ECCK Quarterly Report Q2 2021

quarterly report

ECCK Quarterly Report Q2 / 2021

GENERAL OVERVIEW

In June, President Moon Jae-in paid a weeklong visit to Europe, demonstrating Seoul's commitment to playing a bigger role in addressing ongoing global issues and improving strategic partnerships with Austria and Spain. President Moon’s Europe trip highlighted the visit to G-7 summit in the UK’s County of Cornwall. As a guest, he attended sessions on healthcare, climate change and economy. Through this year’s G-7 summit, President Moon had an opportunity to confirm South Korea's enhanced international status and improved relations with European countries. After the summit, President Moon paid a visit to Austria, which marked him as the first South Korean president to make a state visit to Austria since the two nations established ties in 1892. During his stay, President Moon had a summit with his Austrian counterpart, Alexander Van der Bellen and a meeting with Chancellor Sebastian Kurz on improving bilateral relations. The president’s trip to Europe concluded in Spain, where he met with King Felipe VI and Prime Minister Pedro Sanchez to discuss upgrading economic partnerships between the two counties.

With the highly contagious delta variant sweeping the nation, Korea had a setback on slowing the spread of the virus despite its vaccination plan rolling out. According to the Korea Disease Control and Prevention Agency (KDCA), 48% of new patients were infected with the delta variant in the third week of July, compared with 3.3% in the fourth week of June. The number of confirmed cases continued to rise in July and Korea recorded its highest-ever 1,842 of new daily COVID-19 infections. As a result, a level 4 social distancing guidelines was implemented in the Seoul Metropolitan Area, which includes Seoul, Gyeonggi Province, and Incheon. The KDCA reports around 11% of population has completed vaccination, including receiving both shots for vaccines requiring two doses, while 30% have received one dose.

The Ministry of Economy and Finance (MOEF) raised this year’s growth outlook for economy to 4.2%, up from its December estimate of 3.2% and the Korean economy is projected to grow 3% next year. The ministry's forecast is higher than the Bank of Korea's projection of 4% and the 3.6% growth estimate by the International Monetary Fund (IMF).

10 Years Anniversary of EU-Korea FTA: Updating and Modernizing a Successful Trade Deal with the KGCCI

Symposium with HUFS on ‘A decade of Korea-EU FTA: Looking back, looking forward’

This year marked the 10th anniversary of EU-Korea Free Trade Agreement (FTA). To commemorate the special pact between two economic powerhouses, the ECCK hosted ‘10 Years Anniversary of EU-Korea FTA: Updating and Modernizing a Successful Trade Deal?’ with the Korean-German Chamber of Commerce and Industry (KGCCI) and the German Embassy in Korea. Also, an academic symposium was held in cooperation with Hankuk University of Foreign Studies (HUFS) on the topic of ‘A decade of Korea-EU FTA: Looking back, looking forward’. On July 1, the ECCK hosted ‘The 10th Anniversary Conference on the EU-KOREA FTA’ with the Korea International Trade Association (KITA) and BusinessEurope.

In July, the ‘Korean New Deal’ commemorated its first anniversary. President Moon held a ‘Korean New Deal 2.0 Strategic Meeting’ at Cheong Wa Dae. During the event, the government announced the upgrade to the original plan includes an increase to the fiscal investment plan from KRW 160 trillion to KRW 220 trillion to be made by 2025 and expansion of the Green New Deal taking into consideration carbon neutrality.

<Table 1> Trade in Goods between Europe (EUR) & Korea (KOR)

In H1/2021, exports from the EU to Korea increased by 20.5% to USD 31.9 billion (compared to USD 26.4 billion in H1/2020). Exports from the UK and EFTA to Korea increased by 56.4% and 36.5% respectively. While exports from Korea to the EU and UK increased by 45.2% and 27.5% respectively, exports to EFTA decreased a combined 12.6% to 0.8 billion.

<Table 2> H1/2021 - Foreign Direct Investment (Arrived) in Korea

European Foreign Direct Investment (FDI) in Korea in H1/2021 increased by 249.5% compared to H1/2020, representing 51.9% of the total foreign direct investment. German FDI accounted for 26.6%, Singaporean FDI for 12.6 %, and Irish FDI for 11.2%. Germany was the largest European investor in Korea during this period with a total of USD 2.2 billion in arrived direct investments; the second and third largest European investors were Ireland and Malta with USD 910.4 million and USD 681.0 million in arrived direct investments, respectively.

COVID-19 Updates

ECCK has reached out to the Korea Disease Control and Prevention Agency (KDCA) for clarification on that foreign resident in Korea who have gone through the whole vaccination process overseas should be exempted from the quarantine. On July 7, the KDCA delivered its clarification that the quarantine procedure will be waived if a foreign resident in Korea left for another country and completed the vaccination process in the country and requested a Korean embassy in the country to issue a quarantine exemption letter. When returning to Korea with the quarantine exemption letter and the negative result of the PCR test, the foreign resident in Korea will be exempted from the quarantine procedure as foreigners residing overseas.

ECCK MARKET OVERVIEW

Chemicals Committee

The ECCK had a meeting with the Korean Occupational Safety & Health Agency regarding the MSDS IT system and trade secret review procedures in cooperation with the KOTRA Ombudsman. Also, the ECCK joined the 2021 Chemical Safety Policy Forum, which the Ministry of Environment kicked off to improve current system of hazardous chemicals management and establish transparent communication platform.

Cosmetics Committee

The Ministry of Food and Drug Safety (MFDS) revised the functional cosmetics screening rules to accept ISO test method for Sun Protection Factor / UV (SPF/UV) index on June 2021. This was a long-standing issue raised by ECCK and finally officially accepted. Also, a further recommendation by the ECCK has been taken up by the “Regulatory challenge” initiative run by Prime Minister’s office; the recommendation is related to natural related claims with ISO index.

Fashion & Retail Committee

On June 10, the Prime Minister Kim Boo-kyum announced that the Korean government will improve the current Korean regulations which are much more excessive than relevant foreign regulations, under the initiative of 'Regulatory Challenge'. The Office of Government Policy Coordination received suggestions from several economic organizations including ECCK and as a result, the regulation on 'Price Labeling Requirement' which has been raised from ECCK for a long time was selected as one of the tasks of 'Regulatory Challenge'. ECCK and Fashion & Retail Committee had a separate meeting with the Ministry of Trade, Industry and Energy and KOTRA's Office of Foreign Investment Ombudsman on June 16 and submitted the opinion letter to the MOTIE on July 21 regarding ‘Price Labeling Requirement’.

Food Committee

The Ministry of Environment (ME) distributed guidelines related to the enforcement of prohibition of repackaging on June 22. Also, the ME announced the final separate discharge mark regulation on July 9. The ECCK arranged an information session with the Korea Environment Corporation (KECO) on July 27. At the briefing members had an opportunity to learn more about the contents of repackaging violations and check the packaging status of each member company's products through various examples. In addition, it clarified the contents of the packaging inspection system and the packaging material & structure evaluation system in general. During the Q&A session, they also covered new separate discharge mark which will be implemented starting from January 1, 2022 for newly introduced products in the market.

Passenger Vehicles Committee

The Ministry of Environment (ME) announced the Notification of ‘Annual Low and Zero Emission Vehicles Supply Target’, and revised the definition and the measuring method related to calculation of achievement result for supply target in vehicle sellers, topics suggested in ECCK White Paper 2020. The Notification clarified the definition of ‘Combined Fuel Economy’ and the test standards of ‘Zero Emission Mileage’ for plug-in hybrid vehicles reflecting recommendations in ECCK White Paper.

ECCK REPRESENTATION

April 8: Meeting with Ministry of Trade, Industry and Energy (MOTIE) Europe Trade Division
April 20: ECCK Roundtable Meeting with National Assembly Member Hong Jungmin
April 22: Meeting with Anti-Corruption and Human Rights Commission (ACRC) Ombudsman Kim Tae-Eung
April 30: Meeting with Gwangju City Mayor Lee Yong-seop
May 25: Meeting with Korea Carbon Industry Promotion Agency
June 1: Meeting with Seoul Metropolitan Government Job Policy Division
June 16: Meeting with Gyeonggi Provincial Government Trade Division
June 23: Meeting with Seoul Vice Mayor Kim DoSik
July 1: Meeting with National Assembly Member Hong Jungmin
July 1: Meeting with National Assembly Member Kang Sunwoo
July 6: ECCK Business Round Table with Vice-President of the European Commission Frans Timmermans
July 6: Meeting with Korea Internet & Security Agency (KISA) on cooperation with ECCK
July 8: Meeting with Gyeongsangbuk-do Governor Lee Cheol Woo
July 8: Meeting with National Assembly Member Jang Chulmin
July 16: Meeting with Busan Mayor Park Heong-joon
July 20: Meeting with MOTIE Director General Park Jungwook

July, 2021

ECCK

About ECCK

The European Chamber of Commerce in Korea (ECCK) is the pre-eminent association of European companies conducting business in or related to Korea. Representing the common voice of the European business community in Korea, the ECCK aims to function as the platform for information exchange, effective communication channel to the Korean authorities and convener of networking opportunities for European businesses. The ECCK is a non-profit and non-political organization. (www.ecck.or.kr) Disclaimer The information and opinions in this report were prepared by ECCK. The information herein is believed by ECCK to be reliable and has been obtained from public sources believed to be reliable. ECCK makes no representation as to the accuracy or completeness of such information. Opinions, estimates and projections in this report constitute the current judgement of the cited sources and/or the author as of the date of this report. They are subject to change without notice and ECCK has no obligation to update, modify or amend this report or to otherwise notify a reader thereof in the event that any matter stated herein, or any opinion, projection, forecast or estimate set forth herein, changes or subsequently becomes inaccurate. This report is provided for informational purposes only and ECCK does not accept any responsibility for liabilities arising from the use of this document or its contents.

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