (7 months), 5 years total: : change in imports from one year before (July 2010~Jan 2011) and the 5 th year (July 2015~Jan 2016). Source: Eurostat. 15

16 Ch. 3. Factor analysis 16

17 5 years after Korea-EU FTA: trade Cause of fall in export to the EU Sovereign debt crisis and economic recession in Europe Korea s export concentration in few sectors Ship (HS 89), automobile (HS 87) and electronics (HS 85) represent 60% of Korea s total exports to EU Massive Import of crude oils from the North Sea (from UK) Trade diversion from Dubai oil to Brent oil Relocation of Korean firms to oversee production base China and Southeast Asia (Vietnam) Korea-EU FTA contributed to increase of Korea s export to the EU, when business cycle and exchange rate are controlled in empirical study. Effect of Korea-EU FTA to the Korea s export to the EU is positive (KIEP 2013). Much affected by growth rate difference between Korea and exchange rate Increase in export by US$ 4.5 billion and import by US$ 7.8 billion due to the Korea-EU FTA (KIEP 2015) 17

18 Difference in real GDP growth rate GDP Growth rate and Korea s export Note: % change from previous year. Source: Global Insight Note: 1) 30 most important export destination of Korea, 2) change in annual real GDP growth rate In vs. % change of Korea s export in same period. Source: KITA, Global Insight Korea s export to the EU Korea s investment and export to Vietnam Source: Korea International Trade Association Note: Electronic parts are , , , , ,852990, and

19 EU s trade in automobile with Korea, Japan and US (Million euro) Source: Eurostat Korea Japan US 19

20 Did exchange rate has been affecting the bilateral trade? Granger causality test Data: st q ~ rd q Won/Euro and US$/Euro exchange rates affected respectively Korea s and US export to the EU. Won/Euro Korea s export to the EU (statistically significant at 1%) However, Yen/Euro, RMB/Euro and TW$/Euro did not affect each country s export to the EU Exchange rate development 20

21 EU s recession and trade partners export to the EU Reduced form of regression analysis on EU s GDP and exchange rate over trade partners export to the EU Equation: log(export to the EU) = c0+c1log(eu s GDP)+c2(exchange rate of euro) Period: st q ~ nd q, total 38 quarters Results Korea China Japan Taiwan US EU s GDP 4.31 *** (0.35) 8.96 *** (0.53) (0.35) 2.71 *** (0.41) 2.31 *** (0.67) Export country s *** *** 0.46 *** *** *** currency/euro exchange (0.11) (0.25) (0.14) (0.14) (0.29) rate log(export to EU) = *log(EU s GDP) *log(won/euro exchange rate) 21

22 EU s quarterly GDP Won/Euro exchange rate Quarterly growth of 0.34% Expected export path to the EU 22

23 Thank you very much