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>> Welcome and thank you all for standing by.
At this time, I would like to remind parties
that your lines are on a listen-only mode.
Today's call is being recorded.
If you have any objections, you may disconnect at this time.
I will now turn the meeting over to Linda Abbruzzese.
Thank you.
You may begin.
>> Thank you.
Good afternoon, or good evening for those of you joining
on the East Coast and the West Coast.
Thank you for joining us for a webinar
on Korea Free Trade Agreement.
I am pleased to know that we have more
than 50 people registered for this webinar today.
I am Linda Abbruzzese, International Trade Specialist
for the Marketing and Communications Office
for the US Commercial Service at the Department of Commerce.
This webinar is being brought to you by the US Commercial Service
and I'd like to welcome all US Commercial Service
and Foreign Commercial Services, participants joining us all
across the USA to learn about Korea
and the Korea Free Trade Agreement.
In a moment, I'll turn the presentation
over to John Fogarasi, Minister Counselor
of the US Commercial Service in Korea and Stan Phillips,
Director, Agricultural Trade Office
of the American Embassy in Seoul, Korea.
All speakers will be available at the end of the presentation
to answer your specific questions.
Contact information will also be provided
at the end of the webinar.
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Now because of a large number of participants online,
we now have more than 25.
It is not logistically feasible to take all your question.
However, we do invite you to type in questions on your screen
as they curfew during the presentation.
As you can see on the right hand side, there is a box
at the bottom of the screen where you can click and type
in your question at anytime during the presentation.
We will compile the questions and present as many
as time allowed after the webinar, after the presentation.
Typed questions which are not answered during the webinar due
to time constraints will receive personal answers via e-mail
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In addition, all listeners can be provided with information
for any individual follow up counseling
or export assistant they need
to pursue opportunities in this market.
For those of you who just joined us and logged in,
you can still join in our internet conference.
Now, I'd like to introduce live online from the embassy
of United States-Korea, John Fogarasi,
Minister Counselor US Commercial Affairs
of Embassy of the United States.
John, thank you for joining us.
>> Thank you Linda and thank you
to all the participants on this program.
And good afternoon and good evening as the case maybe.
Here in Korea and of course you're all seeing a slide
that shows an evening scene and in fact still a little bit
on the dark side here in Korea.
It is right now 7:00 in the morning and we're calling
from a crisp first snow morning here in Seoul.
And we are here ready with my staff
to provide the general information regarding Korea,
provide an introduction and hopefully interest companies
to participate in a number of our commercial service programs.
Let me first off just provide a general overview.
I'm going to go to the next screen here.
[ Pause ]
There we go, South Korea today.
South Korea is a sophisticated high-tech dynamic country.
It's in fact the world's 13th largest economy.
It has a global trade that has really surpassed
over 700 billion dollars and is booming ahead.
It is very much a trading-oriented country
that has strong relationships with the US going back
in a number of decades.
It has particular strength in the logistics and IT sectors.
One fact that I think is a particular interest
to you listeners is, the 86 percent
of Korean households have access to the internet.
In fact, that level makes it one
of the most wired countries in the world.
Korea has developed very strong strengths in the IT area.
You're probably familiar with companies
such as Samsung and Hyundai and LG.
And these are familiar to US consumers, the cellular phones
or the flat screen monitors
and this is really only the visible tip
of the Korean tech iceberg.
I encourage all the listeners here
when they have an opportunity to come to Korea
and experience this, this sophistication here
that you would immediately experience as you step-off
from the airplane into one of the most, let's say,
easy to traverse airports in the world.
Let me move on to the next, scene leaders,
scenes from the modern economy that I was referring to.
Upper left hand corner is the World Cup soccer
that Korea hosted here a few years back, 2002.
Korea in fact has a number of other world class events
that it will be hosting the Asian games,
as well as Korea recently won the fight for World Expo.
In the center, you see high speed train in Korea.
That is very similar to the Japanese bullet train,
it's called the KTX and it runs right through the heart
of the country from the capital Seoul right down on
to Busan in the South.
And the final picture
in the lower hand right corner is Seoul at night.
It feel a little bit stylized I have to say.
It's a time-lapse photograph showing traffic moving
through Seoul.
Well, it is a special time-lapse photograph
because traffic unfortunately,
in the city of 14 million doesn't quite move
as smoothly as one would like.
And that's a long time-lapse to show traffic moving as quickly
as that picture would depict.
Let me move on to the next screen here.
Just a little background on Korea.
The term miracle certainly applies.
Korea 40 years ago, had a GNP per capita something equivalent
to Nigeria, hundred dollars per capita.
And today, it is exceeding 20,000 dollars.
That is a steep, steep development curve
that Korea has gone through.
That obviously has been the huge attraction
for so many American companies and entrepreneurs.
At the same time of course,
such a rapid development has had it's own social impact
when you have changes of such rapid dimensions.
And so, Korea has have to deal
in both the social and political sense.
But Korea today, is a, as I initially stated,
sophisticated economy, a stable political setting and a home
to many US companies, the Fortune 500 companies,
it's something that I'll go
into in some depth here in a moment or two.
In terms of the growth today, it is 4 plus.
In fact, the latest indications are that it will be 5 plus
in terms of economic growth for the Korean economy
and the trade side, the growth and trade is also booming.
It has extremely strong trade relationships,
both with its neighbors as well as around the globe
but of course especially, taking advantage
of the relationship with China and Japan.
And then moving down to trends, the, let me just move
over to the next frame-- oh yeah, trends, thank you.
We're going back and forth.
I'll start up with US trade [laughs].
Expect strong investment outside Korea.
You know, the Koreans are very bold in terms of their activity
and I'm sure that the listeners here recognize the penetration
that Korea has made in the US,
namely with the visible products,
name recognizable products, Hyundai, Kia,
Samsung, LG, et cetera.
Okay, let's move on to the next frame here.
Let me kind of bore into a little bit
on what their relationship nowadays with the US.
And it is very impressive, the relationship
with the US is significant in terms of even the numbers
of 7th large export market, that's larger
than France, Holland or Brazil.
And the most recent figures we have is 32-1/2 billion
in terms of US exports.
And as the slide notes, it's up to 17 percent
from the previous year.
It is moving ahead at about that clip for 2007.
Let me also mention a few other points regarding the--
just for comparison sake, this is now comparing Korea-US
with respect to US relationships around the world
and the Korean market here
for the US is the 6th largest high-tech market
and the 5th largest agricultural market.
My colleague here will be talking
about the agricultural components here
in a moment or two.
And then at the bottom is the United States
with the Korea's second largest meeting
that the two-way relationship from the Korea--
from Korea's perspective, the US is one
of the most important trading relationships it has
within its economy.
Next slide, please.
Now, taking this one step further, looking at the kind
of trade that is going on between the US and Korea,
a very interesting fact is that 40 percent of all
of the non-Agricultural products that are exported
to Korea can be categorized as advanced technology product.
This is a definition that comes from the Department of Commerce
and they have ranked these products and so,
40 percent of all of our trade is
of a very sophisticated nature.
And what that means is that, with the strengths
that the US had in such areas as electronics
and in advanced manufacturing and in materials,
is that Korea is a market that's able to absorb as well as add
to in terms of joined ventures and in terms
of developing further R&D.
And we'll talk about that in a minute about R&D here in Korea.
And just to conclude on this slide, US exports with ATP,
Advance Technology Products are up 24 percent in 2006.
Next slide please.
Yeah, this slide maybe a little bit difficult to see
for some folks, but this is really meant
to say one basic site.
The top 10 exports to Korea are in a very diversified area.
They go everything from energy to aircraft
to optical equipment, chemicals, plastics, and then of course,
in the transportation sector.
The point here to or to remember is
that our trade is very diversified.
And it covers the entire spectrum
of US products and services.
Next slide please.
I mentioned investments, US investments in Korea.
This I think is another strong indicator of the faith
and credibility that Korea has, as I mentioned earlier,
most of the Fortune 500 companies have presence here,
significant presence and just as an indication here,
City Group has recent acquisitions,
a few years ago we are 2.7 billion
and in buying a major stake here
in the financial network here in Korea.
And this is a Branch Banking outfit,
operation not just a merchant banking.
General Motors has a major production here.
It's a platform for General Motors for much
of their marketing bank into China.
They produce the GM Daewoo vehicle here and it's then sold
onto China in kit form and that supplements also some plants
that GM has that are currently underway
in producing vehicles within China.
Gale Corporation-- Gale Corporation, you see,
a lovely picture of Songdo, there we go.
Songdo new city project.
This is a planned city that is near the Incheon Airport
in fact, it is-- the Incheon Airport is a good 50-55
kilometers outside of Seoul.
And as I've mentioned, at the very beginning
when you arrive here in Korea, you're pleasantly greeted
because the airport is very friendly, consumer friendly.
But they have devised
and planned a major mix used meaning residential
and commercial city that is today the largest real estate
development, private real estate development in the world.
It's 25 billion dollars and this is done in cooperation
with United Technologies and POSCO
who is the largest steel maker in Korea.
And also by the way, Koreans love golf.
And so, one of the big drawing points here has been
to develop a Jack Nicklaus championship golf course.
Next slide please.
Recently, Kimberly-Clark established an R&D Center here.
The reason is that, I felt that this was important to mention,
is because Kimberly-Clark
with Global Operations still only has major R&D facilities
in the US with the exception of Korea.
And of course, I raised the question
with the Kimberly-Clark folks as to, what was the motivation
for setting up here in Korea?
And I thought that the President CEO,
Tom Falk's answer was captured I think what is the,
one of the key values here for Korea.
Now let me read this.
"The Korea has world-class scientific talent
and infrastructure.
It also has sophisticated consumers,
consumers who can give us new product insights,
who is also a culture that bridges the best of the East
with an understanding of the West.
This creates a highly favorable climate for innovation."
I felt that that, that really hit so many of the aspects
that are an attraction for US exporters.
Sophistications, scientific talent,
the sophisticated consumers here and then also an understanding
of how business should be done between East and West,
and let me just make one more point on this.
Korea sends more students to the United States
than any other country in the world.
And what that has resulted in is setting the mindset here
in Korea for how to deal with American business,
how to deal with American customers, et cetera.
So, so often when I go in and I visit Korean companies,
their CEO, or their board have graduates from Stanford,
from University of Texas, from Michigan, et cetera.
And it's an immediate connection and moreover,
the important part is,
they understand how to do business well.
Next slide please.
[ Pause ]
Thank you.
Let me just then bring it right down to the kind
of the hard core of what will make it a successful,
what exporters can expect
and what the formulas for success are.
Well, first off, US products here come in with a big plus.
They recognize for quality price and innovation.
We just in fact, tomorrow will be the opening of Toys "R" Us.
This is their first outlet here in Korea and Toys "R" Us
of course has a great reputation within the US
and there are throngs of people who have gone to the US.
They go on travel shopping tours and have been seeking something
such as Toys "R" Us here in Korea and of course the focus
of the management there has seen that opportunity and is opening
up their first outlet right here.
There is upscale affluence here; vehicles that are driven
on the road are large sedan-typed,
limousine-typed vehicles literally.
Unlike what I had imagined, the streets scenes would be,
before I came to Korea and that just again is another indicator
of a fair bid of a disposable income in this country.
The third point, diminishing resistance to import a good,
that is very, very important.
Korea have had a negative reputation in the past
of inward-looking, xenophobic,
essentially a hermit-type kingdom
where they were playing the world markets on exports,
their exports but were very resistant to imports.
That has completely changed.
You have a very broad scale, up scale, view points,
name brands coming in from the US, as I said, and of course
as you walked down the shopping mall, it would be as if you were
in any major capital in the world.
You have a craving in fact, for,
for foreign products here in Korea.
Then a question of the basic pocketbook,
the Korean currency here has appreciated over the last,
let's say about 18 months.
At least 8-9 percent and that makes the,
in turn the US dollar, 8-9 percent are more attractive.
The second from the last point, marketing channel, SMEs,
Korean past has had a reputation of being run
by the majors, the conglomerates.
That has changed.
The conglomerate clearly still have a lot of influence.
But by virtue of the entrepreneurial push here, SME,
small and medium sized entrepreneurs are prevalent.
And in fact, are great matches for small US companies who want
to set up here and also, the SMEs have their contacts
with the majors so that, that is a channel or conduit to get
to the major companies.
And last but certainly not the least the Korea-US Free Trade
Agreement wherein we anticipate a major leap
in our trading relationship more than terms of the intensity,
broadening it and of course making US products all more
attractive here in Korea.
And I'll be talking about that in a moment.
Now, let's turn to some of the challenges
that US products have here.
Koreans are survivors.
They have developed their economy here
between two roaring neighbors,
one being Japan, the other one China.
And now the result, they have developed their own style
of doing business which is namely a hard bargain.
And so, American exporters should be prepared
for some intensive discussions, negotiations and moreover,
at times, even after the deal has been concluded,
Koreans will continue to seek confessions.
Korea is a regulated environment for doing business.
The free trade agreement has addressed a number
of the regulatory issues that we found to be inconsistent
with international standards
but like most sophisticated economies,
regulations must be abided by when it comes
to either telecommunications or even the ingredients
that go into pastries.
So all this needed obvious,
very close attention from the US client.
Intellectual property rights are honored here, however,
may I go back again [laughs] thank you, thank you.
Anyway, the protecting the intellectual property rights is
a key component namely because the Korean framework,
legal framework here is different
from the American protections
for intellectual property rights.
It doesn't mean that it's any less but it has a system
where it's the first to file.
So I strongly encourage, in fact
in our website we have a special toolkit
for intellectual property rights which essentially says,
"You're just doing business here, start right from square 1,
get those intellectual property rights secured here in Korea."
The next point is to cover the business relationships.
Business is nothing new for any exporter, I'm sure.
But obviously it is a key point, it's not a bad idea
to do a little bit of homework with respect
to the Korean customs, in order to and Korean goes a long way.
And then the last two points here quickly,
obviously Koreans have their own way of packaging things and so,
a sympathetic ear as opposed to, this is the way we do it
in US will also help add to that formula
for success here in Korea.
All right, let's go to the next slide.
I have mentioned earlier the Korea-US Free Trade Agreement
and Secretary Gutierrez was here last December.
His statement I think is really, is the definitive statement here
of the importance of this agreement
or the most significant agreement,
trade agreement for us in 15 years.
It covers every single aspect of our trading relationship
and it is the-- it's considered by the folks,
the US trade representatives office and others,
well familiar including independent study
by the International Trade Commission
to be really the gold standard for free trade agreement.
And, when I referred earlier to Koreans driving a hard bargain,
the fact that this took over a year to negotiate,
and it was a day and night affair,
I think it speaks for itself.
This was a very, very tough agreement to reach and namely
because the US market is relatively free
and the Korean market as I've mentioned earlier,
had this heritage of being walled off and closed off.
Well, I think we can all be very proud of this agreement
as it had broken a virtue, all the walls down.
And now we're on an equal frame here.
Next slide please.
I just quickly what, what does the KORUS
and by the way KORUS means Korea-US Free Trade Agreement.
What does that mean?
It will reduce tariffs for thousands of US products,
many of our products on average about 8 percent
and those would go down to zero.
There maybe some, depending it
from a particular product itself, it will have a phase
out of anywhere from immediate to two year
and if there are obviously some other products
that are exceptions that will have longer phase out period.
The result, 25 and 50 percent increase in US exports.
That's a stunning figure.
There's no real timeframe to that but I would--
my best estimate on that would be, that I can see,
is moving from the 32 and a half billion dollars and increasing
that another 16 billion over the next three to four years.
In addition to the tariff productions,
it has made doing business in Korea much easier,
clarifying regulatory framework, pushing the Koreans
to international standards,
and also ensuring stronger transparency in all
of the relationships, all of the trading relations that we have.
Now, in the next slide, it says,
building in a strong relationship
because we indeed do have a very strong relationship.
And the reason that we feel very optimistic about the impact
of the FTA is because it brings together everything I have been
saying earlier, meaning this is a very sophisticated market
and in essence we are growing to ideal trading partners together.
And even the statistics will show
that there're no two trading partners
in the entire OECD listing of countries that are as close
to each other in R&D spending as between Korea and US.
And as I mentioned also, there's a strong flow
of education growing between the US and Korea.
So again, we are in sync with each other and in essence,
I think we can bring out the best in each other.
Next slide please?
Just to touch on the point regarding Korea being
for major players.
Yes Korea has a reputation for the big players in Korean areas,
the world's largest fake carrier.
Hanjin is one of the world's largest shipping companies.
Yes, it would be great and we,
our job is to help American companies get the foot
in the door with the big guys.
At the same time, we want to see all levels, all scales,
penetrated here because we feel
that there's a diversification here that can be taken advantage
of here in the Korean market.
So the answers to that is SMEs are important here
and we're looking forward to helping US SMEs deal
with Korean SMEs equally.
Next slide please.
[ Pause ]
I'll just going to skip through this very quickly.
These are just some highlight points.
The market size for defense-related products close
to five billion and growing significantly is one
of the most significant in defense markets
for United States in the world.
On aerospace, the major player is obviously are here
with the Boeing.
And in fact, Boeing had major sales here imminent to a number
of the major players here, very strong in the market.
But at the same time, let me mention
that having recently participated
in the Seoul Air Show, there was the entire scale
of American Aerospace products right
down to basic instrumentation packages from small
to medium sized companies.
Next slide please.
Healthcare and beauty.
Interesting fact that somebody did analysis and I believe
that if Koreans spend per capita more
on upscale cosmetic products than any other country
in the world, then that also brings together a number
of things that I've mentioned earlier
which is disposable income, their interest in main products
to pick items, et cetera and that, I mentioned the fear
as an indicator of-- in general, consumer products.
Next slide please.
[ Pause ]
IT, this goes without saying, huge markets.
And we've got growth here in a range of 8 to 10 percent.
US is a significant player here on the market with the wireless
and next generation products.
RFID by the way is a very strong component here and is an area
where Koreans and the US together worked closely.
And the next slide is, let's try information communication,
thank you.
Okay, tourism and education, 10 million travelers come back
and forth between the US and Korea.
And it is a hot market with very good connections now.
There're direct connections by the major American airlines here
on Northwest [inaudible] and United
and Delta all have routes coming in here and then Korean Air
of course has direct flights to many of the major US cities.
On education, also something I've mentioned earlier,
the strength here of the relationship,
parents encourage their children.
This is their ideal to attend an American--
it could be an American high school
or could be an American college
but there're significant relationships going on here
between our two countries when it comes to education.
Okay, and let's-- I think we're coming to a conclusion here.
I've mentioned IPR too, with-- repeating, there is our website
and I encourage those who have any questions
about the intellectual property rights to look at that website.
Let me now quickly turn it over to Stan Phillips,
Director of The Agriculture Trade Office here,
a colleague who will talk to you about the agricultural side
of the prospects here, Stan?
>> Thank you John and thanks to the Commerce Department
for including USDA in this webinar this morning.
It's a real pleasure to join you.
I just like to take a few moments to go over a couple
of resources that are available for US food
and agriculture exporters
to take advantage of the Korean market.
The slide that you see before you right now is an overview
of the Foreign Agricultural Service website.
And you can see the address
of that website is www.fas.usda.gov.
And there's a wealth of information on our website
about the US-Korea Free Trade Agreement.
You can find out how the agreement benefits
individual commodities.
You can also find out how the agreement benefits each state.
I think we have almost 48 fact sheets for most
of the states now up on our website.
And I would encourage you to take a look at those
because I think you will find
that it covers almost any product that you were interested
in and how it will be treated
under the Korean-US Free Trade Agreement.
With that, I'd like to encourage you also to take a look
at our attache reports which you'll find lower
down the screen on the USDA Foreign Agriculture
Service website.
Under at the attache reports, you will see reports
from around the world from our offices
in agriculture trade offices.
The one that I'd like to point out to you in particular,
is our exporter guide.
That exporter guide is one of many reports.
But it really encapsulates many of the key points
for entering the market in Korea with the food
or agricultural product.
If we can move to the next slide there.
This is the slide that shows the various commodity, fact sheets
and state fact sheets that are available on the FAS website.
As you can see, there's quite a wide variety there.
And you can drill down into the state fact sheet.
And I think you'll find that there's quite a rigorous review
of the various benefits that the FTA will provide
on a state-by-state basis.
Next slide please.
And this is our attache report section.
As you can see there, we've highlighted the exporter guide
for the republic of Korea.
And they said there's these many other reports as well
that you might find of interest are FAIRS report or food
and agriculture import regulations
and standards is also a good report to take a look
at to see the types of certifications
and labeling regulations, et cetera, that the Korean Food
And Drug Administration and the Korean Ministry of Agriculture
and Forestry have in place to regulate the imported food
that comes into Korea.
In addition to these reports that are available
on the FAS website, there're several other resources
that are available to US food and agriculture exporters.
State and regional trade groups are out there to assist you.
I think most food
and agriculture exporters are aware of those groups.
There're also many trade associations
who represent particular commodities
and we have nearly 30 trade associations
that have some kind of activity in Korea.
Many of those, almost 15, have local representatives
who are working to develop the markets
for particular commodities.
Then a couple other things
that we have found are very good tools
for entering the market are trade shows here in Korea.
The one in particular that exporters find
to be very useful is the Seoul Food, and Hotel Show
which will be held May 14th through 18th in 2008.
It's the largest food-related trade show in Korea
and it's endorsed by the US Department of Agriculture.
The agriculture trade office that's here
in Seoul will be organizing a US pavilion at that event
and we would encourage you to contact us
if you are interested in participating.
We would be able to help you with the arrangements to come
to the show and assist you in making contacts
with Korean importers while you're here.
We also have several other trade shows which are focused
at particular commodities like wine and spirits.
Seafood industry have their trade show in November
and the US agriculture trade office that's here
at the embassy have a pavilion of both of those shows
and we would encourage you to consider making use
of those shows to enter the market.
Let's see, I think let's go to next slide.
This is our agriculture exporter guide
and this is really an overarching report
that covers many of the points that if we have an hour,
I would get into, but I would encourage you
to take a look at this report.
It has a detailed market overview
of the Korean agriculture and food market which,
as John mentioned earlier, is the fifth largest market
for US agriculture products.
And a growing market.
The agriculture exporter have guide has section
on exporter business, tips which gives in details about standards
and regulations, tariffs, not only the current tariffs,
but also the tariffs that will exist after implementation
of the Korea-US Free Trade Agreement.
And it also has this section on market sector structure
and trends which gives in detail on food
and nonfood retail markets in Korea, which may also be
of interest to non-agricultural product exporters
if you're targeting the retail market in Korea.
The report also covers franchising,
family restaurant chains, coffee shop chains and a variety
of different retail markets that may be
of interest to US exporters.
So, with that I think we'll just conclude by saying
that as the fifth largest market for US agriculture products
and a market that's sure to grow
after the Korea-US Free Trade Agreement is implemented,
we'll encourage all of you who are interested
in exporting agriculture products and food products
to consider the market.
And if you have any questions,
please contact the agriculture trade office here Seoul
and we'd be happy to try to assist you
in entering the market here in Korea.
Thank you.
>> Thank you Stan and thank you John for your presentation.
Now, we'll have a sampling of more
than eight questions submitted by our participants.
For those of you whose questions we aren't able to get
to during this presentation, if you left your e-mail address
when you registered, you can expect a reply via e-mail
from one of our offices shortly.
Well I guess the first question is,
from James Van Huese [phonetic].
The question is, when will the tariff decreases go into effect?
>> Good question.
Let me just backup a little bit and mention how these FTAs
or what the process is.
First, one goes through a period of negotiations,
that is between the Korean Government
and the US Government, in this case the United States Trade
Representative's Office, and because of the special instance
with fast track, there was a clear deadline
which was a big benefit to the negotiators.
They really have to conclude the negotiations
or miss the window of opportunity.
That was done at the-- last summer that was concluded.
The next phase is to get ratification from both
of the legislatures, the US Congress in our case
and the National Assembly.
So, that process is still underway.
Both countries are going through political elections right now
and campaigning and so, I think they're looking
for the appropriate window
when folks get focused on these issues.
We hope to have the FTA addressed
by the US Congress here in early spring
and the National Assembly here in Korea to,
shortly after the beginning of the year, take up that question,
that proposal, and hopefully by the middle of the spring here,
we should have, we should be in a position here
with both legislatures ratified.
At that point, if the, many
of the tariff reductions then decrease
without any question was, would go into effect immediately.
There are somewhat delays of course and it just depends
on a case-by-case basis but the vast majority would go
into effect immediately.
>> Thank you very much John.
The next question is from Judith Nelson.
She would like to know what kind
of advantage does a locally-made product hold?
For example, our special purpose machine has a Korean
made version.
Is there likely to be an automatic edge and tenders
in local government purchases
for locally manufactured products?
>> It's another very good question.
Locally-manufactured products, meaning their product
that is designed for the Korean market and in this is,
as I understood it correctly, manufactured here in Korea.
Did I understand that question correctly?
>> Yeah, meaning that if they have an advantage,
the locally-made products and,
for example special product machine has a Korean made
version, is there an edge and tenders in local government--
>> Oh I see.
Yes, yes.
>> For the locally manufactured--
>> There are local procurement regulations.
And in certain sectors, there is an edge for local products
as there are in the instance in the US
where a state reserves a right to have, let's say,
incentives for or benefits for locally produced products.
There are so many international tenders that Korean seek
where the American product is on the same playing field,
level playing field as the Korean product.
And that would be, let's say that that's majority of cases.
There are of course
as I mentioned earlier particular instances
of exceptions and we'd be happy to look
into that for the inquirer.
>> Great, than you very much John.
Lin Weng [phonetic] has a question,
he would like to know how well the free trade agreement affect
the education and travel industry?
>> Sure. That's another good question.
It doesn't affect it directly.
While services obviously are going to be the relationship
on services in the broad scale are made more transparent,
doing business and services is made much easier.
What we see, the benefits, is in two ways.
One, stronger overall relationship with Korea,
meaning a halo effect that as the relationships
on the trade side intensify, that means greater interaction,
an interplay between Korea and the US and all the more interest
in American educational institutions.
Secondly, another benefit is the kind of a positive trend here
between the US and Korea.
Korea is now eligible for what's called the Visa Waiver Program.
So this will mean a much easier ability of Koreans
to visit the United States, travel tourism and again,
that will have spinoff effects
to assisting the greater interest of families
and students to come to US educational institutions.
>> Okay, thank you.
The next question is from Michael Wagner.
He would like to know how does healthcare spending
in Korea compare to that of the United States?
>> Great question.
I'm going to call upon my colleagues on,
in the healthcare sector here to respond to that question.
I'll just repeat it for them here.
Okay, Mr. Erik Hunt will be on the line here
and Commercial Attache and question was,
how does the Korean healthcare spending compare
in terms of other countries.
Erik?
>> Good afternoon.
I would like to say that with the healthcare sector,
it's one of the largest economic sectors here in Korea.
And depending on the exchange rate, you're looking
at a National Healthcare Insurance Budget between 28
and 30 billion US dollars.
And roughly speaking about 5 percent would be towards
medical devices.
You're looking at the market side at about 2.6 billion.
You are looking at about 84.5 billion dollars expenditures
in pharmaceuticals.
As it is public health, there is significant issues related
to having every product both medical device
and pharmaceutical, registered within a pricing register.
Everything is controlled on those price list, and of course
and in most countries, all medical device
and pharmaceutical companies most have local representation
to deal with Korean Food
and Drug Administration regulatory issues, the insurance
and also the registration of the product and of the pricing.
Those markets are improving and there's going
to be changes brought on by the free trade agreement
that will be streamlined in things
like distribution channels, making it easier
and less problematic for companies to deal
through the multiple layers of distribution that you have
in a public health system.
Thank you.
>> Thank you very much Erik.
Our next question.
>> Go ahead.
>> Thank you.
The next question I have is from Sean Hanslik [phonetic].
He would like to know, do we really have any information
or do you have any information regarding clinical trials
in Korea?
>> Clinical trials in Korea, that's the next question
and perhaps I'll hand it right back to Erik here.
So the question was what do we know about clinical the trials?
>> The report of Korea for a number
of years has primarily been working
on what we call the generic pharmaceutical products.
And most of those products are approved
on a bio-film food basis,
documentary and laboratory tests.
So, very limited clinical trials are conducted in the area
of pharmaceuticals and medical devices in Korea,
because the market is not necessarily an innovative market
for the generics market.
The free trade agreement
and other economic factors are forcing the Republic of Korea
to move towards a more innovative approach
and we understand that just like Kimberly-Clark,
there are other pharmaceutical companies from the United States
on the innovative side that will be coming to Korea with respect
to conducting clinical trials on pharmaceutical launches
for products here in the Republic of Korea.
So the market for clinical trials, though,
in its infancy is going to expand probably
within the next year or two, primarily as a result
of the economic factors and the free trade agreement.
So sit tight and that the companies
who are developing the clinical trials or the people
who are supplying the products to generate the information
on the clinical trials,
that market is going to be increasing.
Thank you.
>> Thank you Erik and that was Erik Hunt who's the Commercial
Associate of the Commercial Services Embassy
of the United States, of Korea.
Next question I have here and we still can take questions.
We still have some time.
It's from James Van Huese.
He's like, he asked when will the tariff-- excuse me.
He asked, when will the tariff decreases go into effect.
And is there a document
that identifies the harmonized code that are effected?
I think we already answered the first part of the question.
The second part, is there a document
that identifies the harmonized codes that are affected,
what is that document?
>> Right, there is a book or let's say the grey alignments
in terms of what is affected.
But we're happy to do a little bit of research
on the gentlemen's behalf.
And also we could add in there a few more things
about what we think of these prospects are
for that particular product.
So we delighted to look into that forehand and we just need
to find the, you know, what the particular product category it's
in then we'll take it from there.
>> Great, great.
Thank you very much.
Arnie Yas [phonetic] has the question.
When is it expected that the free trade agreement will
become effective?
>> Right. Yeah.
So again, I mean we're talking about the legislative calendar
and we are hoping, our anticipated date here would be
at some time in the early spring, early to mid-spring.
And so, that puts us at March-April timeframe and,
but at the same time, you know,
these things are rather unpredictable.
So we can't be certain.
But we are aiming for that kind of timeframe.
>> Thank you John.
And just to answer some of your questions
about the PowerPoint presentation slides
from this webinar, yes, we will have this available as well
as the taping of this webinar as well as the transcript
and that will also be given to you, that information
where you can find this information will also be given
to you at the end of our Q and A session.
We still have a couple more questions.
And I'd like to finish out the remaining questions
for the webinar presentation.
This question is from Steve Dew [phonetic].
He would like to know how,
does the free trade agreement treat textile
and do you anticipate any reduction in tariff rate
in the USA on Korean fabrics?
>> Okay, let me hand that one over to Mr. Eric Olsen.
This does of course, textiles has always been a very,
since the very end and there are, as I recall, the chapters
on textiles to be purely extensive.
So I think Mr. Olsen here will give you a general answer
and then we can just get into the specifics
on a one-on-one basis with the caller.
But here's Eric.
>> Thank you very much.
Yes, as John mentioned, textiles are definitely a chapter
in the FTA and there are-- the FTA will be impacting the types
of quotas and tariffs that face textile products.
So what would be helpful for us
with the individual questionnaire,
if they could send us in further information on what type
of textiles they are referring to,
because the different rate changes depend
on what you would be exporting to Korea.
So if we get some further information from you,
we'll be happy to look into those changes and you know,
definitely get the answer back to you.
>> Right, thank you very much.
That was Eric Olsen who's also Commercial Attache,
for the US Embassy in Seoul, Korea.
Okay, we'll go on with the next question from,
looks like Virginia Berry [phonetic].
She would like to know, do you have any specific regulations
on vitamins in South Korea, including label requirement?
>> Vitamins and labeling, okay.
We have one of our local specialists,
Yoon Chiow Chei [phonetic] coming on the line right now
who will provide an answer to that.
The question was vitamins in any special labeling requirement.
>> Vitamins of course, on their health function
on food sector here in Korea.
So it is regulated on their health function
or food of code, food act.
The labeling or requirement,
is there are several labeling requirements, but the first,
the major one is it described, and scripted in Korean.
And I have a regulatory requirement
for our health function of food,
which include the nutritional supplement in a document.
So for more details, I can e-mail you the whole,
that regulatory procedure.
In Korea, import notification, which is a kind
of a pre market license, is required, by Korea Food
and Drug Administration.
We call it KFDA.
So I'm going to send you the whole, the major requirement
by KFDA of paying the import notification.
>> Okay great.
Thank you very much.
>> Thank you Yoon Chiow.
>> Yes, thank you.
Just a few more questions I'd like to ask before we end.
This is from Paul Hefgy [phonetic].
He would like to know, is there a health product specialist
who can help us find a Korean distributor
for orthopedic soft goods and splints?
>> Orthopedic?
Could you repeat that last part again please?
>> Sir, orthopedic soft, goods and splints.
How can--
>> Sure.
>> How can someone find a health product specialist
or a specialist?
>> Orthopedic product-- well and in fact,
Yoon Chiow was the person,
she's really the individual who's a rep
on top of the market.
She in fact has been working globally here
and she had just returned from Medica,
the world's largest medical show, and working on behalf
of the US companies, leaking them together
with Korean companies.
So, she'll go anywhere in the world [laughs].
Let me put Yoon Chiow back in the line and here,
the question is, can you help a client find an agent
and distributor orthopedic product and specialist.
>> Well the orthopedic products
like implants are mostly 100 percent.
But accessories like splints yes, they're--
I need to check which one is specializing in split
because each distributor, which are deal
with the medical devices
in Korea has their own specific specialized item, product items.
So yes, we can help through our [inaudible] program
to locate the distributor candidate
for orthopedic and splints.
>> Right, great, thank you very much.
>> And let me mention that we, of course have our program
of Gold Key, which has worked very effectively
for American exporters to find agents and distributors
and her value here is exactly in her network with agents
and distributors who can handle those products here in Korea,
either regionally or across the country.
>> Right, thank you very much.
And this is our last question for today's webinar.
This is from David Drenk [phonetic].
He would like to know, what is the trend for energy drink
and what are the tariff
for nutritional supplements and healthy drinks?
>> What? Okay, that was a transfer--
run that one by me again?
>> Yeah, what is the trend for energy--
>> Oh trend, I'm sorry, for energy drinks.
>> And what-- uh-hmm, what--
>> And nutri-- [laughs].
>> What are the tariff for--
>> Nutritional supplements.
Well, let me just introduce that first by saying
that Koreans are very health-conscious.
They love to go to the stores and find the products
that are going to enable them to live a long and healthy life.
This is the country that is the originator of ginseng.
So I mean, you've got that as a tremendous heritage
and background.
They love nutritional food.
So, let me hand it over to Yoon Chiow again who also covers
that territory if she can add a few more words.
>> Well, as John have mentioned,
Korea is very a health conscious country.
So there are a lot of health food and drinks.
But energy drinks, in order to get import notification,
Korean FDA requires the ingredient's list first.
So before we take the ingredient list, I'm not so--
I cannot say if that the products are just food
or under nutritional supplements.
Sometimes Korean, actually,
is the energy drink contained some--
does not contain the list that the KFDA does not allow.
It cannot be imported.
But with the ingredient list,
we can tell whether it can be imported or not
because KFDA checks the ingredient list
very effectively.
>> By the way, KFDA is the Korean
and Food Drug Administration and they have their list
of prescribe products that, or ingredients
that they have to review.
And so Yoon Chiow was mentioning
that the ingredients are a one-key component in terms
of marketing channels, as well as revealing it
for any regulatory controls that the Koreans may have.
>> Great, thank you Yoon Chiow and thank you John.
Everyone, I'm after that it's all the time that we have.
Remember for those of you whose questions we didn't answer,
you can expect a reply via e-mail from one of our speakers.
Also, for questions that occurred to you
after this webinar, please do make a note
of the contact information on your screen.
You can contact anyone of the speakers at anytime
so please take a moment to write down the contact information.
Also please do check out our website at www.export.gov
for more information on upcoming webinars and more information
on other country markets and topics.
Also if you'd like to see the archive version of this webinar,
you can go into www.export.gov and go into the link
on the right hand side that says View Webinars.
Once again, that link will be view webinars,
for not only the archive version of this webinar,
but PowerPoint presentation slides and the transcript.
Thank you everybody for joining us for this webinar and please--
>> And may I also add our thanks from our office here
for everyone that's participating in this and TGIF.
>> Well, thank you very much and please check your e-mail boxes
for more information on upcoming webinars.
Thank you everybody and goodbye.
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