Policy Analyses
PUBLISH
Policy Analyses
-
-
-
Europe-East Asia Economic Relations : Current Status and Prospects
Until the 1980s, Europe-East Asia relations were eclipsed by those between East Asia and North America. However, Europe-East Asia interaction has greatly accelerated in the 1990s. As a result, the volume of trade between the two r..
Baksoo Kim Date 1997.12.30
DownloadContentSummaryUntil the 1980s, Europe-East Asia relations were eclipsed by those between East Asia and North America. However, Europe-East Asia interaction has greatly accelerated in the 1990s. As a result, the volume of trade between the two regions has come to surpass that of Europe and North America. The volume of investment between the two regions has also increased gradually. Against this background, the launching and development of ASEM signifies the beginning of serious efforts to promote closer and cooperative economic relations between Europe and East Asia.
This book is a compilation of the papers and comments from the Seminar on Europe-East Asia Economic Relations held in Seoul on October 30-31, 1997, organized by the Korea Institute for International Economic Policy (KIEP) in collaboration with the Friedrich-Ebert-Stiftung (FES) of Germany. Held right at the onset of the Korean financial crisis, this seminar reviewed Europe-East Asia economic relations in a long term perspective, focusing on opportunities for closer trade and investment between the two regions. -
A Study on China's Petrochemical Industry: Status and Prospects
A Study on China's Petrochemical Industry: Status and Prospects Ihkpyo Hong The petrochemical industry is key in that it has a great effect on other industries and plays an important role in improving industrial structure. In the..
Ihkpyo Hong Date 1997.12.30
Energy industryDownloadContentSummaryA Study on China's Petrochemical Industry: Status and Prospects Ihkpyo Hong The petrochemical industry is key in that it has a great effect on other industries and plays an important role in improving industrial structure. In the 1980s, China's petrochemical industry developed rapidly due to the country's becoming economic growth.
However, despite increased petrochemical complex and production, China's rate of self-sufficiency in petrochemical goods remains only 60%. China's petrochemical market continuously remains in short supply and depends heavily on imports. In addition, China's petrochemical industry faces serious obstacles such as small-sized ethylene factories, an unsettled free market system, disordered circulation of goods, worn-out plants and equipment, and environmental pollution. Therefore China's government plans to actively develop its petrochemical industry through the 'Ninth Five-year Plan' (1996-2000), which entails expanding production, attracting foreign capital, and drawing in advanced technology.
China is currently the largest recipient of exports and investment from Korea's petrochemical enterprises. But the future for these exports and investment into China bodes uncertainty as China's petrochemical industry increases petrochemical complex and production, ASEAN's low-cost petrochemical goods enter the Chinese market, and EU, US, and Japan's petrochemical enterprises expand investment into China. In response, Korea's government and petrochemical enterprises must devise new directions in approaching China. -
Analysis of the First WTO Dispute: United States-Standards for Reformulated and Conventional Gasoline
Analysis of the First WTO Dispute "United States-Standards for Reformulated and Conventional Gasoline" Hosaeng Rhee The Dispute arose from complaints by Venezuela and Brazil regarding the gasoline rule which was implemented by th..
Hosaeng Rhee Date 1997.12.30
Trade disputeDownloadContentSummaryAnalysis of the First WTO Dispute "United States-Standards for Reformulated and Conventional Gasoline" Hosaeng Rhee The Dispute arose from complaints by Venezuela and Brazil regarding the gasoline rule which was implemented by the United States to improve air pollution problem. The Complainants argued that the baseline establishment method included in the gasoline rule violated the most-favored-nation treatment and national treatment obligations, thereby nullifying or impairing the benefits accruing to them under the GATT 1994.
The panel concluded that the baseline establishment method imposed more stringent standard on, and thereby accorded less favorable treatment to, foreign gasoline in favor of domestic gasoline, and such discrimination could not be justified under the Art. XX of the GATT 1994(General Exception Clause).
The United States appealed to the Appellate Body concerning the legal interpretation by the panel of the Art. XX(g) of the GATT 1994. The Appellate Body Pointed out the Panel's errors in the interpretation of the Art. XX(g). However, it concluded that the baseline establishment method was not consistent with the preamble of the Art. XX.
The dispute which was the first one raised according to the WTO DSU, confirmed effectiveness and credibility of the WTO dispute settlement procedure, which would facilitate utilization of the procedure, especially by the developing country Members. On the other hand, although the environmental regulation implemented by the United States turned out to be inconsistent with the GATT 1994, various new interpretations of related Articles widened the scope for the WTO members to implement trade-related environmental measures in the future. It needs to be noted, however, that the Panel and the Appellate Body did not suggest clear and specific criteria for accommodation of environmental measures under the WTO. -
A Study of IMF Bailout Programs: The Cases of Mexico, Thailand and Indonesia
This work reviews the policy experiences of Mexico, Indonesia and Thailand during their financial crises to explore some implications for Korea's economic policy directions. Mexico's case is taken as a successful one given a long ..
Won-Ho Kim et al. Date 1997.12.30
Financial crisisDownloadContentSummaryThis work reviews the policy experiences of Mexico, Indonesia and Thailand during their financial crises to explore some implications for Korea's economic policy directions. Mexico's case is taken as a successful one given a long period of policy dilemmas during the 1980s and the disguised boom in the early 1990s. The other two Asian countries' experiences are also important in that their developments have a parellel impact on Korea's external economic front. The main lesson from the Mexican case is that hesitation in policy reform and priority given to political interests always lead to another cycle of economic crisis. An example of this can be found in 1985, when the Mexican government broke accords with the IMF on an austerity program for pre-election expansion of government spending. Further, the Mexican government's anti-inflationary policy decisions on an overvalued peso since 1987 finally contributed to exacerbating its current account deficit during 1992-94.
The current financial crisis prevailing in East Asia originated from the abrupt devaluation of the Thai Baht in July, 1997. Thailand's financial crisis is commonly attributed to: an ill-managed foreign exchange rate policy; loss of competitiveness in the world market due to the rapid growth of China, Vietnam, and India's economies; and most importantly, a lack of a well-developed supervisory system of the financial sector. The Thai government's current intentions to reform its economy are now well accepted by the international community. Nonetheless, the prospects for the Thai economy are not overly optimistic mainly because of the widespread corruption of its businesses.
Indonesia's current economic crisis can be traced to its expanding current account deficit, growing external debt and problems in its financial sector, particularly its weak banking system. The IMF is placing special emphasis on financial reforms in Indonesia, which, in turn, has ordered the closure of 16 banks, established the Indonesian Bank Restructuring Agency (IBRA), and allowed foreigners to own 100% equity of firms in all sectors. In spite of the IMF program, Indonesia's economic situation has not improved significantly, primarily due to the family-connected Indonesian state's failure to implement the IMF program faithfully. -
A Case Study on the WTO Dispute Settlement Mechanism: Janpan-Taxes on Alcoholic Beverages
A Case Study on the WTO Dispute Settlement Mechanism: Japan - Taxes on Alcoholic Beverages Wook Chae The dispute arose from complaints by the European Community, Canada and the United States with respect to the Japanese Liquor Ta..
Wook Chae Date 1997.12.30
Trade disputeDownloadContentSummaryA Case Study on the WTO Dispute Settlement Mechanism: Japan - Taxes on Alcoholic Beverages Wook Chae The dispute arose from complaints by the European Community, Canada and the United States with respect to the Japanese Liquor Tax Law. The Complainants argued that this Law discriminated against spirits exported to Japan by levying a higher tax on whiskey, cognac and white spirits than on Japanese shochu, thereby nullifying or impairing the benifits accrued to them under GATT 1994.
This case has highlighted four issues based on the Article Ⅲ of GATT 1994 such as definitions of like products and directly competitive or substitutable products, interpretations of 'taxation in excess' and 'similarly taxed' and the meaning of 'so as to afford protection'.
Panel concluded that shochu and vodka are like products and Japan, by taxing the latter in excess of the former, is in violation of its obligation under Article Ⅲ:2, first sentence, of the GATT 1994. It also concluded that shochu and other distilled spirits other than vodka are "directly competitive or substitutable products" and Japan, by not taxing them similarly, is in violation of its obligation under Ariticle Ⅲ:2, second sentence, of the GATT 1994.
While Japan and the United States appealed to the Appellate Body concerning certain legal issues and interpretations, the Appellate Body affirmed most of panel findings and conclusions except for some fundamental issues.
The dispute provides various implications to the on-going case at WTO on Korea's taxation on certain alcholic beverages; that is, it provides good guidelines for developing the relevant logics in the panel process regarding definitions of 'like products' and 'directly competitive or substitutable products', interpretations of 'taxation in excess' and 'not similarly taxed', and the meaning of 'protection of domestic production' and so on. -
The Current Status of the Energy Industry in China and Souggestion for Korea
The Current Status of the Energy Industry in China and Suggestion for Korea Euihyun Choi The Energy industry, as a leading industry, supports economic growth, and makes up a large portion of the national economy. Particularly for..
Eui-Hyun Choi Date 1997.12.30
Energy industryDownloadContentSummaryThe Current Status of the Energy Industry in China and Suggestion for Korea Euihyun Choi The Energy industry, as a leading industry, supports economic growth, and makes up a large portion of the national economy. Particularly for a rapidly growing, developing country like China, the energy industry plays a very important role. In this respect, cooperation in the energy sector between Korea and China should promote mutual economic development.
As a geographically large country, China is endowed with diverse and enormous energy resources. However with a population exceeding 1.2 billion people, China's per capita energy resources are relatively small. As China's economy expanded, so too did its demand for energy. Total energy demand in China in 1993 was the third highest in the world, nearly double its 1978 level. In an effort to underpin its future economic growth, China today is embarking on a major energy development program that will likely present tremendous opportunities to foreign companies in coal mining, electric power generation, oil production, refining and distribution, and supplying the required equipment for constructon.
At present, there already appear to be opportunities galore for foreign firms interested in China's energy industry. With strong economic growth seemingly a given, Chinese government authorities and foreign companies have already negotiated a variety of cooperative deals, and more are in the works.
This report studies the status of the energy industry, related systems, and policies on FDI in China, and based on the reports conclusion, makes suggestions for Korean companies interested in the energy industry in China. -
Background and Prospects for the Indonesian Financial Crisis
Background and Prospects for The Indonesian Financial Crisis Wanjoong Kim Indonesian financial market has rapidly grown in quantity since 1980's. The ratio of total financial institution assets plus securities(TFA) to GDP has ris..
Wan-Joong Kim Date 1997.12.30
Financial crisis, Financial policyDownloadContentSummaryBackground and Prospects for The Indonesian Financial Crisis Wanjoong Kim Indonesian financial market has rapidly grown in quantity since 1980's. The ratio of total financial institution assets plus securities(TFA) to GDP has risen from about 50% of GDP in 1980 to 124% of GDP in 1994. But that market has many structural problems in efficiency and stability. These problems has become major causes of economic crises in 1997.
Indonesia's current economic crisis can be traced to expanding current account deficit, growing external debt and problems in the financial sector, in particular weak banking system. Indonesian banks have been weakened by imprudent lending booms, asset price collapses, increasing bank liabilities with large maturity/ currency mismatches, inadequate preparation for financial liberali- zation and insufficient government management.
Facing economic crisis, Indonesia requested aid from the IMF (International Monetary Fund), which along with the United States, other countries promised a $43 billion credit bailout on the condition of economic reform. The Indonesian government has already announced measures to cut tariffs, reform the financial sector and abolish the monopoly of the National Logistics Agency (Bulog). The IMF is placing special emphasis on financial reform in Indonesia, which, in turn has ordered the closure of 16 banks, established the Indonesian Bank Restructuring Agency (IBRA), and allowed foreigners to own 100% equity of firms in all sectors.
In spite of the IMF program, Indonesia's economic situation has not improved significantly, due primarily to the Indonesian government's failure to implement the IMF program faithfuly. The only way for Indonesia to overcome its economic crisis is to show strong will to reform to investors and creditors. In this way, Indonesia could restore confidence in its economy, thereby stabilizing the currency, increasing exports, and allowing Indonesia to repay external debt. -
Current Status and Prospects of CIS Economic integration
Current Status and Prospects of CIS Economic Integration Sung-Kyu Lee, Pyeong-Hee Choi The study is designed to analyze progress, current issues and prospects of CIS economic integration. Particular attention is paid to the impli..
Seong-Kyu Lee et al. Date 1997.12.30
Economic integrationDownloadContentSummaryCurrent Status and Prospects of CIS Economic Integration Sung-Kyu Lee, Pyeong-Hee Choi The study is designed to analyze progress, current issues and prospects of CIS economic integration. Particular attention is paid to the implications of CIS economic integration for Korean firms.
After the collapse of Soviet Union, the 12-former Soviet Republics established the Commonwealth of Independent States (CIS) to revive economic, trade and financial links between them. But the leaders of CIS countries have varied in their commitment and interest in regional economic integration, thus stifling any real progress in multilateral cooperation.
Because of this problem, the former Soviet states are founding new economic blocs within the CIS: the Russia-Belarusian Union, the Quadrilateral Customs Union (Russia, Belarus, Kazakhstan and Kyrgyzstan), the Central Asian Economic Union (Uzbekistan, Kazakhstan and Kyrgyzstan), and GUAM (Georgia, Ukraine, Azerbaijan and Moldova). The recognition that CIS countries need to unite in a more powerful integrated grouping to achieve an upturn in the economy will become more pronounced in the future.
Since the conclusion of the treaty of friendship between Korea and the Soviet Union, Korea has continued to increase investment into the CIS market. However, Korean firms have limited their investment to Russia, Uzbekistan and Kazakhstan. Thus, before the CIS develops into a complete economic union, Korean firms must work out new sales strategies and gradually increase participation in CIS local markets.