Research Reports
A Study on Strategies for Increasing Agricultural Exports by Utilizing FTAs (Year 2 of 2)

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AuthorLee, Sanghyeon
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Publication Date2016.01.26
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Original
Background of Research
Korea is expanding its free trade scale and range at a rapid speed, concluding 15 FTAs with 52 countries as of October 2015. As a number of FTAs have taken effect, agricultural trade with FTA partners has been growing. While agricultural exports have constantly increased, imports have exceeded exports with the gap increasing.
When trading with FTA partners, exports can be expanded through lowering tariff barriers by applying FTA preferential tariffs. However, Korea’s FTA utilization ratio in agricultural exports is very low compared to that of manufacturing exports. To encourage agricultural exports, the government has implemented various support systems on FTA utilization, but they are not being led to agricultural export increases. Therefore, this study analyzes constraints of agricultural exports when utilizing FTAs in terms of domestic export companies as well as overseas import companies, suggesting strategies for enhancing agricultural exports.
Research Method
This study mainly investigated constraints in agricultural exports and imports when utilizing FTAs through interviews with domestic export companies and overseas import companies. Also, it drew a conclusion with improvement plans for enhancing agricultural exports of Korea.
First, the literature on utilization of FTA preferential tariffs, non-tariff barriers and policy data concerning Korea’s agricultural exports was reviewed and the statistical database established in the first year’s work was used. To investigate domestic conditions, interviews were conducted on utilization of FTA preferential tariffs and export obstacles. The overseas investigation was conducted in the USA, EU (Netherlands, Austria, Germany), ASEAN (Vietnam, Indonesia, Malaysia). By visiting the major import companies of Korean agricultural products, interviews were conducted regarding FTA utilization and obstacles of imports, as well as systematic requirements to the government.
A questionnaire survey on “analysis of FTA utilization and improvement plan for agricultural export and import companies” and “a study on non-tariff barriers of agricultural products exported to the FTA partners (USA, EU, ASEAN)” were commissioned to researchers working in related fields.
Research Results and Implications
After reviewing previous researches and interviewing domestic export companies as well as overseas import companies, constraints of agricultural exports were distinguished into common and different factors by the partner country. First, the major processed food export companies in Korea tended to reject issuing a certificate of origin. The main reasons of rejection were determining country of origin by the material costs, worries on exposure of Process Flow Chart (PFC), burden of post hoc test in 5 years. Some companies were not able to get a certificate of origin since a large portion of their products were made of materials from overseas. Fundamentally, administrative management is not handled properly due to absence of experts on certificates of origin. The constraints regarding non-tariff barriers were not knowing of accurate information on regulations, licensing procedure, standard, labelling, customs of the authorities, or delay of customs due to discord of each country’s HS Codes. In case of ASEAN countries, there were problems with transparency of customs and customs clearance. Especially, there was a constraint of using ports since Korea should use the designated port by the Government of Indonesia. Southeast Asian countries have Islamic culture, so dairy and meat products exported to Indonesia and Malaysia were required to get a halal certification.
According to the result of analysing export support systems and export support websites, they were generally well-established based on the experience of farmers and companies regarding utilization of FTA preferential tariffs. Nevertheless, the support systems have not been utilized due to lack of recognizing information and experts on the systems. So, there needs to be a tool to connect the systems to utilization of FTAs through awareness-raising. For efficient promotion, an education system as well as a promotion system are required, targeting export complexes, export companies and the related organizations. Also, information on FTA utilization needs to be delivered through establishing networks among the related organizations. Moreover, FTA expert training and employment support with regard to agricultural export through industry-university-institute collaboration will bring export competency and increased employment.
The existing websites have the basic information only and they are not user-oriented, so it is necessary to improve accessibility and establish an integrated website which provides information on FTA utilization at every step of import and export process by product and country. This study suggested an information system for supporting agricultural export of FTA utilization which provides information on sellers (export companies), tariffs, issue of certificate of origins, customs, export support systems utilizing FTAs.
In addition, this study proposed recommendations for FTA working groups according to the research result of export obstacles of the selected countries. Through the government’s discussion on different systems by FTA partner such as customs, food quarantine, certification, a better environment for agricultural exports will be created and it will lead to the increase in agricultural exports.
Researchers: Lee Sanghyeon, Eor Myongkeun, Chung Daehee,
Ahn Soojung, Yun Yeongseok, Kim Taeyoon, Suh Jinkyo
Research Period: 2015. 1. ~ 2015. 12.
E-mail address: shlee@krei.re.kr
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