Transcript Georgia 2012

Georgia Reaching Out Worldwide
KOREA
Maria Galindo, Commercial Officer
Commercial Service (USDOC), Seoul
May 14-18, 2012
Introduction & General Overview
Benefits for Georgia from the U.S.Korea Free Trade Agreement
Georgia & Global Trade
 Georgia is the 12th largest exporter among all U.S. States with
global exports of $34.7 billion (2011)
 Exports of manufactured goods account for over 4.2% of
Georgia’s total private-sector jobs
 88% of all Georgia exporters are SMEs
Georgia & Korea Trade
 Georgia exports to Korea were $907 million in 2011
 Korea is Georgia’s 10th largest international market
Overall Benefits of the Korea FTA for Georgia
 The U.S.-Korea FTA, which began on March 15, 2012, will
eliminate 95% of all Korean consumer and industrial
products duties within 3 years, including such leading
Georgia exports to Korea as computers and electronics,
machinery, and transportation equipment.
 The U.S. International Trade Commission estimated that U.S.
exports to Korea could expand by as much as 40% over the
next few years under the U.S.-Korea FTA.
Sector Benefits of the Korea FTA
for Georgia
 Transportation Equipment Manufacturing – USD 338 million
(2011) – Georgia’s largest leading exports include aircraft,
fishing vessels, locomotives and other transportation
manufactures. Duties on most transportation equipment
products will be eliminated immediately, including duties on 87
percent of aircraft and related parts.
 Machinery Manufactures – USD 94 million (2011) - Georgia’s
second manufactured exports, such as water filtering,
purifying equipment, refrigeration compressors, etc., faces an
8 percent tariff rate; however, these tariffs will be phased out
immediately.
 Chemical Manufactures – USD 84 million (2011) – Georgia’s
third leading manufactured exports to Korea that includes
pharmaceuticals, cosmetics, fertilizers, agro-chemicals, etc.,
have tariffs that range from 6 to 50 percent. Most of these
chemical exports will receive duty-free treatment immediately,
with the remaining tariffs phased out within 10 years, under the
U.S.-Korea FTA.
 Computers and Electronic Products – USD 43 million (2011) –
Georgia’s sixth largest exports to Korea faces 8 percent tariffs,
based on their specific HS code. Under the KORUS FTA all of
these tariff rates will be phased out immediately.
Best Market Prospects for Georgia
under the Free Trade Agreement
Among Georgia’s top global exports, the following products will
have significant benefits under the U.S.-Korea FTA.
 Georgia exported over $1 billion in gas turbines worldwide in
2011. The 3-8% tariff will be eliminated immediately upon
implementation of the U.S.-Korea FTA.
 Georgia exported $1.8 billion in motor-cars & vehicles for
transporting persons worldwide in 2011. The 8% tariff will be
eliminated immediately upon implementation of the U.S.-Korea
FTA.
 Georgia exported $1.1 billion in agricultural products
worldwide in 2011. Tariffs on U.S. agricultural products like
those produced in Georgia such as poultry, cotton, and
peanuts, will be phased out upon implementation of the U.S.Korea FTA.
Korea’s Golden Age …
 1988: Summer Olympics
 2002: World Cup
 2010: G20 Seoul Summit
 2012: Nuclear Security Summit,
 2012: Yeosu World Expo
 2014: Asian Games
 2018: Pyeongchang Winter Olympics
 Mr. BAN Ki-moon: Secretary-General of the United Nations
 Mr. Jim KIM: President-elect of the World Bank
 Mr. Sung KIM: U.S. Ambassador to Korea
…(oh …and by the way)…COSTCO stores in Korea have some of the highest revenues of any
COSTCO stores -- worldwide.
How big is Korea?
Korea, where 70 percent of the topography consists
of mountains, is about the size of Indiana …but with
50 million people.
Korea then and now
Korea has maintained a remarkable average annual
economic growth rate of 7% (<>) over <>35 years.
Today it is the world’s 10th largest economy, despite
 being totally resource dependent ,
 being totally dependent on trade (80%), and
 recovering from a major civil war over 50 years ago.
Korea is a Global Player
 8th in the world in trade (World Factbook)
 1st in Internet usage (ITU)
 1st in shipbuilding (Economy Watch)
 3rd in Semiconductors
 3rd in mobile phone penetration
 3rd in Production of LCD monitors
 5th largest Auto producer (Economy Watch)
 10th in power generation (US EIA)
 15th global GDP (IMF)
 …oh…and by the way… is world-renown for TV & movie
dramas, music and the K-Pop or Korean Wave…
Korea as a Trading Partner
 Fast-growing market with 49 million consumer with a per
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capita GDP of $31,754 (2011)
World’s 12th largest economy: $1.6 trillion GDP (2011)
U.S. 7th largest trading partner and 7th largest export
market
U.S. goods exports to Korea were $43.5 billion in 2011
U.S. services exports to Korea were $17.0 billion in 2011
Korean exports (goods and services) as % of GDP: 52%
U.S. exports (goods and services) as % of GDP: 13.8%
 Korea ranks 8th out of 183 economies in 2012: “Ease of
Doing Business” index by the World Bank
Korea’s Economy
 GDP: US$ 1,014 trillion (2010)
 Services 67%
 Industry 31%
 Agriculture 3%
 Trade: US$1,081 billion (> 100% of GDP)
 Exports in 2011: $557 billion
 Imports in 2011: $524 billion
 US 8th largest export market
 Over 80% of Korea’s economy is trade-related
Important, and true
 Korea is clean, safe (you are captured on a CCTV screen ev.
12 secs in Seoul!), and well-organized
 Intellectual Property protection is pretty good
 Legal recourse is expensive, much more predictable
than in many nations, and improving
 Korea is 43rd in Transparency International’s
Corruption Perceptions Index
 Korean industry is skilled at tweaking improvements to
technology
Industrial Concentration is High
 Korea grew on the backs of a few favored firms. Today
they dominate the economy.
 Several Chaebol are highly innovative and willing to
take very large risks
 30 Chaebol are responsible for more than 50% of
Korea’s GDP.
 The economic power of the largest players, who
dominate multiple industries, is astounding
Korea is strategically located
 Northeast Asia accounts for 21% of global GDP,
24% of global population and 15% of global
trade.
 Korea is strategically located between the giant
economies of China and Japan, which are the
world’s largest single markets and the world’s
largest economies.
Korea is strategically located
 51 cities with populations exceeding 1 million
are located within a 3.5-hour flight of Seoul.
 700 million people live within a 1,200 km radius
of Seoul (more than the populations of the
United States and Europe combined).
 Trade volume with Japan, China and United
States amounts to over $220 billion.
Transportation
 Marine transportation
- Cargo imports, exports and transshipments:
11,840,000 TEU (No. 5 in the world)
 Land transportation
- 90% of domestic transportation is handled by roads
and railways.
- 5th high speed rail network in the world.
On-line Shopping Websites
 30,064 on-line shopping websites in Korea.
 Over 4,500 B2C Korean cyber shopping malls.
 In 2011, on-line consumers spent nearly USD 28 billion.
 E-Commerce transactions in 2011 exceeded USD 700
billion.
 Korea is ‘connected.’ In 2009, 96% of Korean
households had internet access.
(79% - Germany, 69% - USA, and 67% - Japan)
 Power bloggers are…popular and powerful…
Top 10 US Exports to Korea
Machinery & Computers
16%
Electrical Machinery
15%
Optical, Medical & Laboratory
7%
Aircraft
7%
Cereals
6%
Organic Chemicals
6%
Fuel & Hydrocarbons
4%
Iron & Steel
3%
Plastics
3%
Vehicles
2%
68%
Source: US Customs
Korea’s Best Prospects 2012
Aerospace Industry
Cosmetics
Defense Industry Equipment
Education Services
Energy: New and Renewable (NRE)
Entertainment and Media
Franchising
Medical Equipment and Devices
Pollution Control Equipment
Semiconductors
Specialty Chemicals
Travel and Tourism
Source: Commercial Service - Korea
Protecting Your Valuable Intellectual
Property (IP) in Korea:
 In Korea, registration of patents and trademarks is on
a first-to-file basis.
 IP must be registered and enforced in Korea through
Korean laws.
 KIPO website:
http://www.kipo.go.kr/kpo/user.tdf?a=user.eng.main.Bo
ardApp
KORUS FTA
KORUS FTA
A Well-Timed Opportunity
 Korea and the U.S. have worked together closely for
more than half a century.
 The KORUS FTA is the most important trade
agreement for U.S. companies since NAFTA. Is very
‘unlike’ NAFTA in many ways.
 This FTA is described as the ‘gold standard’ -- and
was six years in the making.
Average Korean Tariff under KORUS FTA
Tariffs
14%
12%
KORUS enters into force
10%
8%
6%
4%
2%
0%
0
1
2
3
4
5
6
7
8
Year
9
10
11
12
13
14
Source: Appendix 2-B, KORUS FTA,
http://www.ustr.gov/trade-agreements/free-trade-agreements/korus-fta/final-text
15
Tariff Reduction –
Staging Categories
Category
A
Day 1 at 0%
B
2 years to reach 0%
C
3 years
D
5 years
E
6 years
F
7 years
G
10 years
H
15 years
I
10 years, tariff reduction starts
slowly then accelerates
J
12 years, no reduction first 9 years
K
already at 0% before KORUS
MNQUY
Special Rules for Agricultural Products
H.S. Codes
7,521
6
749
503
2
38
718
88
24
1
1,625
128
FTA Tariff and Trade Snapshot
KORUS Overview and Key Provisions
 Over 95% of trade in consumer and industrial products duty
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free within 5 years
Tariff and non-tariff barrier reductions for agricultural
products
Increased access for U.S. autos, including unprecedented
provisions to address non-tariff barriers in Korea
Further market access for U.S. service providers
State-of-the-art protections for IP
Expanded access to Korean government procurement
contracts
New protections for U.S. investors
Investor-State Dispute Settlement mechanism to help
investors address violations of the KORUS investment chapter
How KORUS benefits U.S. businesses
 KORUS Levels the Playing Field
Korea’s applied tariffs on U.S. goods average 6.2 percent, while
U.S. tariffs on Korean goods average 2.8 percent.
 Small and Medium Size Enterprises and KORUS
The transparency provisions help small and medium size companies
that may not have the resources to navigate customs and regulatory
red tape
 Investors
Establishes a secure and predictable legal framework for U.S.
investors in Korea
 Service Providers
Improved access for U.S. service providers, including telecom,
express delivery, legal, financial, and many others
Market Access Reports
What’s My Tariff?
FTA Tariff tool:
http://export.gov/FTA/FTATariffTool/
Detailed Background Information:
http://export.gov/FTA/korea/index.asp
USTR website:
http://www.ustr.gov/uskoreaFTA
ITA website:
http://export.gov/FTA/korea/
US Customs website:
http://www.cbp.gov/xp/cgov/trade/trade_programs/inte
rnational_agreements/free_trade/
Do I need a Certificate of Origin?
 You must prove your product qualifies for a lower tariff
under KORUS.
 But, you do not need to get an official document from a
government office. (unlike NAFTA) The burden lies with
the importer of record.
 Written or electronic certification by the manufacturer,
exporter or importer.
 If requested by Customs, must provide proof.
Self-Certification
These ‘data elements’ are part of your self-certification.
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Name of ‘Certifying Person’
Importer
Exporter
Producer
Description of Good
Tariff Classification
Information Demonstrating that a Good is Originating
Period Certification Covers (if a blanket certification)
Certifying Statement
Authorized Signature & Date
There is no prescribed format.
Rules of Origin
 Transformation rules: inputs are substantially different
from the final product.
 Specific rules by HS code under KORUS FTA.
For example:
 Leather and metal parts transformed into a handbag
 Raw cinnamon transformed into packaged, ground
cinnamon
 Wood, plastic and metal parts transformed into
furniture
 Electronic parts transformed into a printed circuit
board
Rules of Origin
 Regional Value Content rules: the proportion of U.S. and
Korean (“Regional”) content exceeds x%, or the proportion of
non-Regional (KR) content is less than y%
 Specific rules by HS code under KORUS FTA
For example:
 Imported furniture components (not from Korea)
transformed into finished furniture; at least 35% Regional,
or no more than 45% from third countries
 A printed circuit board (not from Korea) transformed into a
new printed circuit board; at least 30% Regional, or no
more than 35% from third countries
Rules of Origin
 A good must be more than a product of Korea, it must
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meet a preference rule of origin
The FTA rules of origin lay out the various methods that a
good can qualify for preference, or “originate”
An imported good must “be originating” to receive
preferential tariff treatment
Preferential tariff treatment is not necessarily “dutyfree,” might be a reduced rate of duty while tariffs are
being phased out
U.S.-Korea FTA qualifying goods eligible for “KR” rate of
duty found in the “Special” column of the HTS Chapters 1
to 97
U.S. Customs and
Border Protection
Preference Criteria
 Wholly Obtained
 Tariff Shift
 Regional Value Content (RVC) achieved in three ways:
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Build Up
Build Down
Net Cost
 Exclusively from Originating Materials
U.S. Customs and
Border Protection
You, your company and Korea
Doing Business in Korea: 2012 Country
Commercial Guide for U.S. Companies
 Chapter 1 : Doing Business In Korea
 Chapter 2: Political and Economic Environment
 Chapter 3: Selling U.S. Products and Services
 Chapter 4: Leading Sectors for U.S. Export and Investment
 Chapter 5: Trade Regulations, Customs and Standards
 Chapter 6: Investment Climate
 Chapter 7: Trade and Project Financing
 Chapter 8: Business Travel
 Chapter 9: Contacts, Market Research and Trade Events
Consult: http://www.buyusainfo.net/docs/x_6114956.pdf or www.export.gov/southkorea
(see icon for CCG).
Source: USDOC/Commercial Service
We look forward to working with you in this
mature, …dynamic, …fast-moving, …everchanging …(…but not for everyone!!!) market …
Visit with International Trade Managers of the GA Dept. of
Econ. Dev. , Office of Global Commerce: International
Operations: International Trade and Mr. Peter Underwood
and Ms. Shin Hee-jung, State of GA Reps in Korea,
www.ircltd.com
Visit with International Specialists in the U.S. Export
Assistance Centers in GA:
www.export.gov/usoffices/index.asp who will assist you in
contacting us.
Jim Sullivan
Erik Hunt
Mark O’Grady
Maria Galindo
Catherine Spillman
[email protected] - Senior Commercial Officer
[email protected] Deputy Senior Commercial Officer
[email protected] – Commercial Officer (sector specific)
[email protected] – Commercial Officer (sector specific)
[email protected]– Commercial Officer (sector specific)
Gamsamhapnida
and
Good luck!
(Haeng-un ul biluyo)