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Political and Security Cooperation, Membership Enlargement and the Global Information Society: Agenda Solutions for ASEM III
This paper discusses political and security cooperation, membership enlargement and the Global Information Society in the context of ASEM III agenda building. While the economic and business cooperation issues have so far 'monopol..
Sinonetta Verdi Date 1999.11.10
DownloadContentSummaryThis paper discusses political and security cooperation, membership enlargement and the Global Information Society in the context of ASEM III agenda building. While the economic and business cooperation issues have so far 'monopolized' ASEM's attention, it is now clear that the evolving and complex reality of the ASEM process needs to increasingly address other issues such as political and security cooperation, membership enlargement and the Global Information Society in a more concrete and focused manner. As ASEM evolves from the ideation stage to the practical implementation stage, leaders and operators need more detailed answers about all aspects of this comprehensive Asia-Europe partnership. Since all the areas of cooperation are clearly interlinked, any one area which is 'ignored' will reflect negatively on another, and in the end the whole process could potentially suffer.
Several features deserve attention. First it is necessary to reinforce the security elements in the ASEM relationship as an investment for a stronger economic and business relationship. In an interdependent world, adequate security cooperation can best guarantee stability and, therefore, economic gains on a permanent basis. The 'fruits' of the economic agenda could be jeopardized if security matters (and their political consequences) become unmanageable. In ASEM's movement towards a security community, perhaps addressing directly the single issues affecting the two regions could be a more dynamic approach instead of focusing exclusively on the creation of a security architecture, that maybe at some point in the future would also address the real issues at stake.
Second, as the ASEM III meeting in Seoul is approaching quickly, the controversial issue of membership enlargement is going to re-present itself. A country's membership in ASEM brings with it that country's distinct positions on economic, political, security, and civil society issues. When it comes to taking action, who is a member and who is not could determine the outcome for a specific issue. ASEM leaders will have to choose between the principle of widening versus the principle of deepening. However, at this still very early stage for ASEM, deepening as opposed to widening is the most efficient course to take as it is an investment in the consolidation of its procedures and the establishment of a solid identity. Indeed this strategy is going to benefit both the ASEM process and the potential candidates themselves because a well-functioning ASEM is going to integrate new members into the dialogue more fairly and efficiently. In this way synergies will emerge as opposed to lines of conflict.
Third, the Global Information Society (GIS) is a fundamental element in sustaining the ASEM economic partnership, highlighting a new era of communication and interaction between the two regions. Although at this stage, ASEM specific initiatives in the GIS can be appreciated only within a very limited context, some current GIS related issues are being addressed through relations between Europe and some Asian countries. These cover a number of areas with the final goal of creating a knowledge-based society for the 21st century. What will prove useful at ASEM III is information exchange from all sectors, both public and private, coordinated in the form of an ASEM Information Technology Council (as recommended by the AEVG). ASEM should not become a structure imprisoning or distorting the fast paced, natural flow of the GIS, therefore this Council should function reflecting the reality of the complex and fast moving Global Information Society.
Dr. Simonetta VERDI, is the EC's European Union Science and Technology Fellow in Korea and visiting research fellow at KIEP. She specializes in relations between the European Union and Korea and steel industry research. Send all correspondence to: 300-4 Yomgok-Dong, Seocho-Gu, Seoul 137-747, Korea; (Tel) 822-3460-1046; (Fax) 822-3460-1066; (E-mail) sverdi4@yahoo.com -
A Study on the Global Competitiveness Report of the WEF
A Study on the Global Competitiveness Report of the WEF Yunjong Wang·Dongwha Shin·Hyongkun LeeNational competitiveness may be defined as a country's ability to create an environment, through the use of policy and support systems..
Yunjong-Wang et al. Date 1999.11.10
Exchange rateDownloadContentSummaryA Study on the Global Competitiveness Report of the WEF
Yunjong Wang·Dongwha Shin·Hyongkun Lee
National competitiveness may be defined as a country's ability to create an environment, through the use of policy and support systems and by possessing a stable and effective social structure, which allows a company, from that country, to hold competitiveness.
According to The Global Competitiveness Report, published by the World Economic Forum (WEF) in July of this year, Korea ranked 22nd in 1999, down three places when compared to last year's ranking. In addition to this, in April, the International Institute for Management Development (IMD) announced that Korea's competitiveness has continually decreased over the past five years.
It is generally assumed that this sluggishness and decline in Korean competitiveness was brought about by the adverse economic conditions created by the 1997 financial crisis. However, while Korea suffered through this crisis, some of its competitors, such as Singapore and Taiwan, did not. Therefore, it could be suggested that Korea's diminished competitiveness may have, in fact, at least indirectly contributed to the advent of the crisis.
If this is the case, what should Korea do in order to not only recover but to also improve national competitiveness? First of all, the Korean government should create more favorable optimal business environment. Secondly, every economic body should voluntarily put more effort into improving competitiveness because improving competitiveness only through government policy and institutional reform has limitations.
In addition to improving national competitiveness we should undertake the following strategic measures:-Prepare for influences, such as integration trends in the global market and the innovative development of information technology, which easily affect national competitiveness -Put more effort and focus into intensively analyzing and understanding each item identified as a weakness in the national competitiveness evaluation-Increase the role of government as a system designer for national competitiveness.-Improve external credibility through continued reform-Publicize the ongoing Korea's structural reform process -
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Official Development Assistance : Trend and Issues of DAC Members
Official Development Assistance: Trends and Issues in OECD/DAC The Development Assistance Committee(DAC) of OECD has contributed to the formulation of development co-operation programmes and policies by donor countries and by m..
Yul Kwon Date 1999.09.15
Economic development, Economic cooperationDownloadContentSummaryOfficial Development Assistance: Trends and Issues in OECD/DAC
The Development Assistance Committee(DAC) of OECD has contributed to the formulation of development co-operation programmes and policies by donor countries and by multilateral institutions active in development cooperation since the 1960's. DAC has also been the source of information on the flow of financial resources to developing countries, and has regularly published the data collected from its member countries.
According to DAC's definition, Official Development Assistance (ODA) is defined as those flows to developing countries and multilateral institutions provided by official agencies, each transaction of which meets the following tests: ⅰ) it is administered with the promotion of economic development and welfare of developing countries as its main objective; and ⅱ) it is concessional in character and contains a grant element of at least 25 per cent.
DAC has stressed that substantial additional aid efforts will be required, both quantitatively and qualitatively, for development cooperation and has set three major ODA targets: a) a net flow of ODA equal to 0.7 per cent of the donor's GNP; b) a net flow of ODA to least developed countries of 0.15 per cent of GNP; c) the provision of ODA by each donor on terms such that the commitments made convey an average grant element of 86 per cent. According to this last target, DAC has been endeavouring to seek appropriate ways and means of untying national aid programmes and providing a framework for the orderly use of associated financing related to tied aid.
The aid volume performance of individual DAC members in recent years has varied considerably. While private flows have expanded, overall DAC aid has faltered since the beginning of the 1990's. On a net disbursements basis, total ODA from DAC countries amounted to US$48.3 billon in 1997, that is, a net flow of ODA equal to 0.22 per cent of the donor's GNP. DAC countries channelled approximately one third of their net ODA through multilateral agencies in 1997, Seven DAC countries (Denmark, Ireland, Luxembourg, the Netherlands, Norway, Portugal and Sweden), provided at least 0.15 per cent of their GNP to least developed countries.
Korean ODA is relatively small and the largest share consists of multilateral aid. Korea's ODA in 1997 was equivalent to 0.042 per cent of GNP, which was far behind the lowest level (0.09 per cent for the United States) as well as the DAC average (0.22 per cent). With regard to the current level of Korea's ODA, Korea needs to significantly expand its external Assistances quantitatively. and improve the terms and conditions of aid qualitatively. While there exists no consensus or official position on the proper level of Korea's ODA, its ODA policy has reached a turning point in its evolution, because Korea has had to prepare for its accession to the DAC sooner than originally anticipated, after obtaining OECD membership in 1996. Supposing that ODA/GNP increases by 0.01% annually, Korea's ODA wil amount to about US$559 million (equivalent to 0.1 per cent of GNP) in 2004 and US$1 billion (equivalent to 0.16 per cent of GNP) in 2010. This confronts budgeting officials with a dilemma as to how to accommodate ODA expansion with other competing domestic policy interests.
There are several future tasks facing Korea's ODA in relation to the present ODA system and policies. First, the Korean government must elaborate its aid philosophy, or ODA charter, in which aid should be justified and expanded as it begins to embark on a new stage of its ODA evolution. Second, a new approach needs to be adopted, in order to improve the capacity to plan and manage projects, through the reinforcement of policy implementation, for example country-specific programming. -
The Asian Financial Crisis and the Need for Regional Financial Cooperation
The Asian financial crisis and its policy implications can be understood on the national, regional, and global dimensions. At the national level, both directly and indirectly affected countries have to strengthen their self-defens..
Yun-jong Wang Date 1999.09.10
Financial crisis, Financial integrationDownloadContentSummaryThe Asian financial crisis and its policy implications can be understood on the national, regional, and global dimensions. At the national level, both directly and indirectly affected countries have to strengthen their self-defensive countermeasures to prevent a future financial crisis. For this purpose, countries under the IMF program, including Thailand, Indonesia, and Korea, have undertaken macroeconomic stabilization policies and bold structural reforms in financial and corporate sectors. As a result, usable foreign reserves have accumulated dramatically and the structure of external debts has much improved. In addition, policy-makers are very serious about structural reforms, although a sense of complacency can be observed among consumers, businesses, and trade unions.
At the regional level, there were also many calls for financial cooperation just after the Asian financial crisis broke out. However, the discussion on regional financial cooperation has largely remained within the realm of academia and has not been able to produce any tangible result. This is primarily due to the lack of a consensus initiating a regional framework to respond to the crisis, both in terms of crisis management and prevention. The three Northeast Asian countries - China, Japan, and Korea - officially participate in such regional fora as ASEAN+3 and APEC to discuss major issues concerning regional financial cooperation. However, in order to obtain more concrete results that can reflect the interests of the three countries, there needs to be a dialogue channel beforehand for a much closer regional financial cooperation. Such a dialogue is not necessarily exclusive to the neighboring countries around the region. Rather, it should evolve into an institution that strengthens and stabilizes the East Asian financial system. However, considering the fact that the U.S. is constrained to act globally and will not cooperate with the region as a region, the three countries have to form a consensus in East Asia on a mutually beneficial basis. The political feasibility of a regional framework will not be a burden, if we start to lead a discussion over economic and financial issues in the relevant regional context.
As exemplified by the launching of the Euro, the discussion on regional financial cooperation may focus on such sophisticated topics as monetary cooperation. However, more realistic and working-level agendas are likely to produce more tangible results. In other words, the task of regional financial cooperation is to be approached from a long-term and gradual perspective. As was the case with the Euro, the different levels of economic achievement among the East Asian countries must be considerably narrowed to meet the economic requirements for monetary cooperation. This is not to say the discussion of monetary cooperation itself is futile. A consensus on monetary cooperation will emerge when the achievement of more specific agendas shows the possibility of regional financial cooperation.
At the global community level, various issues for building a new international financial architecture are being discussed at numerous arenas. However, the major leading group is the G7, which is composed of highly industrialized countries. Furthermore, the scope for Asian participation is limited. In such regional fora as ASEAN+3 and APEC, and such extended global fora as G22 and G33, several Asian countries, including crisis-affected countries and China could have the opportunity to express their own views. However, there is a serious division between the U.S. and the rest of the G7 membership on various architectural issues. In most cases, outside inputs from developing economies are not satisfactorily recognized and incorporated.
This paper examines the need for regional financial cooperation and points out the importance of the regional dialogue channel for further close cooperation. In order to create a more formal institutional framework for regional financial cooperation, we should simply start a discussion on various possibilities in a more informal and freer way. Through successive rounds of discussion, we will discover what barriers against an institutional framework for regional financial cooperation exist.
The paper is organized as follows. Section II will review the regional actions to deal with the Asian crisis. Section III will also review the global actions to deal with the Asian crisis and its aftermath. Section IV will discuss the long-term and short-term agendas for regional financial cooperation. -
Developing an ASEM position toward the New WTO Round
This paper discusses how ASEM can play an effective role in the upcoming new WTO round and thereby further liberalization of the multilateral trade regime. As ASEM only came into being after the conclusion of the Uruguay Round, pa..
Chong-Wha LEE Date 1999.09.10
Economic cooperation, Multilateral negotiationsDownloadContentSummaryThis paper discusses how ASEM can play an effective role in the upcoming new WTO round and thereby further liberalization of the multilateral trade regime. As ASEM only came into being after the conclusion of the Uruguay Round, participation in the new WTO round will be challenging yet critical as it could demonstrate whether the ASEM process can function as a complement to multilateral trade liberalization. In this connection, ASEM members collectively and individually need to take a proactive stance towards framing the agenda of the New Round.
Several features deserve attention. First, considering the dynamic interaction towards trade liberalization between regional and multilateral initiatives, and the failure of APEC's regional initiative (EVSL), ASEM can be expected to give new momentum to the prospects for enhanced multilateral trade liberalization. This can be achieved through providing united support for further liberalization in the New Round. Second, considering the differing development stages of ASEM members, a comprehensive New Round with the principle of a single undertaking could probably best meet the divergent interests of member countries because only this approach would enable the bargaining and concessions to occur. Third, the three issues, namely trade and investment, trade facilitation and electronic commerce, seem to meet common interests of ASEM members since they are directly trade-related and have enormous potential to enhance trade. In addition, as ASEM has its own programs in these areas, especially trade and investment and trade facilitation, it could pave the way for reaching common ground in the ASEM approach to the New Round. Fourth, in order to build consensus among ASEM members, it would be necessary to use ASEM's informal features, such as people-to-people dimension and substantive political dialogue. Lastly, if the EU takes the initiative vis-?och-vis the US in advancing the New Round, it would be from ASEM that the EU seeks support in the New Round, and ASEM thus could be expected to take a leadership role.
Consequently, if ASEM provides a useful vehicle for the New Round, this would give a decisive momentum to multilateral liberalization and the ASEM process as well and contribute to Asia and Europe making great strides in cooperation at the dawning of a new millenium. -
Capital Inflows and Monetary Policy in Asia before the Financial Crisis
Asia has received sizable capital inflows before the Asian crisis in 1997. Capital inflows are contributed in part by internal factors such as high economic growth, liberalizing the financial system and opening the capital market,..
Sung-Yeung Kwack Date 1999.08.30
Financial crisis, Monetary policyDownloadContentSummaryAsia has received sizable capital inflows before the Asian crisis in 1997. Capital inflows are contributed in part by internal factors such as high economic growth, liberalizing the financial system and opening the capital market, and in part by external factors such as low rates of interest in industrial countries, especially the United States. Capital inflows supplied finance needed for a high rate of investment, imports and economic growth. At the same time, capital inflows distorted relative good prices, fed bubbles into real asset markets and inflationary pressure into the economy.
Substantial capital inflows can give rise to microeconomic and macroeconomic policy issues. Especially, capital inflow surges increase the difficulty in managing monetary policy of an open economy under a fixed exchange rate system and with unrestricted trade flows and capital flows. The higher the degree of capital mobility, the more difficult the maintenance of a fixed exchange rate and the control of the money stock.
The main purpose of this study is to empirically explore how the monetary authority in Asia did cope with the surge of capital inflows in the period 1985-1996. It statistically examines the extent to which the massive capital inflows influenced the conduct of monetary policy and the effects of the policy of sterilization and intervention in the foreign exchange market. it provides empirical evidence for what a group of seven selected countries across Asia have done. The seven countries in the group are Indonesia, Korea, Malaysia, Philippines, Singapore, Thailand, and Taiwan( R.O.C.). The regression is estimated using a panel of 84 observations for the seven countries during 1985-1996.
A capital inflow generates monetary expansion and pressure for exchange rate adjustment. It poses an important policy question as to how to deal with capital inflows. It is uncertain whether capital inflows last long or not. Asian countries regarded capital inflows as a transitional phenomenon. As a result, Asian countries decided it was desirable to minimize the impact of capital inflows on the economy.
Asian countries heavily utilized the policy categories of measures to minimize the impact of capital inflows on the money supply and exchange rate. The monetary authority conducted contraction of the domestic source in the monetary base of the central bank, primarily directed to offset the effect on the money supply of an increase in the net foreign assets of the central bank resulting from capital inflows. At the same time, the monetary authority intervened in the foreign exchange market, primarily designed to absorb pressures on exchange rates that are accompanied by capital inflows and to prevent nominal exchange rate appreciation.
The statistical results indicate that the degree of sterilization of the monetary authority is very high and that the sterilization is undertaken to control the money supply rather than to control the monetary base.
Furthermore, the effect of the intervention in the foreign exchange market is estimated to be small. The main statistical finding implies that the monetary authority took the policy of a high degree of sterilization with a low level of intervention in foreign exchange markets. The policy leads for a capital inflow to yield negligible effects on the exchange rate and small positive effects on the money supply and the price level. Consequently, the monetary authority succeeded in keeping exchange rates at desired levels and in limiting increases in monetary growth, despite a surge of capital inflows.
The majority of industrial countries allow their exchange rates to float and unrestricted capital flows. Under the world conditions, the monetary authority in Asian countries could have accepted the view that capital flows are of a permanent nature and that sterilized intervention policies are effective over a short period. If the monetary authority accepted the view, it would have floated the exchange rate. The study concludes that Asian countries could have avoided the financial crisis. -
Korean Implementation of the OECD Bribery convention: Implications for Global Efforts to Fight Corruption
The OECD Bribery Convention is an important milestone in the global efforts to combat bribery and corruption. The convention, which has entered into effect on February 15, 1999, effectively criminalizes the bribery of a foreign p..
Jong-Bum Kim Date 1999.08.30
Multilateral negotiationsDownloadContentSummaryThe OECD Bribery Convention is an important milestone in the global efforts to combat bribery and corruption. The convention, which has entered into effect on February 15, 1999, effectively criminalizes the bribery of a foreign public official. However, it is limited in that it deals with the bribery of a foreign public official by developing measures against bribe-giving activity only. The convention does not deal with the problem of the bribe receiving foreign public officials. In addition, the convention does not deal with the bribery and corruption that do not involve transnational business.
Although the OECD Bribery Convention only tackles with the supply side of bribery in transnational business, it sets an important standard for combating bribery in both domestic as well as transnational business. Specifically, the OECD Bribery Convention establishes the criminal liability of a legal person. In addition, it imposes sanctions against the proceeds obtained from bribery.
For some countries, these instruments against bribery are not established for domestic bribery offense. In the case of Korea, the implementing legislation of the OECD Bribery Convention establishes the criminal liability of a legal person. Also, it establishes monetary sanctions against the proceeds obtained from the bribery. In contrast, the Korean Criminal Codes punishing the offense of the bribery of a domestic public official do not establish similar measures against domestic bribery.
This paper compares the legal purposes behind the OECD Bribery Convention and those behind the Korean Criminal Codes on bribery offenses. The legal purpose behind the OECD Bribery Convention is primarily the protection of fair competitive condition in the international business transactions, while the legal purpose behind the Korean Criminal Codes is the protection of 'incorruptibility' of a public official's duty. This paper argues that the Korean Criminal Codes should also be reinterpreted to protect the fair competitive conditions in the domestic market. It is recommended that the Korean Criminal Codes on domestic bribery should be amended to incorporate the new instruments introduced in the OECD Convention.
In today's rapidly globalizing world, bribery and corruption has no national boundaries. In a global effort to combat corruption, all the trading nations in the world should adopt the OECD Bribery Convention so that the existing criminal measures to fight domestic corruption would be strengthened in line with the measures introduced to fight transnational bribery in the OECD Bribery Convention. -
Korea-Brazil Cooperation Vision for the 21st Century
Korea-Brazil Cooperation Vision for the 21st CenturyEdited by Won-Ho KimContributed by Kyu-Ho Chung, Dal-Young Kim, Young-Jo Lee, Heon-Deok Yoon, and Young-Ho Nam The great geographical distance between Korea and Brazil left l..
Won-Ho Kim et al. Date 1999.07.30
Economic cooperationDownloadContentSummaryKorea-Brazil Cooperation Vision for the 21st CenturyEdited by Won-Ho KimContributed by Kyu-Ho Chung, Dal-Young Kim, Young-Jo Lee, Heon-Deok Yoon, and Young-Ho Nam
The great geographical distance between Korea and Brazil left little room for bilateral cooperation in the sphere of as long as the latter was primarily concerned with national security in the traditional sense.
However, national security in the era of post-Cold War is affected by a wide range of factors that include politics, economy, society, and culture. In addition, both Korea and Brazil, as secondary powers seeking to maintain autonomy despite the overwhelming influence of the US and its European allies, share many commonalities in their perception of the international situation, national interests, and national goals. For these reasons, they have an increasing number of issues over which they can cooperate to their mutual advantage.
First, considering their relatively limited bargaining leverage against the traditional Western powers, pooling resources to strengthen their position in multilateral fora would be mutually beneficial. They should cooperate to their mutual benefits in those issue areas where new international norms are evolving: labor standards, environmental protection, and investment.
Second, the two countries should strengthen their cooperation with regard to the reform of the UN Security Council to ensure that the interests of the secondary powers are best represented in the process.
Third, they may also cooperate in the reform of the international monetary system so that the international debt problem may be solved to their advantage. They may help each other in international debt negations by sharing information and experiences.
Fourth, there is wide potential for cooperation in dealing with issues of trade and development. On the basis of the shared perception that sustainable development is not possible without financial support and technology transfer by the advanced industrialized countries, common efforts may be exerted to ensure that advanced industrialized countries assume this responsibility fully.
Fifth, bilateral cooperation is also needed in the governance of international common areas, such as the oceans, Antarctica, the atmosphere, and space. Most matters regarding such global commons have been virtually always decided by the superpowers.
Sixth, Brazil and Korea may exert common efforts to ensure unrestricted access to advanced technologies, which are essential for national security and economic development. Given the limited market size of the two countries, cooperation in R&D would also be beneficial in achieving greater economies of size advantages.
Seventh, bilateral cooperation to ensure that nuclear technology is used for only peaceful ends will be mutually beneficial.
Eighth, considering that globalization has also brought about the globalization of crime, bilateral cooperation will be essential in dealing with the issue.
The general perception Koreans have of Brazil is as psychologically and culturally distant as the geographical. However, the relationship of the two countries is becoming more closely linked as the world's economies become more integrated. The most recent proof of this phenomenon is he Asian crisis and its effects on Brazilian economy. On October 28, 1997, contagion effects derived from the Asian crisis created turmoil in Brazil's financial and exchange markets. The Sao Paulo stock market (BOVESPA) dropped by about 30 percent and the net losses of international reserves by the central bank amounted to US$8 billion (about 13 percent of total reserves) by the end of October.
Despite the causal relationship demonstrated by the recent economic difficulty, the two nations' official economic relationship has been limited to an almost insignificant level. Fortunately, in recent years the interests shown by the two governments toward each other promise improvement of economic and social cooperation.
Despite the recent turmoil, Brazil is considered a fast and attractive emerging market for trade and investment. The promise of these areas was greatly heightened following the formation of MERCOSUL. Since Brazil is the major player of MERCOSUL, a productive relationship with Brazil is crucial for successful and effective access to South American markets. Korea, along the lines of its internationally oriented economic policy, is pursuing more diversified economic partnerships. Meanwhile, Brazil has begun pursuing a newly established economic policy focusing on open market economics, including market liberalization, and privatization. This has marked the transition from the 'lost decade' of the 80s, when Brazil was still pursuing an import substitution policy.
Therefore, at the present time both countries see each other as potential economic partners that can benefit their respective economic growth strategies. Following the introduction of the Real Plan in 1994, Brazil has achieved substantial progress in macroeconomic areas: three years of positive growth of per capita income, relatively low unemployment and improved living standards for lower income groups, a sharp and sustained decline in inflation, strong growth of productivity and investment, including foreign direct investment, and renewed access to international capital markets. These facts show the promising potential the Brazilian market holds for Korea in terms of economic cooperation.
Economic cooperation between the two nations should be based on a mutually beneficial and inter-dependent relationship. However, considering the status of Brazil in MERCOSUL and in the international arena, along with its market size and potential purchasing power, it is only natural that Korea initiate efforts at increasing economic ties. Such an approach should be comprehensive, and embrace diplomatic, cultural, trade and industrial cooperation, with a long-term view underpinning all strategy considerations.
Brazil offers great potential as a partner with Korea in many respects. Currently, the industrial relationship between the two nations is very limited in both scale and scope. Thus, the promotion of industrial cooperation between Korea and Brazil represents an area with strong potential to expand and diversify export markets, technology transfer, expansion of bilateral trade and joint resource development. Such cooperation could boost restructuring efforts in the respective industrial sectors and thereby remove obstacles to future growth both countries currently face .
Korea has changed its industrial structure rapidly from one of labor-intensive and light industries to one of capital- and technology-intensive industries. Meanwhile Brazil, with its traditional and basic industrial directions and policy of import substitution, has faced serious industrial and economic difficulties since the 70's, as evidenced by its tremendous foreign debt burden and continuously declining industrial competitiveness. However, since the introduction of Real Plan, the Brazilian economy has stabilized and is increasingly considered as one a large emerging market with strong potential for trade and investment due to new policy directions of market liberalization and privatization. For Korea, Brazil represents not only an opportunity to gain access to the large MERCOSUL market, but also a mutually beneficial and cooperative relationship with diverse alternatives, such as the increase of export-import opportunities, joint development,
technological assistance, direct investment, joint-venture, and project financing.
There are three main potential areas of cooperation between Korea and Brazil: expansion of bilateral trade, direct investment, and joint natural resource development. The first area of bilateral trade comes from Korea's need to diversify and increase the number of its trade partners. Brazil faces a similar need. Brazil currently pursues a policy of market liberalization. This will facilitate market access that will continue and be consolidated with the formation of MERCOSUL. Brazil's new direction also requires diversified trade partners. Korea presents a strong candidate with its proven industrial and strong technology base. Not only Korea, but also Brazil needs to reduce its high dependency on developed-country markets, such as the United States, Japan, and Europe. Thus, industrial cooperation through increased bilateral trade would have clear mutual benefits, but must be pursued through both sides understanding the importance of the relationship and adjusting policy directions accordingly to maintain consistency.
Secondly, direct investment is an alternative area for the improvement of industrial cooperation between two nations. Korean investment in Brazil is relatively small in scale and in committment. However in recent years, Korean large corporations have become increasingly active in Brazil, especially in the automotive, home appliance, and electronic manufacturing areas. As the localization level of parts and components are still low and local content requirements are likely to be higher, these overseas Korean companies need to establish and upgrade local supplying networks. For this issue, the 'piggy-back operation', encouraging Korean small and medium sized suppliers to invest jointly in establishing suppliers in the Brazilian market is very promising.
Third, joint natural resource development holds much potential for strengthening the economic partnership between Korea and Brazil. Korea imports much of the raw material needs of its export activities. Thus, to more effectively weather overseas changes in economic conditions, Korea needs to diversify sourcing alternatives and secure the long-term, stable supply sources. Despite the distance, Brazil is an excellent candidate for that end. Although the core players in the improvement of industrial cooperation are individual firms, the government must play the important role of promoting such cooperation through providing diplomatic and political support. In particular, the Korean government needs to explore the possibility of cooperation not only with the Brazilian federal government, but also with local and regional governments to increase and support industrial cooperation. Specific approaches include investment in large infrastructure related projects, and natural resource development projects that would further a long-term, consistent and viable relationship. For this purpose, strategically focused areas must be identified and supported by tax and other incentives.
In addition, both nations should seek the cooperative relationship in international arenas and organizations, such as the United Nations and the World Trade Organization.
Brazil is currently in the midst of an economic crisis, and the science and technology (S&T) budget has been drastically cut. Korea has also suffered cutbacks in this area do to its own crisis. Compensating for the cutbacks in science and technology budgets through cooperative efforts between Korea and Brazil is an excellent opportunity to pursue closer ties.
It is unlikely that Korean firms will initiate steps to boost international cooperation in the area of S&T cooperation with Brazil, since the cooperation cannot provide immediate benefits. Instead, it is expected that the main actors in the process of the cooperation will be universities and Government-funded research institutes (GRIs). In some sense, Korean universities or the GRIs could be more suitable actors than private firms in developing such ties as a large amount of Brazilian S&T manpower is located in universities and public research institutes.
It is well known that Brazil has a highly-developed aerospace technology base and cooperation in this field is very attractive to Korea. Funding for such projects could be drawn from the growing National Aerospace of Korea. A rich bio-diversity confers on Brazil a great potential for the development of new agricultural products. Korea is interested in developing new functional products in this area utilizing the vast resources present in Brazil.
Currently, two cooperative projects are in progress between the Korea Research Institute of Bioscience and Biotechnology and its Brazilian counterpart. Hopefully, such development can foster the establishment of a Korea-Brazil Cooperative Research Center. Korea is well-regarded for its manufacturing and process technology. Korea could send experienced engineers to Brazilian small-and medium-sized firms to train Brazilian personnel as well as to help with Brazilian attempts to absorb the foreign technology. It is expected that KOICA is suitable since these kinds of activities could be packaged with other kinds of aid programs.
Brazil's geographic location and seasonal changes are the opposite those of Korea. Also, Brazil's territory is 78 times larger than that of Korea and is abundant in natural resources. From the ethnic point of view, Korean society is ancient and overwhelmingly dominated by people of the traditional Korean race, while Brazil is a heterogeneous society consisting of many races with the national character beginning with the conquest of Portugal in the 16th century.
From the cultural point of view, Korea has traditionally been a society dominated by Buddhist and Confucian traditions, while Brazil is a Catholic-dominated society where the influence of the church has been deeply rooted in every corner of the social sector. Korea has many fine arts and sculptures with Buddhist cultural traits, but has only recently been widely exposed to Western culture. By contrast, Brazil has been strongly influenced by Iberian culture from the beginning of the Portuguese conquest. This mix of European and indigenous American cultures draws a distinct contrast with the isolated cultural development of Korea.
The resulting wide difference in ideologies, customs, value system, artistic sensibility requires that Korea and Brazil approach improving ties in view of these wide cultural differences. Both countries can benefit from greater cultural exchange both at the public and private levels. A promising venue to realize such cultural exchange potential is the 2002 World Cup to be co-hosted by Korea. Prior to the next World Cup, cultural diplomacy and informal cultural exchanges between Korea and Brazil should be pursued. In this regard, the Korean government should provide civil organizations and local government authorities with systematic and continual support in order for them to diversify cultural projects such as eco-tourism. In closing, it is suggested to the governments of both countries that the following actions be taken without delay: 1) waver of the entry visa requirement to Brazil for Korean tourists and businessmen, 2) recognition of dual nationality for Korean residents in Brazil, 3) fundraising by both sides to set up more frequent cultural exchanges, 4) establishment of a tax incentive system for individuals and enterprises who are involved in these cultural projects, 5) establishment of a body in charge of providing necessary information and guidance to the local governments and organizations, 6) establishment of a scholarship system to train cultural professionals, 7) establishment of a Korean studies course on the Brazilian side and a Brazilian studies course on the Korean side along with an exchange program, 8) formation of a "Youth Service Unit" under the sponsorship of the Korea Foundation to provide the youths of both countries with opportunities for cultural and job experience in the partner country, 9) inauguration of a "Korea-Brazil Cultural Exchange Promotion Center" in Korea and a "Brazil-Korea Cultural Exchange Promotion Center" in Brazil as its counterpart, where both sides would be responsible for implementing systematic and continued cultural exchange projects.To date, most of Korea's cultural and educational exchange programs have been with North American countries and European nations. However, Brazil, as one of the world's largest and socially diverse countries, along with its increased international importance in the 21century, certainly demands more attention by Korea. Brazil and Korea are nations that aspire to boost their education development to an advanced stage. As is widely known, to achieve the higher stages of development, both socially and economically, human resources take presence over material resources. In developing human resources, Korea and Brazil may seize on many opportunities to pool and share educational opportunities and resources. Korea is geopolitically important in East Asia for being industrial developing country and she has too many relationship with Asian countries. Two counties can exchange informations and technologies because both countries are confronting intellectual competitiveness in the different continents. It is indispensable for Brazil and Korea to take advantage of all available opportunities for educational cooperation, such as promoting greater and closer relations between universities and information exchange among not only institutes of higher learning, but by research institutes as well. It is undeniable that every development of social and economic society has been dependant on a powerful education base. -
Consumer Protection Issues on Electronic Commerce in OECD
The business-to-consumer (B-to-C) electronic commerce on the global network has grown rapidly in Korea since 1996. In 1998, the number of Internet users reached 4 million and the estimated sales turnover of B-to-C electronic comme..
Sung-Jin Kang Date 1999.07.15
E-tradeDownloadContentSummaryThe business-to-consumer (B-to-C) electronic commerce on the global network has grown rapidly in Korea since 1996. In 1998, the number of Internet users reached 4 million and the estimated sales turnover of B-to-C electronic commerce was 42 million US dollars. A great number of new shopping malls have been entering the electronic marketplace and their number was been estimated at about 500 as of May 1999. Electronic commerce allows consumers to conveniently purchase goods and services at a lower cost on the borderless global networks.
However, it invokes new consumer issues such as fraudulent and misleading transactions, misuse of personal information and the difficulty of addressing consumer complaints.
Along with other areas, such as privacy, authentication, taxation and security, the issue of consumer protection has been an important agenda in international conferences on electronic commerce hosted by the OECD since 1997. The related committees in the OECD, in particular, the Information, Computer and Communications Policy (ICCP) and the Committee on Consumer Policy (CCP), have been reviewing the way for dismantling constraints, increasing consumer trust and encouraging participation in electronic commerce.
The CCP drafted the Declaration on Consumer Protection in the Context of Electronic Commerce and submitted it to the Ottawa Ministerial Conference on Electronic Commerce in 1998. In order to develop B-to-C electronic commerce, the Declaration recommended that Member Countries encourage self-regulation by businesses, review existing legislation covering electronic commerce and developing technology as a tool of consumer protection, reinforcing consumer education, and promoting international cooperation.
The CCP is planning to finish formulating the Guidelines for Consumer Protection in the Context of Electronic Commerce by the end of 1999. In May 1999, the delegates from Member Countries reviewed the Draft Guidelines [Revision 4], which included general principles with regard to fair business practices, online advertising and marketing, contract information, confirmation process, and consumer complaint and dispute resolution.
However, it will not be so easy to reach conclusion by the end of 1999, as there is a great gap among the countries' positions concerning several issues, in particular, jurisdiction and applicable laws in international B-to-C electronic commerce. The EU and consumer representatives insist that the existing laws on jurisdiction and other applicable laws, such as the Brussels Convention and Rome Convention, should be applied on electronic commerce. On the contrary, the delegation from the US and business associations said that it was premature to provide such provisions.
This report introduces the OECD's works on consumer protection issues in the field of electronic commerce along with some implications for consumer policy in Korea as follows: First, it is necessary for the government to encourage market-driven self-regulation as a policy direction of B-to-C electronic commerce and to push ahead with governmental regulation as a tool for promoting effective enforcement of self-regulation.
Second, the government should develop implementation policies for the Electronic Commerce Act newly enacted in early 1999 and adapt existing laws like the Door-to-Door Sales Act to the specific characteristics of online transaction. In order to encourage fair business practices, the policy authorities had to develop and distribute model contract terms and revise the Fair Trade Commission's rules for labelling and advertising in the area of tele-marketing.
Third, the government should develop the so-called the 'Internet Fraud Watch Center' in order to monitor marketing practices, provide consumer information and enforce regulatory policies. Fourth, the government needs to reinforce consumer education and awareness of businesses with regard to electronic commerce through the establishment of a 'Consumer Center for Electronic Commerce'. Finally, the government should actively take part in international joint action such as 'Internet Sweep Day.' Through this effort and others Korea could exchange their own experiences and information for effective dispute resolution, and encourage mutual recognition of each legal scheme or decisions with other countries.