Korea: economy still in high gear; U.S. market access improves

Economy Still in High Gear; U.S. Market Access Improves

U.S. exports to Korea grew by 27 percent in 1987, driven by yen/dollar realignment, Korea's continuing high growth rates, better market access due to lower tariffs and fewer import restrictions, and Korea's efforts to diversify import sources. These factors will continue to have a beneficial effect on U.S. exports, which are projected to increase 20 percent in 1988, reaching nearly $9.7 billion by year-end.

Korea's economy has been booming for the past two years, growing at an annual rate of approximately 12 percent. Predictions are that the economy will grow at a slightly slower 8 to 10 percent pace this year. The won is likely to continue its gradual appreciation, begun in September 1985, improving the competitiveness of U.S. goods in Korea's market.

Politically, 1987 was a year of tremendous change punctuated by massive student-led protests in June, large-scale labor disputes in August and September, and a hotly contested election in December. None of these events had a significant impact on Korea's economic growth. Korea's economic policies, including gradual market liberalization, are likely to continue on the same course under President Roh, Tae-Woo, who was inaugurated Feb. 25.

A number of developments point to improved access for U.S. goods and services. Korea has stated that it will continue to accelerate tariff reductions and import liberalization. On Feb. 23, the Korean Government announced tariff reductions on 319 manufactured goods, including automobiles, cosmetics and toiletries, and film and photographic paper. At the same time it removed import licensing restrictions on 145 items, including passenger cars below 2000 cc displacement, floppy and hard disk drives, and some agricultural products.

The Korean Government has also committed itself to reducing other ono-tariff barriers. The import surveillance list has been trimmed by an additional 27 items. The government will begin to change its "special laws," which embody a number of non-tariff restrictions, in order to ease the impact of these laws on certain imported products.

The situation for investment in services is gradually improving. Life insurance companies can open branch offices, and should soon be able to enter into joint ventures. In advertising, minority equity investment and repatriation of profits is now permitted.

Foreign investment in the more traditional manufacturing joint ventures continues to grow, especially in the automotive, electronics, and medical equipment sectors.

Best export prospects include electronic components and parts, auto parts, chemicals, aircraft and avionics equipment, and synthetic resins. Prospects continue strong for Korea's traditional imports, such as petroleum and related products, steel and iron scrap, hides and skins, and pulp and waste paper.

U.S. exports of telecommunications equipment and computer hardware are increasing due to the recent removal of import licensing restrictions. Telecommunications equipment can be freely imported as of January 1988 and all computers and peripherals will be liberalized by July 1, 1988.

Upcoming trade events include a computer software mission (April), an automotive parts show (May), a construction equipment show (August), and an industrial process controls show (September).

For more information, call (202) 377-4957.

COPYRIGHT 1988 U.S. Government Printing Office
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