Ninguno
Peru and Korea: Exports from the agricultural and fishing sector grow throughout five years of FTA
June 05 , 2017
The joint strategies to consolidate economic, commercial, investment and cooperation relations between Latin America and Korea were analyzed in a regional seminar co-organized by our Center for China and Asia-Pacific Studies, the Latin American Economic System (SELA) and the Ministries of Foreign Affairs.
Although exports from Latin America to the Republic of Korea are still concentrated in raw materials, a new trend in shipments of agricultural and fishery products is making its way into the Asian country and represents an advance on the diversification of the exportable supply, led by the Pacific Alliance countries (Peru, Chile, Colombia and Mexico). Even this last country also exports some industrial items to that destination. This advance, coupled with Korea's economic cooperation with the region -focused on technology transfer-, envisages a takeoff of the economic relationship with Korea. 

The “Seminario Regional: Análisis de las relaciones económicas, comerciales y de cooperación de América Latina y el Caribe con la República de Corea” ("Regional Seminar: Analysis of the economic, commercial and cooperation relations of Latin America and the Caribbean with the Republic of Korea") has been an occasion for dialog on the exchange of experiences to explore joint strategies and consolidate the economic, commercial, investment and cooperation relations between the region and Korea. The event was organized by the Latin American and Caribbean Economic System (SELA), the Ministry of Foreign Affairs of Peru and Universidad del Pacífico Center for China and Asia-Pacific Studies, and took place on May 9 and 10 of this year at the university campus The event was also attended by His Excellency Mr. Keun Ho Jang, Ambassador of the Republic of Korea to Peru; and His Excellency Mr. Kyung Tae Hwang, Ambassador of the Republic of Korea to Venezuela. 

Increase in Latin American exports 

In that event, Juan Varilias – President of the Peruvian Exporters Association (ADEX) and President of the Peru-Korea Business Council – commented that Peruvian exports from the agricultural and fishery sector to Korea grew by 5.7% annually, during the first five years of the FTA between the two countries (2011-2016). 

In the same period, Peru exported 284 new products to Korea, 96% of which were non-traditional shipments, said Ambassador Eric Anderson, Secretary General of the Ministry of Foreign Affairs of Peru. Only in 2016, according to Varilias, 11.5% of exports from Peru to Korea corresponded to non-traditional products, while, for example, of the total exported to China, only 3.1% belonged to this type of goods, which reflects a better export structure to the Korean market. However, in terms of value, the export of non-traditional products to China has almost doubled the one to Korea, which reveals an important potential for future growth towards the Korean market. 

Chile is the Latin American country that has best taken advantage of its FTA with Korea. Between 2003 and 2013, during the first ten years of the treaty, its fruit, salmon and wine exports grew an average of 30.5%, 30.9% and 26.9% per year, respectively. This was reported by Dr. Rosario Santa Gadea, director of Universidad del Pacífico Center for China and Asia Pacific Studies. 

Colombia also has an experience to take into account concerning more traditional products. Alberto Lora, Executive Director of the Commercial Office of Colombia in Peru (ProColombia), reported that, in 2016, Colombian coffee exports grew by 29.2% and metal products did by 39.2%, compared to 2015 results. It would be expected that these and other products grow more thanks to the recent entry into force of Colombia's FTA with Korea. 

In the case of Mexico, the only country in the Pacific Alliance that does not have an FTA with Korea, there has been a growing trade deficit with the Asian country over the past 25 years. However, Juan Manuel Arjona, Counselor of the Commercial Office of Mexico in Peru (ProMéxico), reported that from 2006 to 2016 his country's exports to that destination grew by 447%, but the most important thing is that 18% of the exported goods are machinery (machines, appliances, electrical materials) and 8.3% corresponds to the transport sector (vehicles, tractors, auto parts). 

"A whole export current of fresh food products that have great potential is being developed. To this end, sanitary protocols are necessary, but we also need to diversify exports in manufactured goods with technological content. In the Pacific Alliance it would be important to explore the cumulation of origin to promote productive integration and export to Korea taking advantage of global value chains, in which we must affirm our participation," said Santa Gadea. 

These contributions in terms of taking advantage of the commercial relationship and the FTAs are widely developed in the document Analysis of Experiences in Trade and Investment between Latin America and the Caribbean (LAC) and Korea: The Case of Member Countries of the Pacific Alliance, research carried out by Universidad del Pacífico, under the sponsorship and publication of the IDB. Precisely, in the event, Santa Gadea - editor of said study - presented the main results. 

The SELA, on the other hand, presented the document Corea del Sur: Una potencia tecno-económica emergente. Relaciones económicas, comerciales y de cooperación con América Latina y el Caribe (South Korea: An emerging techno-economic power. Economic, commercial and cooperation relations with Latin America and the Caribbean), by the renowned international expert, Dr. Carlos Moneta. The document analyzes the development process of Korea from its foundation to the present time, and its commercial opening with the region. 

Moneta highlighted the fact that Korea achieved in three decades what other economic powers did in 100 years: stop being a primary economy and become a creative economy. This achievement is explained through the reforms applied in the education sector (with special emphasis on the development of human capital), science and technology, institutional development and innovation. He also pointed out that Latin America has a pending task: to achieve an adequate level of knowledge about Asia, since only in this way can synergies be created through business, cultural and cooperation initiatives. 

Both studies lead the way to deepen into the potential of relations between Latin America and the Caribbean and Asia-Pacific. 

However, the seminar participants made it clear that, except for the members of the Pacific Alliance, there are still countries in the region that are at an early stage of relations with Korea, situation mainly explained by the protectionist trade trend and the low degree of economic and commercial liberalization that they present. Dr. Ignacio Bartesaghi, Director of the Department of International Business at Universidad Católica del Uruguay, warned, for example, that Mercosur exports to Korea are not revitalized because there are high tariffs and there is no adequate integration strategy with the Asian continent. 

In this sense, Minister Jorge Félix Rubio – Director of Integration of the Ministry of Foreign Affairs of Peru – explained that the nature of the Pacific Alliance allows it to be a step forward in the economic insertion into the Asian continent, because they have more open market economies with respect to other Latin American countries and, above all, a pragmatic and non-ideological integration scheme.  
Investment and economic cooperation 

On the other hand, Keun Ho Jang reported that Korean investment in Peru amounts to US $4,486,000 (at the end of 2015), our country being the first destination in Latin America in the energy sector (US $4,196,000). 

Korea is also key in economic cooperation. In the words of Ambassador José Antonio Bellina, Director General of Asia and Oceania of the Ministry of Foreign Affairs of Peru, the Asian country has important projects in Peru in areas with high added value such as information and communication technologies (TIC), health, medicine, environment, education, industry, defense and security. These initiatives were detailed by Daehwan Caim, Representative of the Korea International Cooperation Agency (KOICA) in Lima; and Chulhee Kim, Director of the Korea Trade-Investment Promotion (KOTRA) in Lima. 

Also, Professor Michelle Rodriguez – Dean of the School of Engineering at Universidad del Pacífico – narrated her impressions about higher education and research in Korea, in the light of her visit to the Korea Advanced Institute of Science and Technology (KAIST). She also highlighted the importance of student exchanges based on the trip of five students from Universidad del Pacífico, who explored the Asian country's research, development and entrepreneurship ecosystem in February of this year. She also took the opportunity to tell us that, in August, two students will study in Korea in the framework of our agreement with the Korean Sogang University. 

The relationship between Peru and Korea is taking off. As Ambassador Luis Quesada, Director General for Economic Affairs of the Ministry of Foreign Affairs of Peru, pointed out, the relationship and friendship between both countries has existed for more than 50 years and has been strengthened thanks to the 2011 FTA and the 2012 Strategic Association Agreement. However, as Bellina said, "We need to identify what Korea can help us with. It is necessary for the State sectors and agencies to know how to define the areas in which they want to work with Korea because we are not using everything this country offers." On the other hand, Santa Gadea emphasized that "in the definition of our long-term agenda with Korea, it is necessary to participate not only in the public sector, but also in the private sector. That would be the key to success in the bilateral relationship." 


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