INDO-KOREA RELATIONS

(with special focus on bilateral trade

and economic relationship)

A Presentation by Col Ajay K Raina, SM

소개 • Official name. • Taegukgi. • Geo size. • Population. • Size of economy. • Ideology. • Govt. • Domain. • Currency. • Religion. • Capital. • Official Language.

Sogae

Sits at a Strategic Location

Korea Strait

Senkaku islands

Objective

To study the relations between India and Korea with special focus on bilateral trade and economic

relationship.

Paper to Ppt: Scope • Part 1 – Historical perspective

(pre-modern times till 1974).

• Part 2 – Building up of trade ties (1974 – 2009).

• Part 3 – New surge (2009 till date).

• Part 4 – What lies ahead!

PART 1 – HISTORICAL PERSPECTIVE

(PRE-MODERN TIMES TILL 1974)

The First Contact • 48 AD; Silla.

• 4th Century AD; T&T.

• 14th Century – Sultanate & Confucians; Buddhism.

• Cold era of 500.

• Colonial cousins.

• WW II…..Sayonara!

• 1945 – 38th Parallel.

• 1948; trying to be pre-1945.

• 1950 Korean War.

Role of India : 1947-1954 • Newly born babies; course corrections.

• UNTCOK – 1948.

• KPS Menon.

• UN Resolutions:-

– Who was the aggressor?

– Sending troops to Korea.

• Vijay Laxmi Pandit and Armistice Agreement’53.

• CFI.

• NAM & US; Socialist & Capitalist; To one’s own!

• 1962 on to 1973.

Part 2 – Building up of trade ties

(1974 – 2009)

1974 - 2000 • Nix trade till 1974.

• First trade agreement; generic.

• 1978 bilateral x 36.

• MFN.

• 1985 – thaw; double taxation.

• Collapse of a giant.

• 1990/91 – SAP+LPG+LE vs Restructuring post CW.

• 1993 – Narsimha Rao; 1996 – Kim Young-sam.

• 1996 – Protection of Investment.

• 1999 – Kim Jong-pil; PSLV & KITSAT-3.

Turn of the Century • 2004 - Roh Moo-hyun; Long-term Cooperative

Partnership for Peace and Prosperity.

• 2005 - India-RoK Foreign Policy and Security Dialogue; expansion into defence.

• Re-assertion of LE policy with economic dimensions.

• 2006 – Study Group.

• 2009- CEPA.

• New era.

The Net Effect

Part 3 – New surge

(2009 till date)

Moving on: 2010 & Beyond

• Strategic partnership post CEPA.

• Multiple fronts from diplomatic to defence to economic to cultural fields.

• 2010 - Lee Myung-bak.

• 2011 – Pratibha Patil.

• 2012 – MM Singh.

• 70% jump post CEPA.

• Posco – one off.

• Aiming to hit 40 Billion by 2015.

Facts and Figures

• 20 per cent of the Indian small car market share.

• Over 50 per cent of market share for consumer durables.

• US$158 billion vs US$129 billion in the last ten years.

• Tata & Daewoo trucks; M&M & Ssangyong.

Part 4 – What lies ahead?

Analysis of the Potential • Current trade and investment vs potential.

• Korea’s share in India’s global trade volume is less than 3 per cent.

• India accounts for only 1.3 per cent of Korea’s total outbound FDI flow.

• Challenge of a trade deficit; better access for IT, pharmaceutical and agricultural products.

• Healthy recent past and need for a healthier future.

• Negotiations between friends to review the implementation of CEPA and examine the need for upgrading.

• eg the largest number of pharmaceutical products registered with the US FDA by any foreign country; mangoes are world class and so are many agricultural products.

RoK’ Exports to India

5

18

10

22 6

8

14

9

8

%age

Petrochem

Auto parts

Semi conductors

Machinery

Shipping

Wireless eqpt

LCD Devices

Steel

Others

Indian Exports to RoK

11

22

9

16

24

18

%age

Gems/stones

Chemicals

Pharma

Textiles

Agro

Others

Issues : India’s Outlook • CEPA & trade barriers. • Non trade barriers. • Govt policies. • Licensing requirements. • BIS requirements. • Foreign participation in services. • Bureaucratic hurdles. • Clogged judicial system. • Bias in award. • Corruption. • Licensing and Inspection costs

Issues : RoK • Stiff regulatory framework.

• Very high standards and adherence.

• KFDA requirements.

• KPTA – trade secrets.

• Frequently changing labelling patterns.

• Appointment of inspectors.

The Road Ahead

• IT sector – HW & SW.

• Science and Technology – Financials & HR.

• Pharmaceutical Industry – R&D, clinical trials, mutual.

• Broadcasting- Products & Consumers.

• Tourism - History; Buddhism.

• Healthcare- Mutual.

• Construction and Related Services – Tech & Demand.

• HR – Shortage & Plenty

Part 5 – Conclusion • A long association with huge

gaps in-between.

• Suspicion; search for global entity.

• Realities of post cold war.

• Strong complementarities.

• Shifting bases of economies.

• Comparative advantage based.

• Dynamic equations.

• Miles to go!

감사합니다

(Gamsahabnida)