Korea has actively engaged in Free Trade Agreements(FTA) negotiations since the beginning of 2000. Currently FTAs with Chile, Singapore, EFTA, ASEAN and India have entered into force. Korea-US FTA and Korea-EU FTA was signed and waiting approval for ratification by the Korean National Assembly.
This study focuses on the change in Korea tariff rates after Korea-US FTA and Korea-EU FTA entering into force. Additionally this study analyzes the pattern of trade between Korea and U.S., EU, China and Japan during 20 years. Under Korea-US FTA, Korea would expect trade diversion effect with decreasing the trade volume from China and Japan. However, under Korea-EU FTA, Korea may expect trade creation effect rather than trade diversion effect.
Using CGE model, this study analyzes the effect of reducing tariff rates on Korea economy under Korea-U.S. FTA and Korea-EU FTA. The result of this study suggests that Korea would lower tariff rates under Korea-U.S. FTA and Korea-EU FTA with maintaining current tariff structure. Since 1984, Korea maintains 8% tariff rate on most of its final output. Korea would lower its tariff rate slightly, and lower especially the tariff rate of the products incurring trade diversion effect under Korea-U.S. FTA and Korea-EU FTA. Significantly reducing the tariff rates induce to decrease the trade volume from the FTA partners such as U.S. and EU. Therefore it is not appropriate strategy under new FTA.
- FTA 확대에 대응한 관세율체계 변화 연구(Changes in Korean tariff structure under the new free trade agreements)
- 정재호; 이홍식
FTA 확대에 대응한 관세율체계 변화 연구(Changes in Korean tariff structure under the new free trade agreements)
|Subject Country||South Korea(Asia and Pacific)|
|Subject||Economy < Trade|