In preparation for the Uruguay Round subsidy and response agreement, this study reviews the possible impact of the agreement on Korea’s export assistance program and exports, with the objective of presenting measures to reform the export assistance program in the future.
Growing exports have been one of the driving forces behind Korea’s economic development over the last 30 years, backed by the export assistance program. However, there has been growing demand for the fair distribution of resources, as the size of the economy has increased along with economic democratization and decentralization. In addition, the world is witnessing a move towards a new trade order, with the UR subsidy negotiation following the launching of the GATT system. Korea joined the IMF Article 8 countries and GATT Article 11 countries, while there is greater demand that Korea needs to join the OECD. As its status has been raised, Korea is facing difficulties in maintaining its export training system.
The UR negotiation agenda, which is currently under discussion, enhanced the standards to judge the trade distortion effect, compared with the GATT system. They also define different multilateral remedy procedures for each type of subsidy, and adopt stricter procedures related to countervailing tariffs to prevent them from being abused. If an agreement is reached on the UR agenda, Korea needs to align its export assistance program with GATT rules. According to regression analysis, this will reduce Korea’s exports due to the elimination of subsidies in the long term. Therefore, we need to develop response measures as soon as possible.
For the future of the export assistance program, Korea need to reasonably utilize deferred export finance and trade insurance not subject to subsidy regulation. In addition, it should utilize a latency period after the UR agreement takes effect. Measures to provide more R&D support to SMEs should be developed, such as expanding and advancing production capacity, as they might sustain substantial damage. In addition, it is necessary to expand trade bill assistance, as it is possible to utilize the market in a way that minimizes the distortion of market functions.
UR보조금협상의 영향분석과 수출지원제도 개편방안(Analysis of impact of the UR subsidies negotiation and reform measures for the export assistance program)
|Subject Country||South Korea(Asia and Pacific)|
|Subject||Economy < Trade|
|Holding||KIET; KDI School|