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Traders Renew Call for FTA With Mexico
July 30, 2002 18:48:51
Korean companies are concerned about losing the Mexican market if
Korea does not stay ahead of Japan in clinching a free-trade
agreement (FTA) with Mexico.
This message was conveyed last week to Vice Commerce-Industry-Energy
Minister Leem Lae-gue when he met ethnic Korean-Mexican traders and
Korean companies in Mexico City.
They warned Leem that Korean companies have no choice but to back of
the Mexican market if Mexico concludes an FTA with Japan.
The participants pressed the Seoul government to realize that, in
terms of trading volume and market size, it is more urgent for Korea
to sign an FTA with Mexico than with Chile.
A Korean businessman in Mexico told the vice minister, ``We donnullt
understand why the South Korean government is just standing by idly
talking about conducting studies and research on the FTA.nullnull
They said the South Korean governmentnulls attitude would not only
lead to a wasted opportunity to secure a big exports market, but also
miss out on a potential bridgehead to the Latin American market.
Korean companies pointed out the seriousness of the tariff barriers
that the Mexican government continues to strengthen and asserted in a
consensus that they would the Mexican market if Japan completes the
bilateral FTA in 2004 before Korea does.
In particular, they were anxious about Japan freeing itself from the
high tariff burden in exporting cars, electronics, petrochemicals,
steel and stationeries to Mexico, whereas Korea, which has similar
export item categories, would still be subject to the burden.
Currently the Mexican government has either lifted tariffs or imposed
special low tariff rates of less than 8 percent on goods imported
from the U.S. and Canada, its partners in the North American Free
Trade Agreement (NAFTA). But the benefits do not go to non-NAFTA
member countries.
Mexico also gives similar benefits to the 15 European Union member-
nations and to Latin American countries that inked FTAs last year.
As a result, Korean goodsnull price competitiveness in Mexico has
worsened significantly, as they must bear a minimum 18 -35 percent
import tariff.
In particular, Korean tires were originally subjected to increased
import tariff rates starting the end of this year, but the Mexican
government announced the tariff rate hike six months before the
original schedule and applied revised 23-percent tariffs starting in
July without prior notification.
Hankook Tires, which barely maintained price competitiveness when it
was paying a 5 percent import tariff previously, was at a loss.
``Korean tires managed to survive in the Mexican market because of
their world-class quality but also high price competitiveness _ which
was only possible because of low tariff rate. The revised high import
tariff throws a heavy burden on Korean tire exporters trying to
maintain price competitiveness in the Mexican market,nullnull said
Hwang In-pil, head of Hankook Tiresnull Mexican branch office.
``Korean companiesnull loss will snowball if Korea doesnnullt quickly
conclude an FTA with Mexico,nullnull he said.
The plight is the same for Korean electronics makers. Major Korean
electronics firms like LG, Samsung and Daewoo have built factories in
Mexico, anticipating the heightening tariff barrier for local
production and supply. However, as electronic parts are slapped with
high import tariffs, their price competitiveness has reached its
limit in competing with other foreign goods from Mexiconulls FTA-
partner countries.
General trading firmsnull situation is even more critical. Every
Korean import item, ranging from steel to fibers, is subjected to
high tariffs, and Korean general traders have virtually lost their
competitiveness.
By contrast, the Japanese government is will enter into working-level
FTA negotiations with Mexico at the Asia-Pacific Economic Cooperation
(APEC) summit slated for October this year.
Vice minister Leem, upon arriving from Mexico last week, said, ``We
have neglected the Mexican market. Mexico is a huge market with a
population of more than 100 million. It is an absolutely attractive
market for Korea.nullnull
``I didnnullt know that the matter of clinching Korea-Mexico FTA was
this serious. Mexico will become an important bridgehea]to the Latin
American market. As both countries agree on the necessity of an FTA,
the government will speed up the progress of negotiations with
Mexico,nullnull said Leem.
Meanwhile, Cheong In-kyo, a researcher at the Korea Institute for
International Economic Policy (KIEP), said, ``There is no stumbling
block in forming an FTA with Mexico. I just hope that Korean
companies and traders in Mexico raise their voices more, maybe
through the KOTRA office or local Korean commerce organizations there.
``Since there is no sign from Korean businesses in Mexico to show
their desperate situation to the government, I am concerned that the
government will just pass by the issue,nullnull Cheong said.
``But the most urgent task is the Korea-Chile FTA. It is already at
the final stage of signing, and through it, the government can set up
a model case that would speed up FTAs with other countries,nullnull he said.
Cheong said there are general views that the Korea-Chile FTA would be
formed by the end of the year, and if the government hurries, it is
possible to clinch an FTA with Mexico by 2004 or 2005.
Cheong previously said that if Korea gets estranged from the global
FTA trend, it would face considerable economic and non-economic
losses from diverse trade barriers. He advised the government to map
out a systematic mid- to long-term FTA strategy.
July 30, 2002 18:48:51
Korean companies are concerned about losing the Mexican market if
Korea does not stay ahead of Japan in clinching a free-trade
agreement (FTA) with Mexico.
This message was conveyed last week to Vice Commerce-Industry-Energy
Minister Leem Lae-gue when he met ethnic Korean-Mexican traders and
Korean companies in Mexico City.
They warned Leem that Korean companies have no choice but to back of
the Mexican market if Mexico concludes an FTA with Japan.
The participants pressed the Seoul government to realize that, in
terms of trading volume and market size, it is more urgent for Korea
to sign an FTA with Mexico than with Chile.
A Korean businessman in Mexico told the vice minister, ``We donnullt
understand why the South Korean government is just standing by idly
talking about conducting studies and research on the FTA.nullnull
They said the South Korean governmentnulls attitude would not only
lead to a wasted opportunity to secure a big exports market, but also
miss out on a potential bridgehead to the Latin American market.
Korean companies pointed out the seriousness of the tariff barriers
that the Mexican government continues to strengthen and asserted in a
consensus that they would the Mexican market if Japan completes the
bilateral FTA in 2004 before Korea does.
In particular, they were anxious about Japan freeing itself from the
high tariff burden in exporting cars, electronics, petrochemicals,
steel and stationeries to Mexico, whereas Korea, which has similar
export item categories, would still be subject to the burden.
Currently the Mexican government has either lifted tariffs or imposed
special low tariff rates of less than 8 percent on goods imported
from the U.S. and Canada, its partners in the North American Free
Trade Agreement (NAFTA). But the benefits do not go to non-NAFTA
member countries.
Mexico also gives similar benefits to the 15 European Union member-
nations and to Latin American countries that inked FTAs last year.
As a result, Korean goodsnull price competitiveness in Mexico has
worsened significantly, as they must bear a minimum 18 -35 percent
import tariff.
In particular, Korean tires were originally subjected to increased
import tariff rates starting the end of this year, but the Mexican
government announced the tariff rate hike six months before the
original schedule and applied revised 23-percent tariffs starting in
July without prior notification.
Hankook Tires, which barely maintained price competitiveness when it
was paying a 5 percent import tariff previously, was at a loss.
``Korean tires managed to survive in the Mexican market because of
their world-class quality but also high price competitiveness _ which
was only possible because of low tariff rate. The revised high import
tariff throws a heavy burden on Korean tire exporters trying to
maintain price competitiveness in the Mexican market,nullnull said
Hwang In-pil, head of Hankook Tiresnull Mexican branch office.
``Korean companiesnull loss will snowball if Korea doesnnullt quickly
conclude an FTA with Mexico,nullnull he said.
The plight is the same for Korean electronics makers. Major Korean
electronics firms like LG, Samsung and Daewoo have built factories in
Mexico, anticipating the heightening tariff barrier for local
production and supply. However, as electronic parts are slapped with
high import tariffs, their price competitiveness has reached its
limit in competing with other foreign goods from Mexiconulls FTA-
partner countries.
General trading firmsnull situation is even more critical. Every
Korean import item, ranging from steel to fibers, is subjected to
high tariffs, and Korean general traders have virtually lost their
competitiveness.
By contrast, the Japanese government is will enter into working-level
FTA negotiations with Mexico at the Asia-Pacific Economic Cooperation
(APEC) summit slated for October this year.
Vice minister Leem, upon arriving from Mexico last week, said, ``We
have neglected the Mexican market. Mexico is a huge market with a
population of more than 100 million. It is an absolutely attractive
market for Korea.nullnull
``I didnnullt know that the matter of clinching Korea-Mexico FTA was
this serious. Mexico will become an important bridgehea]to the Latin
American market. As both countries agree on the necessity of an FTA,
the government will speed up the progress of negotiations with
Mexico,nullnull said Leem.
Meanwhile, Cheong In-kyo, a researcher at the Korea Institute for
International Economic Policy (KIEP), said, ``There is no stumbling
block in forming an FTA with Mexico. I just hope that Korean
companies and traders in Mexico raise their voices more, maybe
through the KOTRA office or local Korean commerce organizations there.
``Since there is no sign from Korean businesses in Mexico to show
their desperate situation to the government, I am concerned that the
government will just pass by the issue,nullnull Cheong said.
``But the most urgent task is the Korea-Chile FTA. It is already at
the final stage of signing, and through it, the government can set up
a model case that would speed up FTAs with other countries,nullnull he said.
Cheong said there are general views that the Korea-Chile FTA would be
formed by the end of the year, and if the government hurries, it is
possible to clinch an FTA with Mexico by 2004 or 2005.
Cheong previously said that if Korea gets estranged from the global
FTA trend, it would face considerable economic and non-economic
losses from diverse trade barriers. He advised the government to map
out a systematic mid- to long-term FTA strategy.
00:07 UHR
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