Korea, ASEAN to Sign Investment Accord (코리아타임스 2009.05.30)

Korea, ASEAN to Sign Investment Accord

By Kim Hyun-cheol
Staff Reporter

The first two days of June will see new impetus for relations between South Korea and Southeast Asia.

Korea will host the Association of Southeast Asian Nations-Republic of Korea Commemorative Summit on Jeju Island to mark the 20th anniversary of the relationship with the regional political and economic bloc, comprised of Singapore, Malaysia, Indonesia, the Philippines, Brunei, Laos, Myanmar, Thailand, Vietnam and Cambodia.

``This special summit will lay a solid foundation for Korea's `New Asia Diplomacy' by creating fresh momentum for developing and diversifying mutual ties and cooperation with ASEAN countries,'' Kim Jong-hoon, minister for trade at the Ministry of Foreign Affairs and Trade, said Thursday in a written interview with The Korea Times.

Participating leaders of those countries will discuss various issues, from economic cooperation to green growth and cultural exchanges in efforts to consolidate mutual relations.

The meeting is even more special in terms of trade and investment, as both parties will sign a mutual investment agreement, completing a free trade agreement (FTA) ― agreements on products and services have already been in effect since June 2007 and May this year, respectively.

``The FTA will provide a strong legal framework in expanding trade and investment between Korea and ASEAN,'' Kim said. ``This is an important improvement in the mutual ties in that both parties have completed a systematic frame for a mature economic partnership.''

Seoul expects the FTA will lead to notable growth in ASEAN countries ― by 2015, Korea aims to achieve $150 billion in trade with the bloc.

Since the 2007 effectuation, trade in goods rose 23 percent to $81.8 billion in the first 12 months from the previous year. The figure further moved up to $90.2 billion in 2008, making ASEAN Korea's third-largest trade partner after China and the European Union.

Also in the services sector, Korean firms have secured solid ground in businesses such as finance, telecommunications and transportation, where Korea has a sharp edge.

The government plans to fully support companies that invest in the region, as well as protect those that have already made the move there. As of last year, ASEAN is Korea's No.2 investment destination trailing the United States alone, while Korea is ASEAN's fourth largest.

With the invest agreement signed in the meeting, Korean investors in Southeast Asia will be given most-favored-nation treatment, which will guarantee they will be protected from any discriminative measures by local governments.

Plans for the liberalization of investment for individual industries will also be completed within five years of the agreement's effectuation. ``This will make it much easier for Korean companies to advance their businesses there,'' Kim said.

For investments, negotiations took longer than expected since their launch in February 2006 as the two parties had gaps on the level of protection and liberalization. Still, this pact is the highest level by ASEAN, even including the ASEAN Comprehensive Investment Agreement, a pact between its member nations, the minister said.

Such protracted negotiations are common in trade talks, said the veteran official.

``Trade negotiations are like sensitive art. In FTAs, poorly conducted talks surely are a problem but overly well-done ones can also lead to trouble because the outcome will not easily be ratified in the partner country,'' Kim said.

``Successful FTAs are ones that produce win-win consequences through a balance of interests. Mutual openness should be raised for maximized economic effect, but consideration is also needed for sensitive areas.''

And Kim has every reason to mention that. As a veteran official, Kim has been successfully leading Korea's ongoing FTA negotiations so far.

The sharp-eyed official, often described as a ``samurai'' due to his look and highly competitive spirit, played a pivotal role throughout the country's major negotiations, which included knotty and daunting duties during the Korea-U.S. FTA.

Under Kim's leadership, Korea has successfully enacted four FTAs with Chile, Singapore, the European Free Trade Association and ASEAN, and completed FTAs with the United States and India, as well as nearing one with the European Union.

Some critics worry that Korea may not be fully prepared to handle multiple trade talks, but Kim said this was not time for the country to slow down its efforts.

``All other major trade partners are in all-out moves to push further FTAs,'' Kim said. ``The negotiating abilities of Korean officials have improved immensely through past experience, and so are countermeasures for local businesses. So in the end, I believe Korea can get over any hardships that might come along with expansion of global free trade.''

Such ability could also apply to the FTA with ASEAN, which is purportedly moving to transform itself into an economic entity like the European Union. Even though it remains to be seen if this will be realized, it only proves that Korea will have to strengthen its ties with the countries further, Kim said.

``ASEAN is rapidly growing. GDPs and trade amounts of its members have nearly doubled over the last five years and the attraction of foreign direct investment has also soared more than four times,'' he said.

``Activated economies in ASEAN countries will offer bigger opportunities for the Korean economy too. So we need to continue to build up cooperation with them.''

Indeed, the Korean government plans multi-faceted activities to support Korean firms that are willing to move to the region, in a network between related ministries and state-run organizations. They constantly hold consultancy meeting and investor relations meetings for huge social overhead capital projects in the region in efforts to support Korean bids there.

Korean-ASEAN ties have been steadily growing over the last couple of decades, ever since they initiated dialogue in 1989 ― the country became a full dialogue partner three years later.

This February, Thailand newly joined the agreement for products and services to make all ASEAN nations subject to the Korea-ASEAN FTA. The Korea-ASEAN Center is to be launched in Seoul next month as an inter-governmental organization to boost mutual relations.

However, the ties are not bound to the economic area, according to the minister. The June summit will see Korea seeking joint prosperity and development with ASEAN, as well as making a contribution to solving global problems such as financial crisis and climate change, he said.

``In a nutshell, the theme of this summit well shows Korea's key place in ASEAN policies,'' Kim said. The June summit is held under the theme of ``Friendship for Real, Partnership for Good.''

hckim@koreatimes.co.kr