• THE INTERNATIONAL COMMERCE & LAW REVIEW
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• v.13
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• pp.151-192
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• 2000

This study has been focused on the revisions and characteristics of the 7 non-maritime trade terms(EXW, FCA, CPT, CIP, DAF, DDU and DDP) in Incoterms 2000. Main characteristics are as follows: First, the use of different expressions intended to convey the same meaning has been avoided and the same expressions as appear CISG have been used. Second, the content of preamble in each trade terms has been shortened and definitedly. Third, if the parties are going to use variants of trade terms in Incotrems 2000, the meanings should be made clear by adding explicit wording in the contract of sale. Main revisions of the 7 trade terms are as belows: First, Incoterms 2000 has emphasized that in EXW, the seller delivers when he places the goods at the disposal of the buyer at the seller's premises or another named place(i.e. works, factory, warehouse, etc.) not cleared for export and not loaded on any collecting vehicle. Second, in FCA, delivery is completed; a) If delivery occurs at the seller's premises, the seller is responsible for loading. b) If delivery occurs at any other place, the seller is not responsible for unloading. Third, in CPT and CIP, all costs and charges relating to the goods whilst in transit until their arrival at the agreed place of destination, unloading costs and all duties, taxes and other charges as well as the costs of carrying out customs formalities payable upon import of the goods and for their transit through any country are linked with the content under the contract of carriage. Fourth, Incoterms 2000 has emphasized that in DAF, the seller delivers when the goods are placed at the disposal of the buyer on the arriving means of transport not unloaded, cleared for export, but not cleared for import at the named point and place at the frontier, but before the customs border of the adjoining country. Fifth, Incoterms 2000 has emphasized that in DDU, the seller delivers the goods to the buyer, not cleared for import(in DDP, cleared for import), and not unloaded from any arriving means of transport at the named place of destination. Sixth, if the parties do not intend to deliver the goods across the ship's rail, FCA, CPT and CIP instead of FOB, CFR and CIF should be used.

• Journal of Korea Trade
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• v.25 no.8
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• pp.25-44
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• 2021

Purpose - This research aims to provide empirical evidence that highlights the importance of imported intermediate goods in long-term economic growth. To this end, this paper develops an index that measures the productivity gains associated with a country's intermediate goods imports using highly disaggregated trade data. Design/methodology - The basic hypothesis is that countries sourcing higher-productivity (or higher-quality) inputs from developed economies derive a larger benefit from foreign R&D. To explore this hypothesis, standard cross-country growth regressions are performed using the highly disaggregated data from the United Nations (UN) Commodity Trade Statistics Database (COMTRADE). To address the endogeneity issue, I apply an instrumental variable (IV) approach. Findings - The results of this study demonstrate that the index predicts subsequent economic growth in middle- and low-income countries. This finding is consistent with previous studies that have argued that developing countries can achieve substantial productivity gains by importing intermediate inputs from developed countries. By contrast, there is no evidence of a significant association between the index and economic growth in high-income countries. Originality/value - This paper contributes to our understanding of the causal relationship between international trade and economic growth. From an economic policy perspective, the results suggest that developing countries with limited technology endowment can boost growth from input-tariff liberalization.

• East Asian Economic Review
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• v.20 no.4
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• pp.447-467
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• 2016

The RTAs with trade facilitation provisions have been expected to generate a larger net trade-creating effect and complement the discriminatory feature of RTAs but have yet to be empirically proven. Recognizing the limitations of existing studies, we conducted a quantitative analysis on the effects of RTAs with and without trade facilitation provisions on both intra- and extra-bloc trade by using a modified gravity equation. We applied the Poisson Pseudo-Maximum Likelihood (PPML) estimation with time varying exporter and importer fixed effect method to panel data consisting of 45,770 country pairs covering 170 countries for 2000-2010. We found that the trade facilitation provisions in existing RTAs are non-discriminatory by generating more intra- and extra-bloc trade in general. In particular, we found that the trade effects of RTAs in the APEC region are much stronger than the general case covering all RTAs in the world. In addition, as we control the trade effect of a country's trade facilitation, which is ranked by the World Bank's logistic performance index, RTAs consisting of trade facilitation provisions are discriminatory for trade in final goods and non-discriminatory for trade in intermediate goods. Overall, we endeavor to "explain," instead of "hypothesizing," why most of the recent RTAs contain trade facilitation provisions, especially in light of the deepening regional interdependence through trade in parts and components under global value chains and support the necessity of multilateralizing RTAs by implementing non-discriminatory trade facilitation provisions.

• East Asian Economic Review
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• v.22 no.4
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• pp.427-465
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• 2018

East Asia, for long the epitome of successful engagement in trade, faces serious challenges: technological change that may threaten the very model of labor intensive industrialization and a backlash against globalization that may reduce access to important markets. The analysis in this article suggests that how East Asia copes with these global challenges will depend on how it addresses three more proximate national and regional challenges. The first is the emergence of China as a global trade giant, which is fundamentally altering the trading patterns and opportunities of its neighbors. The second is the asymmetric implementation of national reform - in goods trade and investment versus services - which is affecting the evolution of comparative advantage and productivity in each country. The third is the divergence between the relatively shallow and fragmented agreements that regulate the region's trade and investment and the growing importance of regional and global value chains as crucial drivers of productivity growth.

• KDI Journal of Economic Policy
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• v.33 no.1
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• pp.1-44
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• 2011

Terms of trade shocks have been considered one of the main driving forces causing business cycle fluctuations in small open economies. Despite their importance in business cycles of small open economies, it is hard to find a serious study in existing literature investigating their implications on monetary policy under a small open economy. Considering it, this paper studies what form of monetary policy rule is the most adequate for a small open economy where terms of trade shocks are dominant factors in generating its business cycle fluctuations. For this purpose, various implementable monetary policy rules frequently analyzed in existing literature are compared in terms of social welfare levels which they can provide for the economy respectively. Main results of this paper can be summarized as follows. First, for a small open economy where terms of trade shocks are main driving forces of its business cycle fluctuations, the nontradable goods price inflation targeting can provide higher level of social welfare than other traditional monetary policy rules such as the CPI inflation targeting or the fixed exchange rate regime. Second, the social welfare improvement of the non-tradable goods price inflation targeting is more apparent when export goods price shocks are more important than import goods price shocks.

• KDI Journal of Economic Policy
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• v.12 no.2
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• pp.81-94
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• 1990

Illegal transactions such as blackmarketing and smuggling allegedly result from too restrictive trade policies. A recent U.S. Senate hearing on the blackmarketing of American goods imported into Korea for the purpose of supporting United States troops and their dependents stationed in Korea concluded with the allegation that Korea's highly restrictive trade practices are responsible for the emergence of the black market. It has also suggested that the removal of such restrictive trade policies would eliminate black market activities. This study addresses the relationship between trade policy and blackmarketing by investigating whether trade liberalization results in the reduction of illegal transactions, and whether the eradication of blackmarketing indeed improves social welfare. When both legally imported goods and illegally exchanged items command the same price, trade liberalization, meaning a decrease in tariff rates or an increase in import quotas, will increase the quantity of legal imports at the expense of illegally transacted goods on the black market. But the price of legally imported goods usually differs from that of illegally sold ones. In this case, a change in the relative prices of these two groups of goods due to a change in trade policy will give rise to income, as well as substitution, effects. Initially, a decrease in the import price due to a decrease in import tax rates or an increase in the allotted quota will reduce illegal transactions, since the decrease in the import price will induce the substitution of legal imports for illegally exchanged, but otherwise, identical goods. On the other hand, the demand for the illegally transacted goods will rise, because of the income effect of the reduced import price. Thus, assuming the positive income effect overwhelms the negative substitution effect, the demand for illegal goods will increase, thwarting the reduction of blackmarketing through trade liberalization. Yet, stepping up the enforcement measures which are geared to preventing blackmarketing itself will drastically reduce the extent of illegal transactions, since it increases the cost of blackmarketing and hence the price of the illegally transacted goods. What this study suggests is that the emergence of the black market in Korea should be attributed more to the excessive supply of duty-free goods imported through U.S. commissaries and exchanges than to the excessive demand for foreign goods. On the other hand, blackmarketing, in most cases, improves economic welfare, since it constitutes an increase in the "actual" amount of imported goods. Suppressing blackmarketing through stepped-up enforcement methods is beneficial only when the substitution effect of the legally transacted goods resulting from the increase in the price of the illegal goods prevails, since the increase in the demand for legal imports must override the decrease in the demand for black market goods as well as the negative income effect.

• Journal of Korea Trade
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• v.26 no.7
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• pp.1-18
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• 2022

Purpose - Recent international studies have largely focused on measuring the welfare gains from increased trade varieties. To adequately capture the variety gains, it is of importance to estimate the elasticity of substitution between varieties of trade goods because it is one of the key parameters to determine the magnitude of the variety gains. Using the import data of South Korea, this paper shows that the elasticities vary substantially across the estimators, which affects the magnitude of the gains from trade. Design/methodology - Empirical studies working on the gains from trade variety have heavily depended on the estimation methods for the elasticity of substitution between trade varieties, developed by Feenstra (1994) and refined by Broda and Weinstein (2006). We estimate and compare the estimated elasticities for 8,945 HS 10 goods of South Korea, obtained from the three estimation methods: Feenstra's weighted least square (F-WLS), Feenstra's feasible generalized least square (F-FGLS), and Broda and Weinstein's feasible generalized least square (BW-FGLS). Findings - Using the estimated elasticities from the F-FGLS, considered as a suitable estimator, A typical Korean consumer saved 228 dollars per year by the greater access to new import varieties. This leads to gains from imported variety of 2.06% of GDP. In 2017, a typical Korean consumer would gain by 611 dollars, compared with 2000. China is the country with the largest contribution (28.4%), followed by Japan and USA. About 50% of all the welfare gains come from the imports from the three main trade partners. The Southern Asian countries are more important to the South Korean welfare gain than the Western European countries. Originality/value - Existing studies have chosen one of the methods without any criterion for the choice and then estimated the elasticities of substitution between varieties of trade goods. This paper focuses on the estimation specifications and methods as the cause of the disparity in estimated elasticities and welfare gains from trade variety. According to the Ramsey RESET and White tests, the F-FGLS estimates are relatively better compared to the F-WLS and BW-FGLS estimates. As another contribution, this paper provides the first measure of the welfare gains from trade variety for South Korea, using the estimated elasticities of substitution between trade varieties.

• Journal of Korea Port Economic Association
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• v.37 no.4
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• pp.145-160
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• 2021

This study attempted to analyze the trade in goods effect of the Korea-ASEAN FTA by using logistics performance index, which are evaluation indicators of logistics industry workers on the logistics environment and logistics system in international trade. The World Bank's logistics performance index are six indicators: customs clearance, logistics infra, ease of shipment, logistics services, goods tracking abilities, and on-time transportation. The purpose of this study was to examine how it affects commodity trade between Korea and ASEAN states using the gravity model using panel data. Through this, it was confirmed that logistics performance index affect the increase in commodity trade.

• International Commerce and Information Review
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• v.18 no.3
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• pp.47-72
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• 2016

The Government of Korea has always focused on developing and maintaining a surplus on the balance of payments as a successful trade policy. The focus should now be on spatial information hiding, revealing patterns in trade activities that enable viewing trade in a more sophisticated manner. This study utilizes trade statistical data such as the United States-South Korea imports and exports from 2003 to 2015 officially released by the two countries. It allows us to analyze and extract the spatial information pertaining to the origin, transit, and destination. First, in the case of export data to the United States, the origin of the trade goods has expanded and decentralized from the metropolitan area. With regard to transit, in 2003, most of the exported goods were shipped by ocean vessels and arrived at the ports on the western coast of the United States. However, trade patterns have changed over the 12-year period and now more of that trade has moved to the southern ports of the United States. In terms of destination, California and Texas were importing goods from South Korea. With the development of the automotive industry in Georgia and Alabama, these two states also imported huge volumes of automobile parts. Second, in case of import data, most imported goods from the United States originated from California and Texas. In this case, 40% of goods were shipped by air freight and arrived at the Incheon-Seoul International Airport; most ocean freight was handled at the Port of Busan. The purpose of this study is to decompose the spatial information from the trade statistics data between Korea and the United States and to depict visualized bilateral trade structure by origin, transit, and destination.

• KDI Journal of Economic Policy
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• v.32 no.3
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• pp.33-69
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• 2010

This paper examines the causes of the terms of trade decline in Korea since the mid-1990s, using the decomposition methodology suggested by Baxter and Kouparitsas (2000) as well as regression analysis. The main empirical results are summarized as follows. The decomposition exercise of changes in terms of trade showed that Korea's terms of trade decline for the past decade or so is attributable to goods price effect which were driven by the rise of oil prices relative to manufactures. The decomposition of terms of trade change for 55 countries showed that terms of trade decline due to goods price effect is a phenomenon that was commonly observed for exporters of manufactures since mid-1990s. These results suggest that external factors such as China's trade expansion, rather than internal factors, are mostly responsible for the decline in terms of trade. In accordance with these results, the regression results suggest that China's trade expansion contributed to Korea's terms of trade decline, especially in 2000s, by raising the import prices of oil and raw materials and lowering the export prices of manufacturing products.