South Korea’s trade policies, including free trade agreements, are expected to undergo a drastic overhaul under the new government as the presidential transition committee has decided to transfer trade issues from the Foreign Ministry and Ministry of Strategy and Finance over to the Knowledge Economy Ministry.

Under the government reorganization plan, the Knowledge Economy Ministry, currently in charge of policies on industries, will absorb nearly all functions related to trade while the Foreign Ministry will continue to handle bilateral or multilateral economic diplomacy and cooperation issues.

“The change is aimed at using an in-depth understanding of local industries to strengthen our trade pact design and negotiation skills,” said Jin Young, vice chair of the presidential transition committee.

If the government reorganization plans pass through the National Assembly, the Ministry of Knowledge Economy will change its name to the Ministry of Industry, Trade and Energy and emerge as a control tower over the whole process of trade pact policy, from a deal’s design and negotiation to its agreement and the development of follow-up measures.

The Ministry of Knowledge Economy welcomed the creation of a unified channel for trade policy of the world’s ninth-largest exporter.

“There was inefficiency in coordinating trade-related policies as multiple ministries have been involved,” a ministry official said.

“The focus of the new trade policy is expected to develop measures to boost trade and economic cooperation with trade partners through the FTAs, while protecting local industries.”

Trade and industry associations agreed that it is time for the government to consider shifting the focus of trade-related policies away from increasing the number of trade pacts and toward enhancing existing trade relations.

Korea has become an FTA-powered nation, forming multiple FTAs with key trade partners over the past decade. Korea eased trade barriers with 45 countries through eight FTAs, including with the U.S., EU and ASEAN, since signing its first FTA with Chile in 2003.

As of 2011, the nation’s exports to FTA partners amounted to 37 percent of total exports.

Despite increased efficiency in trade policy, trade officials from the Foreign Ministry have reportedly long expressed concern over overlaps and confusion in trade-related operations.

“Trade pact negotiations are country-level talks. There is doubt that the ministry responsible for industrial policy has stronger negotiating power than the Ministry of Foreign Affairs,” a Foreign Ministry official said.

Another issue for the trade-related departments is whether they must relocate to Sejong City, as the Ministry of Industry, Trade and Energy is scheduled to move into the new government complex in the city about 136 kilometers south of Seoul.

The presidential transition committee said the relocation of ministries will be discussed at a later time.

By Seo Jee-yeon and Bae Hyun-jung
(jyseo@heraldcorp.com) (tellme@heraldcorp.com )