This fourth Trade Policy Review of the Republic of Korea has significantly contributed to an improved, informed understanding of recent developments in Korean trade and related policies. Our discussion has greatly benefited from the comprehensive engagement of the Korean delegation, led by Ambassador Choi Hyuck, the insightful comments from our discussant, Ambassador Muhamad Noor Yacob, and many thoughtful interventions by Members.

Members noted Korea's impressive economic performance, underpinned by generally prudent macro stabilization policies, on-going trade liberalization and corporate and financial sector restructuring. Korea was encouraged to continue these market oriented reforms. A major challenge was to ensure continued economic improvements, given the economy's reliance on exports to compensate for weak domestic demand; this is a potential source of vulnerability.

Members welcomed Korea's active participation in the multilateral trading system, including the Doha Development Agenda. It was important that Korea's increasing involvement in bilateral/regional trading arrangements be compatible with the multilateral system, and that such agreements be sufficiently comprehensive to liberalize Korea's trade regime in difficult areas, such as agriculture, where most protection exists. While some Members noted that high agricultural protection reflected food security and other multifunctional concerns, other Members urged Korea to reform its agricultural policies, commenting that continued high levels of price support and tariffs as well as other forms of protection undermined economic efficiency and penalized Korean consumers. The contrast between low industrial and high agricultural tariffs was also noted.

Many Members thought that the multiplicity of rate bands, various flexible tariffs and other types of duties made the Korean tariff structure somewhat complex, and encouraged its simplification. Agricultural tariff quotas were of particular concern, including the possible restrictive impact on imports of their administration. Korea was urged to reduce high tariffs on some industrial products and to raise the coverage of tariff bindings and narrow the gap between bound and applied levels.

Many members noted that Korea had made substantial efforts to further liberalize its foreign investment regime; this was important at a time when FDI inflows had fallen. Some Members inquired about the range of tax and other incentives provided to attract investment, including the use of various types of “zones?

Members appreciated Korea's moves to harmonise standards and other technical barriers to trade with international norms, but also encouraged it to do more in this regard, especially in the areas of food-related standards, labelling provisions as well as duplicative inspection and testing requirements, including for pharmaceuticals. Some Members worried about the possible trade restrictiveness of some Korean SPS measures and encouraged Korea to review them.

Members welcomed efforts by Korea to improve the transparency of its government procurement and to strengthen corporate governance and its competition legislation and enforcement, including on the operations of chaebols. Steps to strengthen intellectual property rules and their enforcement were also recognized and complemented, including Korea's recent accession to the WIPO Copyright Treaty and streamlining of patent applications. Services liberalization, especially of the financial and telecommunication sectors, was welcomed, although several Members noted that certain possible weaknesses remained in the regulatory regime for telecommunications.

Members sought clarification on a range of other issues, including: regulatory reform, particularly of customs procedures, and contingency measures, state trading, subsidies, privatization, services liberalization, future agricultural reforms, trade arrangements for rice, rules of origin, reforms in fisheries and labour markets.

Members appreciated the oral and written responses to their questions provided by the Korean delegation, and looked forward to receiving answers on any outstanding questions.

This successfully concludes our Review of Korea. The wide interest shown by Members, with many advanced questions, interventions and high attendance, reflect the important role that Korea plays in the multilateral trading system. We now have a much better and current understanding of its trade-related policies and measures, and appreciate the challenges facing Korea, along with efforts to address them in a way that is consistent with the multilateral trading system.