The objectives of the APEC Forum on Shared Prosperity are to exchange views on the current status, strategies and future directions of the structural reforms and liberalization, pursued by individual economies in overcoming the economic crisis so as to explore ways to coordinate the policies of the member economies, and present policy directions for sustainable economic growth in the Asia-Pacific region.

The Korean government plans to report the conclusions of the Forum to the next APEC Leader's and Finance Ministers' Meeting as a basis for future discussions and hopes that they will provide invaluable foundations for various APEC Meetings in the future.

The North American Free Trade Agreement (NAFTA), after six years of existence, has left its mark and brought tremendous change to both Mexico's economy and its politics. There are cases both for and against NAFTA in terms of its performance and impact. Arguments on the positive side are that, first, NAFTA has contributed to the transformation of Mexico into one of the major traders in the world. Second, NAFTA paved the way for the prompt assistance of the U.S. when Mexico fell into financial crisis at the end of 1994. Third, NAFTA provided Mexico with an attractive investment environment and foreign direct investments increased from $4.4 billion in 1993 to $12.5 billion in 1997 and $10.2 billion in 1998. The trade expansion and investments surge absorbed labor.

Others, on the negative side, however, argue that Mexico's socioeconomic situation is still far short of real improvement. First, the continuous readjustments in the manufacturing sector produced an increase in unemployment for unskilled workers who were then only later absorbed by the informal employment sector, which has adversely affected the accuracy of employment and job statistics and has also worsened labor conditions. Second, the Mexican economy has increasingly become further exposed to external shocks. Third, the gap between the rich and the poor has widened, and this has resulted in providing critical momentum for increased sociopolitical instability.

The timing of the establishment of NAFTA overlapped Mexico's ongoing unilateral trade liberalization and the sharp devaluation of the Mexican peso amid the financial crisis. This further complicates the possibility of offering an objective evaluation of NAFTA's effects in Mexico. Many of the "positive" effects largely resulted from trade liberalization and the peso devaluation. On the other hand, most of the "negative" effects occurred prior to the implementation of NAFTA or would have happened, whether NAFTA existed or not, under the ongoing liberalization and globalization environments. Both sides' evaluations of NAFTA tend to be exaggerated due to the politicization of the NAFTA issue and the practical difficulty in distinguishing NAFTA's effects from those caused by other factors.

On the political front, the politicization of NAFTA, and other reform issues, by opposition political parties and other actors on the one hand, and the depoliticization of Zedillo's economic policy on the other hand, quite naturally resulted in the political defeat of the ruling party in the July 6, 1997 mid-term parliamentary and local elections. The result may be seen as contributing to the further democratization of Mexican politics as well as to the decentralization of power. However, whether the political realignment that took place after the 1997 elections has been beneficial, or at least still neutral, to the continuity of economic reform is quite uncertain. The government has to negotiate with the opposition in the Congress on the details of economic policies without global consensus, and deal with traditional governors and local caciques (power brokers) to meet decentralizing challenges for the purpose of coordinating economic policy at the national level. This may bring about deadlocked economic policies in Congress, and accelerate the already existing accountability and transparency problems at the state level.

There have been many calls for financial cooperation at the regional level since the Asian financial crisis broke out. However, there has been, as of yet, no tangible cooperative framework for regional financial cooperation among the three key countries in Northeast Asia: China, Korea, and Japan. Hence, the discussion on regional financial cooperation has not entered into the stage of practical and specific policy formation. The three countries engage in dialogue only through various broad Asia-Pacific channels such as ASEAN+3, the Manila Framework, and APEC. This study is a precursor to the inception of an enhanced cooperative body that will bring forth concrete plans for practical financial cooperation among these three Northeast Asian countries. The study deals extensively with the necessity for financial cooperation in the region, long-term visionary goals, and the action agendas for execution of this financial cooperation in stages.
Financial cooperation in Far-East Asia does not only have implications for crisis prevention and management. It can also lay the foundation for establishing a financial infrastructure that promotes regional trade and investment, strengthens linkages in the East Asian financial markets, develops the regional capital markets, and reinforces the regional financial system.

Furthermore, in an effort to stabilize the foreign exchange market, where contagion is most rampant, we should explore the feasibility and viability of a systematic device for stemming vulnerable intra-regional exchange rate fluctuations. The framework for successful regional financial cooperation is as follows: first, there should be an increase in trade linkages through the expansion of intra-regional trade and investment; second, there should be a consolidation of the financial linkages in the region; third, there is a need for minimizing regional exchange rate instability and contagion effects; and finally, there is a need for fostering crisis management capabilities to resolve problems such as illiquidity in emergency situations.

With respect to the visionary goals of long-term regional financial cooperation, it is first essential to draw a road-map for monetary cooperation. In this regard, the issue of a single Asian currency or a regional monetary arrangement could be worthy of consideration. However, practically speaking, the current economic divergence in this region would appear to preclude the sort of policy coordination that would be required to launch a regional monetary arrangement. In addition, a single currency implies a degree of political cooperation that is not currently conceivable in Northeast Asia. Nonetheless, more active macroeconomic policy coordination would contribute to the stability of exchange rates by mitigating the macroeconomic instability accruing from external shocks or by stemming competitive devaluation. Instead of pursuing a complete and consolidated monetary arrangement, a broader form of cooperation would be able to sustain the existing and various exchange rate systems and to consider adopting intermediate regimes in between the two extremes; floating and fixed.

Second, it is crucial to establish a system that will prevent the recurrence of a crisis. At the national level, each country in the region must maintain consistency and coherence in macroeconomic policies and improve the soundness of the financial systems through restructuring. Without strong and sound economic fundamentals in place, countries cannot effectively stem contagion in the region. While addressing internal deficiencies, we must not merely be bystanders to the financial crises of our neighbors, but should instead devise a system that will protect one another and minimize the spread of these crises.

Third, we should develop the financial markets and strengthen the competitiveness of the financial industry. To do so, each country should endeavor to create a blueprint for long-term development of the financial markets and foster mutual linkages to integrate the markets in the region. The development of Asian bond markets and the opening of a common stock market will contribute to the reduction of the region's heavy dependence on the bank-centered indirect financing of corporations. In addition, more competitive private financial institutions in the region must appear so that they can provide better financial services to corporations in the region at large.

Fourth, we should also enhance financial cooperation in order to promote trade and investment flows in the region. Because of the reciprocity involved in trade flows, a cooperative financial arrangement for preventing the disruption of trade credits should prove to be a suitable solution in times of an emergency. In the medium to long-term, a regional Free Trade Area, or Agreement, will enhance trade and investment cooperation in the region. As core infrastructures, various financial innovations will appear to support trade and investment flows. The ACU (Asian Currency Unit), as a regional currency, and a new payment settlement system, through the internet, will reinforce the ever expanding real sector cooperation. Region-wide commercial and investment banks will also emerge to secure sufficient funds for investment and development.

With respect to the four aforementioned visionary goals for Northeast Asian financial cooperation, we must pursue the following action plans. First, the ultimate vision for regional financial cooperation lies in monetary cooperation, as currency integration is the most advanced form of economic integration. Therefore, while maintaining the existing exchange rate regimes, we must carefully explore means by which to achieve monetary cooperation in stages by reexamining the pros and cons of previous monetary arrangements experimented with when the Euro was developed. Then, we must strive to meet the conditions for ensuring the most appropriate form of monetary cooperation.
Exchange rate cooperation, through the internationalization of the Japanese Yen, mostly driven by the market forces, can be seen as one form of monetary cooperation that has already begun. In the short-term, such monetary cooperation seems feasible in the region, as the overall effects look positive.

Second, the establishment of a credit support arrangement that helps prevent the recurrence of crises, and which more effectively manages any crises that may occur, can be revisited in the medium term. The launch of a regional monetary fund, such as an AMF (Asian Monetary Fund) is far-fetched.

Nevertheless, East Asia, including China, Japan and Korea, can pursue other types of credit support arrangements by utilizing a portion of their foreign reserve holdings. Current workable proposals include expanding bilateral SWAP arrangements, or developing this back-up facility into a region-wide arrangement. These credit support facilities, or arrangements, will be reinforced by the regional surveillance mechanism.

Third, in order to ensure a strong foundation for sustainable growth in the three countries in the region, it is necessary to develop the domestic and regional capital markets and to strengthen financial systems. The development of long-term, domestic currency denominated securities will require stable and consistent macroeconomic policies, a strong supervisory and regulatory framework for financial institutions, and a proficient administrative capacity to enforce such prudential supervision and regulations effectively. However, fully-fledged capital markets will take some time to develop, although most countries in the region are now moving in the right direction. The three countries in the region should continue to work on financial sector reform through a mutual exchange of knowledge and experience. When the financial markets and the financial systems in the region mature, we will be able to envision the creation of an influential international financial hub that links the three financial centers in the region, Tokyo, Seoul, and Hong Kong (or Shanghai).

Fourth, we should seriously consider creating a Free Trade Area, or Agreement, that consolidates the trade and investment links among the three countries in the region. Although not likely in the near future, the creation of an FTA, if pursued, will have practical significance as long as it is carried out by the year 2020, as proposed in the APEC Bogor Declaration. Furthermore, emergency trade financing schemes should be considered, if not immediately implemented. At this moment, the feasibility of a Bilateral Payment Agreement is questionable, however, mutual credit guarantee schemes for exports may be worthy of examination.

Finally, as discussed in this report, the current and impending issues, and future agendas concerning regional financial cooperation, indisputably cover a broad range of topics. First and foremost, an appropriate regional dialogue framework should be established to promote a regular channel of communication among the three countries, and to enhance mutual understanding. A shared long-term vision, based on this understanding, should then be constructed. Financial cooperation will form the backbone of the implementation of this vision and it is imperative that the initial focus of this cooperation is centered on the prevention of future financial crises. By re-examining the fundamental causes of the last crisis, and by striving to serve as a role model to the others while simultaneously learning from each others' past policy successes and mistakes, the path to future successes and achievements will be set.

Vladimir Putin was elected Russia's 2nd President in the presidential election of March 26, 2000, following Boris Yeltsin. Thus Putin, who was a KGB agent during the Cold War and later the director of the Federal Security Board (FSB), will be in charge of the country and at the same time commander-in-chief of the military for the next four years.

The purpose of this article is to grasp Russia's situation in a comprehensive way by dealing with the following issues: (1) the presidential status written in the Russian constitution and laws; (2) results of the 2000 presidential election; (3) The 'Putin Phenomenon' (4) the tasks ahead for President Putin; (5) Korea-Russia relations in the Putin era.

Putin was successful in being elected on the first ballot, unlike Boris Yeltisn in 1996. It is thought that ordinary Russians, who were disappointed by the corruption and weakness of the Russian elite under Yeltsin, see Putin as both fresh and strong. In particular, his conviction in the need for military intervention in Chechnya is comforting to Russians. As a result, building a 'strong state', which Putin has emphasized thus far, does look feasible in contemporary Russia. However, even if relations between Putin and the Duma continue to be good, controling the violent crime oligarchs and local leaders as well as restoring bureaucratic discipline will be very difficult because these problems are already widespread and deep-rooted in society. Perhaps Putin will have to strengthen the security apparatus, such as the FSB, to confront social forces that might cause instability in the process of implementing stable economic reforms. Yet, he will not be a dictator.
With regard to foreign policy, Russia's relations with the West will further deteriorate if the U.S. insists on revising the ABM treaty to build its TMD, or if NATO offers membership to the three Baltic counties. However, Putin's Russia will do its best to avoid both the visible and invisible costs accompanying its security and military diplomacy by all means.

Meanwhile, Russia's Korea policy will continue on the same path it took during Yeltsin's second term. That is, it will pursue a balance between its South and North policy. Although domestic and other urgent international matters are major concerns for Russia at the moment, Korea could be a focal point should Russia's relations with the U.S. get worse. Korea must be careful not to let deteriorating Russo-US relations negatively affect its own relations with Russia.

Although there had been interregional "political attempts" to envision a new development model, to escape from the core-periphery economic structure as shown in the New International Economic Order movement of the 1970s, the "actual" economic relations between Asia and Latin America were not really of any consequence until the late 1980s. The post-debt crisis Latin America's economic opening and the emergence of most Asian economies to the newly-industrializing status served as momentum for accelerated inter-regional trade and investments, and for deepened mutual economic interdependence. The formation of the Southern Common Market (MERCOSUR) also stood out in its appeal to the interests of Asian entrepreneurs. Its member countries' political economic stability and market potential induced Asian businesses to enter South America with a more localized mindset. The earlier Asian focus on Central America, the Caribbean and Mexico as a detour to the ultimate U.S. market now contrasted with the new concentration on local markets and meaningful investments in South America, particularly in Brazil.

Japan, Korea, Taiwan, and Hong Kong are the major Asian trade and investment partners for Latin America. Although Japan, without any doubt, is the largest exporter and importer in absolute terms, Latin American shares of Korea's total were the highest among Asian countries trade in 1996 and 1997. Korea's investments in Latin America in 1997 recorded the highest amount in its history, US$614 million, accounting for a record-high 11.7 percent of Korea's total overseas investments. All this meant that the Latin American market became more important to the Korean economy than to any other Asian economy.

Meanwhile, Brazil, Chile, Argentina, Mexico, Peru, and Ecuador, in that order, are the main exporters to the Asian region. Among others, Chile and Peru are focusing more on Asian markets as part of their trade diversification strategy, and this explains why they are the only two South American countries joining the Asia-Pacific Economic Cooperation (APEC).
This interregional partnership, formed in the early 1990s, has come into crisis recently. The momentum for expansive trade and intensive investments was threatened by the financial crisis in Asia first, and then by the contagion of this crisis over Latin America, and finally by policy responses here and there.

What was worse than the 1980s situation, however, was the contagion of this Asian crisis over Latin America in 1998 and 1999. The real threat, at the turning point of the century, was the change of mood between the Asian and Latin American policymaking fronts. As more Asian goods, cheaper with the currency devaluations, appeared in the local markets of Latin America, several Latin American countries erected tariff and non-tariff barriers to restrict Asian imports. This might signal a new era of conflict and severe competition between Asia and Latin America, ending a short-lived cooperation period.

Ironically, however, the crisis opened and widened the opportunity and space for better mutual understanding, strategic cooperation or alliance, and institutionalization by sharing the new economic model, political and socioeconomic challenges at both the domestic and international fronts. First, Asia's first serious financial crisis since the late 1970s/early 1980s served as the momentum for an enhanced awareness of the interdependence on each other. One region has come to understand the dynamics of the liberalized trade regime, and that it was increasingly vulnerable to the financial situation and policy responses of the other. Secondly, such awareness of interdependence promotes strategic alliance between the two regions. Examples of the immediate outcome were the free trade initiatives between Korea and Chile, and between Japan and Mexico. The ultimate Korea-Chile and Japan-Mexico free trade arrangements will represent a new momentum for Asia's presence in Latin America and for redefining strategy in its relationship with the region and ultimately intensify intra-industrial trade and cooperation. Thirdly, a more serious effort toward the institutionalization of Asian-Latin American relations has been undertaken in the post-crisis context. The East Asia-Latin America Forum (EALAF) proposal gains significance given the traditionally low profile of Latin America in the Asian policymaking framework of international relations and vice versa. The success of such an institutionalization, however, will depend on the realization, identification and harmonization of mutual interests, problems to solve, and realistic methods in the globalized context.

A dumping margin calculation in involves currency conversion of either the export price or the normal value. Although the Anti-dumping Agreement permits the conversion of currency when it is necessary for the price comparison, it does not provide a sufficient guideline to guard against potential distortion in the dumping margin calculation resulting from conversion. Unless the conversion is done with an appropriate exchange rate, an investigation authority's price comparison potentially results in a spurious estimate of dumping margin, in violation of the fair comparison requirement of Article 2.4 of the Anti-dumping Agreement. In particular, the distortion in the dumping margin calculation is magnified when the exchange rate moves significantly.

This paper reviews the currency conversion clause of the Anti-dumping Agreement and suggests modifications in order to address the shortcomings.

This paper reviews the degree of competition and complementarity among three Northeast Asian countries - China, Japan and Korea. An attempt is made to identify sectors or commodities that are expected to potentially increase trade between Korea and China or Japan. For the analysis, bilateral, as well as total trade at a somewhat disaggregated commodity level, are considered. In addition, various trade-related indices are utilized with an emphasis on the demand rather than supply side of international trade.

Overall, Japan and Korea are quite similar in terms of their aggregate trade structures. Japan and Korea are commonly import-oriented in beverages and tobacco, inedible crude materials, animal or vegetable oils and fats; and primarily intra-industry trade oriented in most of the manufacturing sectors.

China has quite a different trade structure from Japan or Korea. More specifically, China's export-orientation in food and live animals, beverages and tobacco, miscellaneous manufactured articles is well contrasted with its import-orientation in manufactured goods classified as materials, animal or vegetable oils and fats, machines and transportation equipment. Therefore, China is highly complementary in trade with Japan and Korea.

We also try to analyze the extent of the structural similarities (between one's exports and the other's imports and vice verse, therefore, complementarity) in international trade between the Northeast Asian countries with the index of trade conformity (ITC). The ITC denotes the overall complementarity between two countries' trade. Since the ITC can also be interpreted as a summation of each commodity's contribution, we can identify some commodities which would potentially increase trade between two countries.

The ITC analysis yielded the following implications. Korea's imports from Japan are much more likely to increase than those from China, in a potential sense. Potentially speaking, Korea's exports to the two other countries will increase relatively, somewhat more for Korea's exports to Japan than to China. Looking at it another way, in terms of potential, Korea's exports to China are much more likely to increase than are China's exports to Korea. The overall aggregate trade structures (between one's exports and the other's imports and vice versa) of Japan and Korea are quite similar, therefore complementary, and Japan's exports to Korea are potentially a little more likely to increase than are Korea's exports to Japan.

We also try to identify some commodities (disaggregated in terms of the SITC three-digit classification) which are expected to increase bilateral trade between Korea and China or Japan. For example, Korea's exports to Japan have the potential to increase in other textile apparel, men's and women's clothing excluding knit (SITC 845, 841, 842); fresh, chilled, frozen fish and meat (SITC 034, 036, 037, 012); parts for office machines (SITC 759); baby carriages, toys, games, miscellaneous manufactured goods (SITC 894, 899); aluminum, copper (SITC 684, 682); bags, textile articles, furniture (SITC 831, 658, 821); measure and control instruments (SITC 874); organo-inorganic compounds, miscellaneous chemical products, medicines (SITC 515, 598, 541); and watches and clocks (SITC 885). It was possible to identify even more complementary relationships between the countries as the product classification was disaggregated further.

This paper is a survey of some of the important issues in Korean trade during 1999. 1999 was an important year in Korean trade for several reasons. In 1999, Korea began its recovery from the Asian Financial Crisis, with its GDP growing by more than 10%. Much of the growth, especially in the latter half of the year, was due to a healthy export sector. Korea's exports to all major regions rose greatly. Korea's imports also rose greatly, but imports from some regions, such as Asia and North America, grew more quickly than imports from other regions such as Europe. The growth in exports was driven by such goods as semiconductors and automobiles. On the import side, the growth of imports was driven by increases in the import of capital goods due to Korea's recovery from the Financial Crisis and the recession which followed.

Such growth in exports could not help but generate trade disputes between Korea and its trading partners, most notably the United States. While the bilateral trade disputes were not as serious as they had been in the 1980s, there were some notable issues in 1999, particularly with regard to steel, semi-conductors, pharmaceuticals, and movies.
While many of these trade dispute issues were being dealt with bilaterally, between Korea and various complainant countries, the world was rapidly moving toward establishing a common multilateral rules on trade, and 1999 was an important year in the multilateral trade arena as well. On November 30 1999, the WTO Ministerial Conference was held in Seattle. The Conference was to signal the beginning of a New Round of trade negotiations designed to liberalize trade, as well as introduce multilateral rules with respect to several 'New Issues'. However, because of disagreements among member countries, the negotiations were 'suspended,' and except for certain 'built-in agenda' issues, the negotiations will not resume until the members can attain a wider agreement on various issues concerning the New Round negotiations.

Korea submitted 12 official position papers to the WTO on various topics concerning the New Round. These topics include agriculture, services, the anti-dumping agreement, market access for industrial goods, trade and investment, trade and competition policy, and transparency in government procurement.

This study seeks to correct the general public's perception of the Uruguay Round Agreement to promote awareness of its benefits through concrete examples. Furthermore, by explaining issues disputed in the Uruguay Round this book attempts to enhance public interest and understanding on the Uruguay Round.

The Korea Institute for International Economic Policy organized a policy forum on 'Korean Plan for Strengthening Competitiveness for the 21st century' with the support of Korean Ministry of Finance.

The purpose of this forum was to analyze the problems of global competitiveness and its implication. In addition, it provided a forum for discussions on Korea's plans for strengthening competitiveness in the digital sector. These proceedings are a collection of the lectures, papers and formal comments made by the speakers and discussants.