MOCIE prepares E-trade for new paradigm of global trade Recently, the Ministry of Commerce, Industry, and Energy (MOCIE) announced that Korea's exports would likely record US$285 billion this year, with imports at US$260 billion. Accordingly, the total trade volume for 2005 is expected to reach about $545 billion. On the occasion of "Trade Day," the Korea IT Times had an interview with Lee Hee-beom, Minister of MOCIE, to hear his views on Korea's export achievements and prospects, as well as MOCIE's strategy and vision for Korea's future trade. Korea to Become the 11th Largest Country in Trade Volume According to MOCIE's estimation, this year's trade volume is expected to reach US$545 billion, thus exceeding the $500 billion mark for the first time in Korea's history. In 1963, Korea's trade figures started at $500 million, and in the last 40 years, the trade volume has increased one thousand-fold. In 2004, the trade volume stood at $400 billion. After only one year, Korea is set to hit a new high of $500 billion. As a result, Korea will become the 11th largest trading country in the world. Of particular note, in spite of the difficult situation such as soaring crude oil prices and Korean won appreciation, Korea's exports has expanded at a doubledigit rate of growth. During the period from 2004 to 2005, the oil price has increased from $33.6 per barrel to $48.9 on average, and the won/dollar exchange rate has moved from 1,213 (Jan. 1, 2004) to 1,060 (Nov. 1, 2005). On the other hand, imports have increased by 16.2 percent due to the exports growth and high oil prices. Accordingly, this year's trade surplus is expected to reach $25 billion. In 2004, trade surplus was $29.4 billion. Steady Export Growth Expected for 2006 Since the financial crisis in 1997, Korea's exports are more influenced by the world's economy rather than foreign exchange rates and crude oil prices, which had directly affected Korea's trade figures in the past. Now the internal factors such as product quality and brand power are carrying more weight. However, in the case of the small and medium businesses that have difficulty in responding to the external environment, high oil prices and unfavorable exchange rates will be a heavy burden on them. Meanwhile, thanks to the improved competitiveness of the mainstream export items, the exports for 2006 are expected to show a similar steady rate like this year. The reasons are: the world's economy growth rate is expected to remain at the same level as this year's 4.3 percent. Japan and Europe will be on the recovery, and the United States and China will be a little slowed, and so as a whole, the world economy will show not much difference in growth rate. Also such key industries as semiconductors, automobiles, and shipbuilding will continue to show a steady growth in exports in 2006. Change of Paradigm in Global Trade The paradigm in international trade is rapidly changing. By capitalizing on global outsourcing and foreign investment, the global networks are being intensified. Through global outsourcing of production factors, the corporate supply chain is being globalized, consequently bringing international division of labor. Even more, due to the organic combination of the production systems between nations, global companies mutually compete and cooperate simultaneously; that is to say, representing the importance of "Copetition" (cooperation + competition). Other important changes are the intensified economic blocs that originated from regionalism and the emergence of huge new economic circles like BRICs. Meanwhile, in an effort to strengthen the multilateral economic cooperation by means of free trade, the APEC summit for 2005, has adopted the "Busan Roadmap" confirming the Bogor Declaration, which aims to achieve liberalization of trade and investment by 2010 for advanced countries and by 2020 for developing countries. Finally, another significant change in global trade is the emergence of e-Trade, including the global e-marketplace and trade automation networks. This change is being made possible by the fast development of the IT industry. MOCIE Prepares for e-Trade Era To cope with the drastic changes in the global trade environment, MOCIE is preparing diverse trade promotion measures, focusing on the enhancement of competitiveness of our products, supporting first-class mainstream items, and exploring new markets and niche markets such as BRICs and the Middle East. It is also preparing for the era of e- Trade by means of successful construction of an e-Trade platform. To keep up with the liberalization trend of global trade, MOCIE is stepping up opening of our economy by means of the FTA (Free Trade Agreement) expansion and DDA (Doha Development Agenda) negotiations. Besides, MOCIE plans to expand the range of export insurance undertaking in order to strengthen the export infrastructure, and also makes efforts to mitigate the adverse effects coming from the trade liberalization by amending the related trade laws. Investment Environment Explanation Meeting at APEC In line with APEC meeting for 2005, which was held in Busan last November, MOCIE has hosted a "meeting for investment environment explanation" for two days on November 16 and 17. About 800 experts and overseas businessmen from 17 member countries have participated in the meeting, contracting an MOU of US$510 million, and conducting investment consultations worth US$220 million. This explanation meeting has aimed to attract foreign investment by informing foreign businessmen of the investment merits and business environments of Korea.