Interview: Mr. Kwon Do-youp, Minister of Land, Transport and Maritime Affairs

In May 2011, Mr. Kwon Do-youp was appointed as the Minister of Land, Transport and Maritime Affairs (MLTM), prior to which, he was first vice minister in the ministry. The First form of MLTM, named as Mnistry of Transportation, was organized at the time of the establishment of the Korean government on August 15, 1948. Since then the Ministry has been renamed as Ministry of Construction and Ministry of Construction and Transportation and finally was recreated by the Government’s reorganization through merging with the Ministry of Maritime Affairs and Fisheries in 2008. Minister Kwon is an expert official on housing affairs who took the head-post of Housing Division and acted as Director General for Housing Affairs in Ministry of Construction and Transport (MCT). He has shown both professionalism and driving force in handling land and housing affairs, and that he is judged the right man to upgrade housing environments through stable supplies of houses and to find new solutions to the various housing problems particularly for low-income people. He started civil service, assuming an officer post in deliberation of New Town Development in the Ministry of Construction (MC), and held several key posts including Land Policy Div. Director General (DG), Housing Div. DG and Public Relation Division DG and assistant VM in MCT. And he finally made the first VM in MLTM. Starting his civil service in construction sector, he is deemed to have acquired deep experiences with transport as president of Korea Expressway Corp., state-run, before he was appointed the first VM of MLTM. As a major in civil engineering and public administration, he is highly praised as a leader of consilience versed in engineering and civil service. Following the earlier merger of other ministries with MLTM, he has done his excellent job as the first VM, so he was deemed as the right man to smoothly address the various pending issues including Four River Development Project, real estates and the move of civil service offices to Sejong City (starting this year). He has been displaying his best ability in sorting out MLTM’s most pressing problems of house shortage and of jumping house rental deposit on the strength of his diverse experiences of 30 years since 1979 in the fields of construction and transport. In an exclusive interview, Minister Kwon speak on his priorities and policy plans.

Could you please tell us your vision and policy directions for the future? Land and ocean have been the foundation for Korea's economic development, but in the future it needs to play a bigger role by being a quality place where a new culture can be created. For this reason, the following three qualities--the quality of land, the quality of its inhabitants, and the quality of the institutions on which the citizens and land are based--need to be harmonized. Going forward, in order to increase the competitiveness of the nation's land and ocean through region-specific development strategies, the following efforts will be made: ● Infrastructure such as road, railway, housing, water resources, and aviation, will be made more effective through expansion and rigorous maintenance, improving the landscape of the nation ● Also, new growth engines in the maritime sector will be cultivated through maritime tour promotion and marine resources development; while, ● Regulations pertinent to land will be streamlined to suit the convenience of the public, providing a more scenic and beautiful land environment to the public. Despite the recent cargo volume increases, the maritime industry is seeing revenue decreases; what are the government's measures to analyze the reasons for this and overcome this problem? The global maritime industry started experiencing a downturn from the second half of 2010 and this continued to 2011, reducing maritime fares. For instance, the BDI (Baltic Dry Index) on Nov. 3 was 1,817p, which is 42% of the five-year average; HRCI (Howe Robinson Container Index) on Nov. 2 was 556p, which is 64% of the five-year average. The cargo volumes, such as dry cargoes and containers, all increased but, the vessels are being oversupplied compared to the cargo volume, causing profitability erosion of maritime companies. The soon-to-be-delivered vessels account for 31%, in the case of container vessels and 41% in the case of dry cargo vessels, of the current number of vessels, respectively. The rapid oil price increase (36% increased year-on-year as of June, 2011) is eroding the profitability of companies by increasing their costs, as the fuel cost takes up 15-20% of the total costs for maritime companies. Due to the advanced countries' economic uncertainty stemming from the sovereign debt crisis of the US and Europe, the cargo volume increase is expected to slow down markedly going forward. As it seems difficult to overcome the maritime industry's economic woes in the short term, focusing on internal growth instead of external expansion should be more emphasized. First, industry-wide efforts, such as replacing old vessels, changing docks to benefit from lower fee offers, are essential; while, the government will closely consult with relevant agencies and review measures that can strengthen the foundation of the nation's vessel financing, such as expanding the guarantee scope of the vessel financing and extending operation of the KAMCO vessel funds. As of late October, 2011, 430 billion won of loan guarantees have been made to maritime companies. Restructuring Funds, which are the main funding resources for the KAMCO fund, will be maintained till the end of 2011 before being withdrawn. How is the Four Rivers Restoration Project progressing? In Korea, 70% of annual rainfall is concentrated in summer. As it causes frequent flood and drought, the government spends 3~4 trillion won every year for the recovery from flooding damages. Recent climate change is expected to cause more frequent flood and drought. In addition, investment in rivers is urgently needed as high level of economic development raised awareness about the importance of rivers and demand for using rivers and water-front areas. In the past, riverfront areas were used for farming or neglected. Pollutants accumulated downstream in waterfront farmlands and insufficient fresh water during dry seasons undermined river ecosystem. In order to prevent large-scale natural disasters occurred by climate change and improve the soundness and diversity of ecosystem by securing clean and sufficient water resources, Korea carried out the four major rivers restoration project. Neglected water-front areas turned into bicycle lanes and ecology parks where people enjoy cultural and leisure activities. The four major rivers restoration project that was initiated in 2009 is now 92% completed, and the main stream project is 92% completed. Especially, the main stream project will be completed on schedule by the end of this year. During implementation of the project, there was massive criticism from environmental groups about river dredging, etc. However, as the project is bringing fruitful outcome by securing abundant water resources and building bike paths and water-front parks, many citizens now support the project. In particular, although this summer recorded an unprecedented rainfall during the rainy season, there was no serious damage in the four rivers compared to the past. The Korean government's efforts of restoring the four major rivers, responding to climate change and improving ecosystem, will be a good example to Europe. The 1,592km-long bicycle path along the four rivers is the largest and the most beautiful lane in the world and is attracting many tourists who enjoy and give a positive response to the path. What is the reason for last year's yearly housing lease fees and what is the MLTM's plan to stabilize the housing market? The increase in Jeonse prices was mainly resulted from the imbalance between demand and supply of housing for Jeonse and monthly rent. The global financial crisis in 2008 reduced housing supply was reduced since the housing construction market significantly shrank and raised controversy whether or not to abolish the housing-price-capsystem. * Annual authorization and permission for housing construction - (’05) 46.4→(’06) 47.0→(’07) 55.6→(’08) 37.1→(’09) 38.2→(’10) 38.7 Also, stabilized housing price and the increase in redevelopment·housing reconstruction and people's migration increased demand for Jeonse rather than housing sale·purchase. The Korean government will make continuous efforts to stabilize citizens' residence and housing prices. Considering the shortage of housing quantity and quality, it will supply around 400 thousand houses every year as Korea falls short of housing quantity and quality. In addition, the government is trying to diversify housing types and ease regulation in response to changes in demography and family structure due to increasing single and two-person families, low birth rate and aging population, and changes in housing market structure including increased demand for housing for monthly rent. * single, two-person family (%) : (‘90) 22.8 →(’00) 34.6→(’10) 48.1→ (’20) 57.7 * household of aged family members(%) : (‘90) 8.5→(’00) 12.1→(’10) 17.9 →(’20) 22.7 It will also develop and implement a housing policy fit for generation and social class to supply customized housing for new university graduates, middle aged and elderly people, etc. What is the role of the MLTM in carrying out the Korean government's green growth strategies? MLTM is carrying out an important mission of taking care of land, city, housing, transportation, and maritime affairs essential to life of all citizens, and is therefore in a crucial position to lead the way for greenhouse gas reduction and green growth in Korea. Thus, MLTM is pursuing a green growth policy based on the vision of "Creating Low Carbon Green Land and Ocean." At the same time, MLTM is contributing to the alleviation of climate change damages by reducing greenhouse gases, carrying out projects aimed at increasing the adaptation level against climate change, cultivating new economic growth engines such as green technologies and industries, and providing assistance to under-developed countries in the green technology field. First, in the greenhouse gas reduction category, Buildings and transportation, which take up approx. 42% of Korea's greenhouse gas emissions, are being transformed through diverse projects aimed at reducing greenhouse gas emissions, such as revision of regulations, demand volume management, and subsidies; in particular, the President's pledge to "reduce 30% of Korea's greenhouse gases compared to BAU by 2020" is being on track to be accomplished as the government set a goal of reducing 26.9% and 34.3% of greenhouse gases in buildings and transportation sectors, respectively, implementing relevant measures. Second, in the climate change adaptation category, for the purpose of reducing damages from extreme weather conditions like floods and droughts, the Four Rivers, stream maintenance, dam construction, and sea water desalination projects are being implemented, while other programs such as maritime observation network establishment, coastal region vulnerability assessment and maintenance are underway. Lastly, in order to create new growth engines based on green technologies MLTM is focusing its efforts on securing maritime energy using solar, tidal, algae, and wave power, cultivating renewable energy like maritime bio diesel, developing various architecture technologies for saving energy, and maintaining an IT-based efficient energy management system. MLTM will do its utmost to minimize life and property damage from natural disasters caused by abnormal weather conditions by making constant development of technologies and seeking global cooperation; in particular, it will actively contribute to increasing the quality of life for all humanity on earth by carrying out its green technology support projects. Any additional comments to the European FDI companies in Korea? The Korean government is developing high potential, investment-worthy future growth centers, such as Sejong City, Innovation City, Enterprise City, Saemangeum, six Free Economic Zones and Jeju Free International City. These centers will emerge as the country's economic growth drivers; investment made in the cities will bring about benefits not just to the concerned cities themselves but also to the investment companies. The government is striving to create a conducive environment for FDI companies for their investment and business activities, by providing tax benefits, subsidies, and lease fee reductions. It is hoped that these projects will draw more attention in the years ahead *************** Current FDI company assistance system overview - Cash assistance: if 20 or more staff are hired, education and training subsidies and employment subsidies are provided - Lease fee reduction: when leasing a government-owned land, the fees will be reduced by 50-100% - Tax reductions: (1) National tax (corporate tax, income tax) ▪ High tech industry assistance companies in open FDI areas: 100% for 5 years, 50% for 2 years ▪ Complex-style FDI areas: 100% for 3 years, 50% for 2 years (2) Regional tax (acquisition tax, property tax) ▪ According to relevant ordinances, up to 15 years can be applied ***************

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Interview: Mr. Jean-Luc Valerio, President, European Aeronautic Defence and Space Company (EADS) Korea

A French National, Mr. Jean-Luc Valerio is President of European Aeronautic Defence and Space Company (EADS) Korea, and has been in the country since February 2007. EADS is a global leader in aerospace, defense and related services. The Group includes the aircraft manufacturer Airbus, the world largest helicopter supplier Eurocopter and EADS Astrium, the European leader in space programs from Ariane to Galileo. In 2010, the Group’s 10th anniversary year, it generated revenues of € 45.8 billion and employed a workforce of some 122,000. Before relocating to Korea, Mr. Valerio was Senior Vice-President, EADS International-China, and also Head of Singapore Office of EADS International. An aeronautical engineering, he graduated from the French Air Force Academy (Ecole de l’Air) and also has a military pilot licence. “I have been here in Korea for four and a half years now, having arrived in February 2007. Over the past 17 years I have worked mainly in Asia, including Taiwan, Hong Kong, Thailand, Singapore, China and now Korea. Japan is the only country in this region that I haven’t worked in,” he said. Speaking on the business operations of his company, Mr. Valerio noted that EADS has had an average 500 million euro turnover over the last 5 years, and the major part is the sale of Airbus planes to the two national carriers Korean Air and Asiana : the other part being helicopter and Satellites. We are now targeting to introduce our combat jet (the Eurofighter) and some missile systems. In January this year, Asiana Airlines placed an order for six A380s, even as Korean air already started operating the superjumbo jets. Korean Air’s second Airbus A380 started operating long-distance routes from Aug. 9 on the Incheon-New York corridor. The first A380 made its debut on June 6 and is currently employed for the Incheon-Tokyo and Incheon-Hong Kong routes. The airline will take possession of a total of fiveA380s by the end of this year for its Paris and Los Angeles routes. In fact, according to the company’s estimates, Korea would account for around 3.6 percent of the 8,014 aircraft that will be ordered from the Asian region over the next 20 years. Korean orders would amount to around $55 billion out the $1.18 trillion that Asia is expected to spend on aircraft during this period. Another lucrative business section is the defense sector. In fact, it was on his watch that EADS was able to break the stranglehold of US defense companies in the country, with the signing of an MOU, with Korea Aerospace Industries (KAI) on October 18th, 2007, to create a Joint Venture Company for the worldwide sales and marketing of the Korean Utility Helicopter (KUH). The project is aimed at producing hundreds of helicopters to replace the aging UH-1H Hueys currently in service. Not only is KUH being built on Eurocopter's latest technology to be used domestically, but is also aimed for exports into the global market, starting next year. While test flights have already been conducted, mass production will begin in March 2012, and full-scale production in June 2012. In July this year, the company also announced a multi-million euro contract from Korean Aircraft Industries to supply 24 of its AN/AAR-60 MILDS missile warning systems, with deliveries continuing until 2013. Each system uses about 4 passive sensors, which detect the ultraviolet radiation signature of approaching missiles. As for the space sector, the Astrium-built multi-mission Communications, Oceanography and Meteorology Satellite (COMS) was officially handed over to the Korea Aerospace Research Institute (KARI) in August this year. Astrium was contracted by KARI, to design and manufacture the country’s first multifunctional geostationary satellite, COMS, and was launched by Ariane 5 on 26 June 2010. A veritable ‘Swiss Army knife’ of a satellite, COMS is the first three-axis stabilised geostationary observation satellite developed and manufactured by a European company to carry three payloads dedicated to meteorology applications, ocean observation and telecommunications. The handover follows in-orbit acceptance of the satellite, which was successfully completed on March 17th, 2011. He said that his company continues to see strong business prospects in Korea in all the three segments. The advantage of being in Korea is that the relationships are quite regulated and one knows what they have to deal with. This is mostly true for all democracies. For that matter, EADS has been very successful in Asia, with the region accounting for 25 percent of the global sales. Asia Pacific is an important region for the EADS Group. China and India, in particular, show huge market potential, while Korea, Indonesia, Malaysia and Vietnam also offer significant opportunities, he said. Speaking on his role as new president of EUCCK, Mr. Valerio said he was proud and honored to be given this opportunity. In his acceptance speech at the EGM, he had pointed out three reasons for applying to run for presidency: one, to continue and build on the accomplishments achieved by Mr. Hurtiger; second, to advocate the interests of EUCCK members and improve the business environment for EU companies in Korea; and finally to promote European culture and values to Korean authorities and the local business community. He emphasized that his working experience had reinforced the commitment to European values, such as teamwork and creativity. He encouraged EUCCK members to be proud of promoting European history to their Korean counterparts. Even though Europe was currently exposed to harsh economic developments, this crisis would in retrospect prove merely to be a historical anecdote. The new EUCCK President promised to consult and work together with different stakeholder to create a positive business environment for European companies in Korea. “I have always been a pro-European and believe that Europe is stronger by being united. I do believe that differences in diversities are a positive aspect. Many see it as a liability, but I consider it as an asset and in the end the richness of different cultures will prevail,” he said. He noted that his priorities as Chamber Head will be to make sure that the Korean government is respecting their meaningful choice to open the borders to EU products, with the FTA, and there will not be any new regulation to hamper fair activity. “I will make sure that we have all the wonderful resources of business communities to create an environment for small and medium enterprises to get better access and understanding of the Korean market.” In his message to all EUCCK members, Mr. Valerio noted that even as the EU is going through the sovereign debt crisis, everyone has to keep their optimism, and not to reduce their pace or confidence in business. “We cannot be disturbed by something that will be overcome, and must be as active in promoting and innovative to prepare for exit of this crisis,” he said.

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Interview: Mr. Kim Byung-soo, Director General, Foreign Investor Support Office, InvestKorea

Invest KOREA (IK), Korea's national investment promotion agency, was established within the Korea Trade-Investment Promotion Agency (KOTRA) with the sole purpose of supporting the entry and successful establishment of foreign business into Korea. With assistance extending to comprehensive post-establishment services, IK enables foreign corporations to maximize the benefits of the Korean investment environment to ensure their rapid settlement in Korea. The agency is committed to providing unmatched, comprehensive one-stop service that allows foreign investors to join many of the world's most successful corporations who have selected Korea as an investment destination and been rewarded by high returns on the investment. The new head of the Foreign Investor Support Office in the investment promotion agency, Invest Korea, is not only experienced and proactive, but is also full of fresh ideas to help investors. As noted by Mr. Kim Byung-soo, Director General, Foreign Investor Support Office, the agency attracts foreign investment by identifying potential foreign investors, supporting investment projects, providing aftercare services for foreign investors, and building a cooperative network with related organizations. Prior to heading the office in January this year, Mr. Kim was with the Ministry of Knowledge Economy as Director, Foreign Investment Policy Division. This Division comes under the authority of the Vice Minister for Trade & Energy in MKE. It is more like a back office of foreign investment related issues. “My main role in MKE was to provide all the logistics support for needed for the implementation of the Foreign Investment Promotion Act. This Act aims to encourage foreign investment through deregulation by providing tax incentives and financial assistance; deals with foreign investment and technology, and introduces a reporting system with regard to foreign investment in Korea. However, now my main job is to implement these very same policies,” he said. In a sense, this gives him the opportunity to deal directly with foreign investors and know their problems. While trying to solve the problems faced by investors, he has to sometimes deal with uncooperative officials in various ministries and local governments. But that has not stopped him from giving his 100 percent to the job, even at the risk of “begging” lower rank officials to help foreign investors. “For me, FDI does not refer to Foreign Direct Investment. Rather, it is Frontier Development Initiative and going even further, Friendship Development Intiative. It is very important to develop friendly relations with investors inorder to understand their problems to solve them,” he said. Since relocating to Invest Korea, he has made it a point to visit the various industrial sites which have a high proportion of foreign investors, to meet with them and understand the difficulties that they may be facing. He has also been going on invesment promotion trips abroad to meet potential investors. “One has to be proactive and meet foreign investors to anticipate what problems they may face. I do not like to wait for them to come to me with their problems, but want to solve them before they become big issues.” Recalling some of the notable cases that he has encountered so far, he said that Scania Korea and Edwards Korea faced some ‘unsolvable’ difficulties. But, after persisting with the various government departments, he was able to make a breakthrough. Speaking on the main objectives of the Foreign Investor Support Office, he said the investment promotion and support capability has been considerably strengthened by the introduction of the Project Manager (PM) system, under which a PM is designated for each investment project to offer customized support throughout its entirety, from providing investment consultation and obtaining licenses and approvals to actually launching a business. “In addition to the project managers, we have a pool of experts in such fields as finance, tax, law, securities, accounting, and construction to smooth the foreign investment process and ensure that investors claim the full range of benefits available,” he said. The office provides support throughout each stage of the investment project, from international promotion of Korea's image and identification of target companies to delivery of customized assistance ranging from research and planning to implementation. The agency also provides substantive feedback from investors to policymakers in order to constantly improve the investment environment. “The range of services we offer has been significantly enhanced following the opening of the Investor Consulting Center (ICC) within Invest Korea Plaza. The center provides information and assistance on a variety of matters relating to foreign investment and daily living in Korea, from selecting plant sites and forging alliances with Korean partners, to education and accommodation.” Additional business-related assistance are provided by officials seconded from the Ministry of Justice, the National Tax Service, the Korea Customs Office, and the courts of law, all of whom offer a broad range of administrative support and respond to complaints made by foreign investors. “I prefer to call this center as Inter Cultural Communication since we provide one-stop consulting services free of charge to foreigners who wish to invest in Korea.The services include pre-investment market research, administrative support, and settlement assistance, for the successful establishment of business in Korea.” The center is staffed by consultants, comprising private-sector experts recruited from key investment-related fields, and civil servants seconded from other major government agencies and ministries, in order to provide systematic and professional consultation services. At the ICC, investors can receive one-on-one consultations on taxation, accounting, and law in the beginning of an investment, and receive administrative assistance directly from government officials for visa application, certification of the completion of investment in kind, and business registration. The center also provides personalized life settlement consultations and a one-day, on-site assistance to help investors settle successfully in Korea. “My main role is to help the foreign investors and I am satisfied only if they do not face any problems while doing business in Korea,” he said.

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Interview: Mr. Karel de Gucht, European Union Trade Commissioner

In January 2010, Mr. Karel de Gucht, took over as the European Commissioner for Trade. At the same time, in the new Commission the trade portfolio was extended to cover the coordination of industrial relations with other world powers (Transatlantic Economic Council, TEC). Previously, he had served as the development & humanitarian aid commissioner, Belgian deputy prime minister, and Belgian minister of foreign affairs. He has a law degree from the Free University of Brussels, and at the age of 26 become a member of the European Parliament. After 14 years of active experience, Commissioner De Gucht became a Belgian senator, and a year later was elected to the Flemish Parliament as a member of the Vlaams Liberaal Democraten, and served as party chairman from 1999–2003. Commissioner De Gucht is a lawyer and teaches at the Free University of Brussels. In 2002, he received the title of minister of state. In an exclusive interview, Commissioner De Gucht speaks about the EU trade policy, EU-Korea FTA and his priorities:

In November last year, the European Commission laid out its blueprint for an EU trade policy, for five years, to help revitalise Europe’s economy. What are the main elements of this strategy and what has been the progress so far? This is a time when Europe and most of the other developed economies are under the threat of economic stagnation or even decline. We are facing years of constrained demand, arising from the financial crisis and the imbalances it brought to our economies. In this context, the main objective of the EU trade policy is to be a catalyst of growth and employment. Our main tools are the multilateral Doha agenda, as well trade agreements with individual partner countries. The multilateral track is very important as, in my opinion, the WTO framework is what kept the world from sinking into protectionism throughout the economic crisis. Bilateral agreements can also play a very useful and complementary role insofar as they allow us to pursue levels of liberalisation which go beyond the Doha agenda, and to pursue them faster. The EU-Korea FTA is one big achievement of this policy so far. We hope to secure similar deals with other major EU trade partners, such as India and Mercosur. We are also renewing our efforts to ensure that European business gets a fair deal and that our rights are respected. As an example of that, we are working on a EU instrument to help secure better and reciprocal access to public procurement markets in developed countries and large emerging markets. Our studies indicate that in the EU thirty-six million jobs depend directly on indirectly on trade. By completing the already tabled trade agreements, and working together with our partners to further liberalize trade, we can increase the EU GDP by 150 billion euro. To illustrate, this is the same as the GDP of a country like Ireland. Our message to European citizens, companies and Member States is that trade is not a cause our employment problems, but part of the solution, and a vital component of the EU overall strategy for smart, sustainable and inclusive growth. It is now over 100 days since the EU-Korea FTA was implemented. From an EU perspective, do you think the results so far are satisfactory? Although it is quite early to comment on the impact of the EU-Korea FTA after only 3 months of operation, we can already see some benefits materializing: Trade flows had a positive initial response to the FTA, especially on the side of EU exports which showed well over 20% growth relative to 2010. Export sales for certain EU agricultural products such as pork, cheese, wine, chocolate or luxury products such as cars, clothes and accessories have gone up, while prices have decreased for Korean consumers. This is good for EU companies but also for Korean consumers who have wider choice and cheaper prices. At a time of increasing inflationary pressures in Korea, in particular for foodstuffs, this must be a welcome contribution. At consumer level, FTA has created more awareness among Korean consumers and people for EU products. There is also a positive "perception" effect that quality EU products are becoming a better value for Koreans, due to the lower duties. On the regulatory field, since 1st July double certification is not required anymore for most safety standards for EU cars imported into Korea. EU industrial equipment and machinery can also can be self-certified in Europe by the manufacturer for Korean electromagnetic compatibility and electric safety requirements. This is a very important achievement, for two product categories that together represent nearly 40% of the EU exports. We also now have a more solid framework for regulatory co-operation, to try to avoid that any non-tariff barriers that might jeopardize trade between the EU and Korean in the future. In order to maximize benefits from the FTA, EU businesses still need to learn more about its rules, the import procedures and the Korean market. For example, EU exporters need to undergo the necessary procedures with their national customs in order to become approved exporter and thus get the benefit of reduced duties. According to the feedback we received, there is still some work to be done in this respect. The 1st EU-ASEAN Business Summit took place in May this year. What was the outcome of the summit, and what are your views on economic ties with the block of ten countries? This Business Summit was the first experience for us in the context of the annual ASEAN-EU Economic Ministers Consultation. It was a positive experience, in which I was very happy to participate. My previous impressions about the creativity and dynamism of the business environment in South East Asia was confirmed by a full day of discussions which focused on a number of concrete examples and success stories, but also highlighted some of the regulatory barriers in this region, on which we need to focus. ASEAN is a huge market and one of the world's sources of economic growth. We in Europe realize very well that our continued welfare in the decades to come depends on forging stronger links with those sources of growth. Likewise, connecting to the European market will be crucial for ASEAN’s economic success as well. The European Union remains actively engaged with ASEAN as a region as well as with its members as individual countries. We are negotiating free trade agreements with Singapore and Malaysia and our door is open to other ASEAN partners sharing our objective to negotiate trade agreements for the 21st century. Historically, our negotiations with ASEAN have been somewhat complicated by the diversity of the ASEAN member countries. Although we now recognize that there is no 'one size fits all' agreement, our ultimate goal of a regional EU-ASEAN trade agreement remains valid. We are following with great interest ASEAN's steps towards an Economic Community in 2015. We support the ASEAN economic integration process —both politically and economically. With 60 years’ experience of building our own single market, we know both the challenges and the rewards brought by economic integration. The Doha Development Agenda negotiations within the World Trade Organisation continue to be in a state of flux. Do you think there will be any scope for progress on this front? What is the EU position? There is wide agreement on the importance and value of the global multilateral trading system; global trade rules have helped to limit the attempts to protect markets during the current crisis and should be used to roll back protectionism where it has occurred. The WTO has demonstrated its flexibility to adapt to the new realities of the world economy: as a global institution it genuinely reflects the changing balance in the global economy – emerging countries are now major players in the WTO, as demonstrated by their key role in the DDA. Its dispute settlement system is probably the most effective international enforcement body – all WTO members obey its rulings, even if sometimes slowly and imperfectly. The WTO has proven its worth. The EU remains committed to finding a way through the Doha impasse, but to do so will demand even greater political commitment and that requires business to speak up for the Doha Round if we are to succeed. Doha remains a deal worth doing, with important benefits for developing and emerging economies and we are really not so far apart that it could not be done. Today the WTO rules offer an important base line and the successful conclusion of the Doha talks will strengthen that, for example in the chapter on Rules, by addressing non-tariff barriers. The European sovereign debt crisis has rattled the global economy. What are your views on the present crisis? Do you think this will adversely affect the trade relations with other countries? We are well aware that the backlash from the financial and economic crisis has weakened our economic image throughout the world. Our economic recovery is robust but still uneven and several member states have a tough job in adjusting their public finances. But the economic fundamentals of the European Union are still strong and healthy, and the political sense of urgency and effectiveness in dealing with the challenges must not be doubted. The euro will survive the present difficulties and it will come out stronger. Trade is the fuel that powers the global economy. It has been one of the most important factors in the recovery – in Europe and elsewhere. The volume of global trade has recovered from the low point reached in May 2009. In many countries, exports are the only engine of growth, while competitively priced inputs are helping to businesses to keep down costs. The crisis reconfirmed the importance of global trade rules which had been taken for granted. Global trade rules provide an important shield against protectionism and a framework within which the recovery takes place. The WTO has been in charge of monitoring trade restrictive practices and protectionism in the context of the economic crisis and has estimated that new import restrictions introduced by G20 members overall affected a very small fraction of world imports. Significantly, the few protectionist measures we have seen either affected areas not currently covered by the WTO such as government procurement or were introduced by countries that are not yet part of the WTO system. However, the longer the economic crisis lasts, the more we will see protectionist pressures and assorted restrictive measures being introduced, whether in Latin America, in Asia or elsewhere. The current crisis underlines the significance of moving ahead with an ambitious trade agenda to deliver growth much needed to maintain the EU's welfare States. Trade is part of our strategy to exit the current economic crisis. Our agenda will reach beyond tariff barriers and address the regulatory practices that stop trade flowing, particularly between developed and emerging economies.

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Interview: Mr. Kim Dong-soo, Chairman, Korea Fair Trade Commission

The Korea Fair Trade Commission (KFTC) is a ministerial-level central administrative organization under the authority of the Prime Minister and also functions as a quasi-judiciary body. The Commission formulates and administers competition policies, and deliberates, decides, and handles antitrust cases. It performs its roles and duties independently without any intervention from an outside organization. The organization is committed to four main mandates : promoting competition, strengthening consumers' rights, creating a competitive environment for SMEs and restraining concentration of economic power. To that end, the Commission enforces 12 laws including the Monopoly Regulation and Fair Trade Act (MRFTA). On 3 January 2011, Mr. Kim Dong-soo was appointed as the new Chairman of the KFTC. Prior to his appointment, he served as the Chairman of the Korea Exim Bank and as the vice minister of the Ministry of Strategy and Finance. In an exclusive interview, he tells me about his priorities and plans ahead.

Could you tell us about your goals and priorities as chairman of FTC? As chairman of the KFTC in charge of competition and consumer policies, my foremost goal is to make full commitment to the essential function of the organization; promoting competition and empowering consumers. I believe such effort by the KFTC will help the value of “Fair Society", one of the administrative goals of the Korean government, is fully embraced in the market economy of Korea. With the goal of building Fair Society, the government strives to provide just reward, ensure more opportunity and fair competition and achieve social integration based on mutual trust and shared growth. In this respect, it is directly related to competition policy, whose main objective is to promote the sustained growth of the market economy based on free and fair competition. It is also consistent with the “Ecosystemic Development” President Lee Myung-bak suggested in his speech for the 66th anniversary of the national liberation as a new market paradigm to address economic bipolarization and achieve sustained growth of the economy. In that respect, the priority of the KFTC is to make unchanged effort for its essential mission of establishing free and fair market order and ensure the policy benefits are shared by those in a weaker position of our society such as the working class and small companies First, the KFTC will make proactive efforts against anticompetitive conduct such as cartel in areas closely related to ordinary people’s lives, and improve distribution structure and overhaul entry regulations so that the competition-enhancing effect can be felt by market participants. It will also come up with specific policy measures for the shared growth between small and large companies, and change the perception of the business so the business itself makes voluntary efforts toward creating an environment where they can grow together. What do you think are the main challenges that FTC faces in ensuring fair trade? Even though Korea’s history of enforcing competition law is relatively short --30 years-- compared to the EU or the U.S, the country has produced meaningful results in establishing sound market order. But, I believe there are many challenges that lie ahead for the KFTC to take a leap forward. In Korea, cartels and large companies’ unfair business practices still remain as barriers to fair trade due to a combination of historical, structural and cultural factors. First, the government-driven economic development during the 1960s and 70s created imbalance between small and large companies, and business associations have been used as a channel for participating in a cartel. Second, small companies’ heavy dependence on large companies with dominant position in the domestic market has widened the gap in bargaining power between small and large companies, and delayed the development into the competitive market structure. Moreover, influenced by the Confucianism which controls the fundamental part of Korean society, companies have maintained strong solidarity with one another, which has created the business environment occasionally misconstrued as to the formation of cartel. Furthermore, the contract culture where companies enter into a contract with counterparty on an equal footing through due process of law has not been fully established in the Korean business community. In response to those challenges, the KFTC will take legal and institutional measures as well as actively support voluntary efforts by the business community to change the corporate culture with an aim to boost corporate competitiveness and establish sound market order. What is your opinion on the central government’s pledge to foster “shared growth” between large companies and their smaller suppliers? The past government-driven economic strategy highly focused on large companies has made imbalance between small and large companies deeply entrenched in the Korean economy, causing serious problems. Small companies increasingly depended on large companies, which took up dominant share of domestic demand, and this widened the gap in bargaining power between them. Unfair business practices caused by the power gap between small and large companies still remain, disrupting the development of the business ecosystem. Therefore, for sustained growth of the Korean economy, there should be further efforts to achieve the shared growth between small and large companies so that they can compete with each other on an equal footing. To realize the shared growth of small and large companies: ① relevant laws and systems should be improved; ② corporate culture should be changed (by, for example, encouraging the signing of the Agreement on Fair Subcontract and Shared Growth); and ③ there should be active enforcement efforts against law violations. Changes in corporate values and perception through voluntary efforts by companies are particularly important for establishing fair trade practices and the environment for the shared growth. That is because fundamental improvement on this matter can be made only when large companies change their perception, practices, values and culture, and small companies strengthen their competitiveness. With this in mind, the KFTC revised the Fair Subcontract Transaction Act to improve legal grounds for the shared growth between small and large companies, and supported the signing of the Agreement on Fair Subcontract and Shared Growth between 93 large companies and their 32,000 small suppliers. The KFTC will continue such efforts in the latter half this year by improving the criteria for assessing the implementation of the Agreement so that practical benefits from the shared growth efforts (e.g., adjustment in unit prices or sales commissions) can be enjoyed also by second- and lower-tier suppliers. Recently we saw instances of uncooperative behavior or obvious interference by businesses with a Fair Trade Commission investigation. What steps are you taking to ensure that this does not happen in the future? Obstruction of the KFTC’s investigation constitutes an act of defiance of public authority that severely undermines law and order. In that recognition, the KFTC will take all the possible legal measures within its authority against such violation to maintain legal order and send a clear message that the damage incurred to the company by obstruction of an investigation would be severe. For this purpose, the KFTC applies through penalty against those who interfere with an investigation by imposing administrative fines, heightening the ceiling of aggravated surcharge and bringing a charge to the prosecution. The KFTC will continually update its investigative techniques and enhance compliance of respondent companies through valid procedures to achieve administrative objectives without causing unnecessary friction with companies subject to an investigation. As part of the effort, the KFTC set up a digital forensics team to strengthen capability for obtaining digital evidences in May 2010, and provides staff education on investigative techniques on a regular basis. Furthermore, it makes utmost efforts to minimize inconvenience caused by an investigation and ensure procedural fairness by, for instance, informing an investigated company on its rights and clarifying the purpose and scope of an investigation. Moreover, the Ombudsman Program is in operation to listen to complaints of investigated companies that may arise in the course of the KFTC’s investigation. What is your message to EU investors? The EU is a very important economic partner to Korea as the nation’s second-largest export market and the biggest foreign investor that accounts for 43% of the investment destined for Korea. Korea, the 4th-largest trading partner to the EU, also has strong presence in the EU market based on strong collaborative relationship between the two sides with around 500 companies operating there. The Korea-EU FTA that came into effect on July 1, 2010 will open up new horizons for the economic relationship between the two sides with the accelerated market opening, strong push for corporate innovation and enhanced consumer welfare. The KFTC will faithfully perform its role of establishing and enforcing fair rules as a “referee in the market” so that benefits from the open and free market can be maximized across the Korean economy. The Commission will relax regulations, such as entry regulations, to ensure that all the companies in Korea do business freely regardless of their nationality, and take strict approach to unfair business practices that disrupt the market order to protect creative entrepreneurship and consumer rights. Foreign companies operating in Korea have made a lot of efforts to keep up to date with the global standard in competition law, as shown in its active use of the Cartel Leniency Program. I hope they make continued efforts to spread the pro-competitive culture, and understand the Korean government’s firm commitment to development of the market economy. And I assure you that the KFTC is always open to all the foreign business persons in Korea who have any complaints or suggestions in the course of doing business in Korea.

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