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The Reexamination of Korea's Trade Policy

The Reexamination of Korea's Trade Policy

PARK Bun-SoonKANG Ki-Chun

Dec. 26, 2006

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Multilateral trade vehicles such as the General Agreement on Tariffs and Trade (GATT) and later the World Trade Organization (WTO), the centerpieces of the postwar world trade order, are a key driver in promoting economic liberalization. It is generally accepted wisdom that trade liberalization based on multilateral negotiations is much better in enhancing welfare of a country than bilateral or regional free trade agreements. The benefits of multilateral trade liberalization accrue more to developing countries than more industrialized countries.

Founded as a permanent organization after the Uruguay Round, the WTO has aimed to strengthen the multilateral trade regime. Since 2002, the WTO has pushed forward to conclude the Doha Development Agenda (DDA), a new multilateral negotiation round. The DDA, however, has been stalled for more than two years after its scheduled conclusion date.

In Asia, multilateral trade talks are led through organizations like the the Asia-Pacific Economic Cooperation ( APEC ), the economic cooperation body based on the idea of open regionalism. Its main objective is to promote free trade and investment enhancement within the region. The APEC member nations account for 57.7% of the world's GDP and 45.8% of the world trade volume, making it the world's biggest regional bloc.

APEC did not, however, live up to the initial expectations. The organization had set the goals of free trade and investment for industrialized economies by the year 2010 and for developing economies by 2020. It also introduced in vain an early voluntary sectoral liberalization (EVSL) program to accelerate the trade liberalization process.

Currently, many countries pursue bilateral or regional free-trade agreements in addition to multilateral arrangements. These are intended for achieving a deeper level of integration between the contracting parties, including trade expansion and economic efficiency enhancement. FTA and regional bloc building have become more visible since the 1990s and started accelerating in their frequency in the 2000s partly because of the delay in the DDA negotiations

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