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The annual Korea – New Zealand Joint Economic Committee (JEC) meeting took place on 11 December in Seoul and was hosted by Deputy Minister of Foreign Affairs and Trade Cho Tae-yul. The New Zealand delegation was led by Deputy Secretary Derek Leask. The JEC is an opportunity for government representatives of the two countries to discuss the continually expanding bilateral economic relationship. The meeting covered bilateral, regional and multilateral issues and subjects ranged from FTA policy, to cooperation in science and technology and film, trade access and enhanced regional integration. The talks were positive and highlighted the large number of mutually beneficial cooperative activities between our two countries, particularly in agricultural cooperation, information and communication technology, science and technology, and the strong working relationships between our regulatory agencies.
MP Dr Richard Worth (National Party) and MP Mr Martin Gallagher (Labour Party) visited Korea from 2-4 October at the invitation of the Korean National Assembly to promote inter-parliamentary relations. Dr Worth is currently Chairperson of the New Zealand – Korea Parliamentary Friendship Group.
MP Katherine Rich (National Party) visited Korea from 28 October-1 November at the invitation of the Korea Foundation.
The first Korea – New Zealand Joint Science Committee Meeting was a key focus of a visit by senior officials from New Zealand’s Ministry of Research, Science and Technology and the Foundation of Research, Science and Technology from 9 – 12 October. During the Meeting agreement was reached on the co-funding of two joint research projects in the fields of biotechnology (“Structural genomics on Mycobacterium and Streptococcus for drug discovery; applications of frontier technologies - Auckland University and Seoul National University”) and environmental science (“In-Situ Groundwater Remediation Towards Improved Non-point Source Pollution Management" - Institute of Environmental Science and Research and Hanyang University). The visit was also a great opportunity to visit and renew contacts at some of Korea’s outstanding science research centres in Daejeon and Seoul.
In line with these film events, the New Zealand Embassy and NZTE hosted a film reception at Grand Hotel in Busan on 9 October and a New Zealand Film Night at the New Zealand Residence in Seoul on 12 October. Major Korean film figures including Chairperson Ahn Cheong-sook of KOFIC (Korean Film Council) and Director Park Kwang-soo of BIFCOM and Busan Film Commission, New Zealand film delegation, media, celebrities and many other film people attended the two film receptions.
Korean Film Council (KOFIC) Vice Chairperson, and prominent film director, Lee Hyeon-seung visited New Zealand from 12-21 November at the invitation of the New Zealand Government. Some of the main objectives of the invitation were to promote New Zealand locations and film industry. Director Lee’s programme included trips to locations in Auckland including Karekare Beach (a location for The Piano), New Plymouth including the movie set of The Last Samurai, Wellington and Northland for Director Lee’s future projects. The location visits were mainly organised by the local film industry organization in each region.
The visit coincided with the annual Screen Production and Development Association (SPADA) conference in Wellington from 15-17, which provided a forum for introducing Director Lee to a number of key industry figures. Director Lee also visited major post-production companies including DigiPost in Auckland, Park Road Post and Weta Digital in Wellington to explore world class facilities and technologies in the field.
In the meantime, another main objective of the visit was to explore the possibility of negotiating a film co-production agreement between New Zealand and Korea. In line with this, Director Lee met with officials from related New Zealand Government agencies including the New Zealand Film Commission, the Ministry of Culture and Heritage and the Ministry of Foreign Affairs and Trade in Wellington. Through the visit Director Lee commented that the film relationship between the two countries should be long-term one, with efforts aimed at broadening mutual cultural understanding as well as commercial goals.
Daesung Group, the major Korean energy group that invested in a New Zealand Film, Black Sheep, held a Global Contents Forum 2007 to celebrate its 60 th anniversary and to discuss directions of global culture contents industry, at the Digital Media City (DMC) Culture Contents Centre in Seoul on 10 October. Four world-renowned speakers from the areas of film, games and education, gave presentations at the forum and one of the speakers was the Oscar-winning film special effect expert Richard Taylor from New Zealand, who spoke about the role of films in sending sound messages. He also ran a seminar on his works. Ambassador Jane Coombs made an introductory speech covering the progress in film relationships between New Zealand and Korea
The 6 th Australia and New Zealand Education Fair was held at the COEX in Seoul on 3 and 4 November 2007. More than 90 institutions participated in the fair including 31 New Zealand institutions from across all sectors. The fair attracted about 4,000 visitors during the two days and the feedback from New Zealand participants and Korean visitors was extremely positive. Ng ā Hau E Whā, a kapa haka group, performed at the opening of the fair and attracted high interest from the visitors. top of page
Conservative opposition Grand National Party (GNP) candidate Lee Myung-bak won a landslide victory in Korea’s 17 th presidential election held on 19 December garnering 48.7% of the vote. Pro-government United New Democratic Party (UNDP) candidate Chung Dong-young attracted 26.1% support and right-wing independent Lee Hoi-chang 15.1% and minor liberal candidate Moon Kook-hyun of the Create Korea Party 5.8%, respectively. The gap of 5.3 million votes between Lee and runner-up Chung was the largest in the history of Korean presidential elections. The main reason for Lee's winning margin appears to have been that voters supported Lee’s economic growth campaign pledge. T he so-called “747" pledge to double the nation’s per capita income to US$40,000 in 10 years, attain 7% annual economic growth and make Korea the world’s 7 th largest economy, appealed strongly to voters.
Lee, who worked at the Hyundai Group for almost three decades, including tenures as chief executive of the steel and construction units, will be the country’s first President from a corporate background. Lee's victory end ed 10 years of liberal rule, during which the country embarked on unprecedented reconciliation with North Korea. Experts say that Lee, who pledged to seek closer ties with the US, could usher in a tougher stance towards North Korea.
President-elect Lee has launch ed a transition committee which is responsible for, among other things, identifying nomin ees for Prime Minister and Cabinet member s . Lee will take office on 25 February in 2008.
Meanwhile, Lee may yet become the first President-elect to be the target of a criminal investigation in Korea. The prosecution cleared Lee of alleged involvement in a financial scam in early December, but UNDP and other minor opposition parties passed a bill for a special counsel investigation just two days before the presidential election, claiming the probe failed to reveal the truth. Depending on the conclusion of the investigation which will begin around 10 January and is expected to finish before the February 25 presidential inauguration, Lee could face indictment.
The National Assembly approved a budget bill for 2008 scaled at 256.17 trillion won (US$273.53 billion) on 28 December. The figure represents a cut of 1.2 trillion won from the Government’s initial proposal, which was up 7.9% from 2007. Funds for education, social welfare and inter-Korean cooperation were reduced by 165 billion won (US$175.8 million), 227 billion won (US$241.85 million) and 100,000 million won (US$106.9 million), respectively while for social overhead capital (SOC: capital spent on social infrastructure, such as schools, universities, hospitals, and libraries) were increased by 360 billion won (US$383.6 million).
In a plenary session on 28 December the National Assembly also passed a controversial bill to extend the deployment of Korean troops in Iraq for another year. With the parliamentary approval the 650-strong Korean Zaytun (olive in Arabic) unit will continue its missions in northern Iraq until the end of 2008. Korea has maintained the Zaytun unit in the northern Iraqi city of Irbil since 2003 at the request of the US. The Korean Government has sought to extend the Zaytun mandate into 2008 in a bid to enhance ties with the US. The Grand National Party (GNP) and the Democratic Party (DP) supported it while the United New Democratic Party (UNDP) and the Democratic Labour Party (DLP) opposed.
The second inter-Korean summit between South Korean President Roh Moo-hyun and North Korean leader Kim Jong-il was held in Pyongyang from 2-4 October. President Roh travelled by road across the Korean Demilitarised Zone (DMZ) in going to Pyongyang, the first time South Korean leader had done so.
The two leaders issued an eight-point joint peace declaration calling for a permanent peace deal on the Korean Peninsula on 4 October. In the declaration, the two leaders agreed to support international talks on North Korea’s denuclearisation and to arrange a meeting of concerned parties to establish a peace regime to replace the armistice, which ended the 1950-1953 Korean War. The agreement also included commitments to create a special peace zone in the disputed inter-Korean maritime border in the West Sea, hold bilateral defence ministerial talks in Pyongyang in November to discuss the maritime border issue, and resume freight rail services across the heavily fortified border for the first time in more than five decades. The Prime Ministerial talks were held in Seoul in November to discuss detailed measures to implement the agreements of the joint declaration. A flurry of inter-Korean talks have subsequently been held, but the election on 19 December of conservative candidate, Lee Myung-bak, may affect future implementation of the declaration.
On 3 October, the six participating countries of the two Koreas, US, China, Japan and Russia agreed on a joint statement on the second-phase actions towards the denuclearisation on the Korean Peninsula. Under this statement, North Korea agreed to disable all its existing nuclear facilities and provide a complete and correct declaration of all its nuclear programmes by the end of 2007 in exchange for a total of 1 million tons of heavy fuel oil or equivalent aid from the five countries. As of mid-January, North Korea has not yet produced a complete declaration or completed the disablement process, thereby stalling further progress in the Six Party Talks process. top of page
Korea faces some tough external “headwinds” in 2008, such as projected modest or low growth in the US economy, continuing high oil prices, and a high value won. Monetary tightening by China could also adversely affect the Korean economy. The EIU (Economist Intelligence Unit) and most major Korean economic research institutes, while identifying these as key risks to the Korean economy, nevertheless predict ongoing strong economic growth of round 5% in 2008, with slightly stronger growth in the first half than in the second. Samsung Economic Research Institute (SERI) suggests that the Korean economy is reasonably resilient in the face of high energy costs and unfavourable foreign currency rates, and is less susceptible to US economic turmoil, as a result of decoupling from the US market.
SERI also points out that a strong yen and ratification of the Korea-US FTA would offer exporters further relief from a strong won, as Japan is a key competitor of Korea in many areas such as cars and electronics. An FTA with the US is expected to boost bilateral trade by up to US$29 billion. Overall, SERI estimates around 10% export growth in 2008, to round US$411 billion. However, rapidly increasing imports and unfavourable terms of trade in services leads SERI to project a 2008 current account deficit of round US$3 billion
top of pageThe Korea – US FTA (KORUS) which was completed in April 2007 is still to be ratified by Korea’s National Assembly (and the US Congress). While some more optimistic commentators had said that the deal could be ratified by the National Assembly prior to the Korean presidential elections, this did not prove possible. However, following post-election discussions between President Roh Moo-hyun and President-elect Lee Myung-bak, both Roh and Lee urged the National Assembly to ratify KORUS in the January/February parliamentary session and pledged to work together to ensure that this happened.
Negotiations with the EU continue to make progress, however, the nominal “end of 2007” deadline for completion has now been pushed back into April next year. EU negotiators have voiced some frustration that Korea has not made sufficiently ambitious tariff offers and, as with the Canada FTA negotiation, the auto sector is proving particularly difficult. Korea – Canada negotiations have now reached the 12 th round and in addition to disagreements over the autos sector, a number of issues in the agricultural sector also remain unresolved.
In addition, Korea’s multi-track approach to FTAs continues to keep the government busy. A services agreement with ASEAN (excluding Thailand) was completed in November and CEPA negotiations with India continue to make good progress. The first round of Korea – Mexico negotiations took place in December and according to MOFAT, Korea will begin negotiations with the Gulf Cooperation Council in April or May 2008. Following the completion of private, academic and industry joint studies, Government level discussions on an FTA with China are also underway as are government level discussions with MERCOSUR.
According to the Finance Ministry’s foreign-currency liberalisation plans released on 8 November, the upper limit of US$3 million imposed on individual overseas property investments will be removed in 2008. Individuals will be allowed to transfer up to US$50,000 to overseas accounts each year without providing documents from January 2008. Local companies whose annual international transactions are worth more than US$50 million will be also allowed to receive and make payments without providing documents for the transactions from December in 2007. The Ministry has drawn up these measures in an effort to raise foreign-currency liberalisation standards.
Korea ’s population exceeded the 50 million-mark in October for the first time due in part to a soaring number of foreign residents, making it the 24 th most populous country in the world. According to the Ministry of Government Administration and Home Affairs, Korea’s population stood at 50,087,307 at the end of October, with 624,377 foreigners living nationwide. The number of foreign residents has been growing in recent years as the country has grown into the world's 11th-biggest economy, with the increase partly attributed to the expansion of workforces in manual labour sectors. Meanwhile, Seoul and Gyeonggi Province accounted for a combined 4 3 . 2 % of the total, or 23,903,785 million. Gyeonggi Province had the largest portion of the population with 22.47% or 11,055,658, followed by Seoul with 20.71 % or 10,190,249. top of page
A regular freight train service between South and North Korea began on 11 December for the first time in 56 years. The train service will be devoted to transporting raw materials and goods for the inter-Korean joint industrial park in Gaeseong. The train leaves Dorasan Station of the South every weekday at 9 am and departs Panmun Station of the North for the return journey at 2 pm. Government officials explained the service will expand to Bongdong Station located at the mouth of Gaeseong Industrial Complex in two or three years after a cargo terminal is constructed there.
The two Koreas initially agreed at the Prime Ministers’ talks in November on the follow-up to the October inter-Korean summit to begin the regular operation of the railway between Munsan and Bongdong. The Roh Moo-hyun Government sees the first regular train service to be a starting opportunity to link the Trans-Siberian Railway and the Trans-China Railway with the Korean peninsula. To extend the cross-border train operation, the two Koreas have agreed at the summit and premier-level talks to refurbish North Korea’s outdated railroad between Gaeseong and Shinuiju.
Deputy Head of Mission Rod Harris finished his posting to Korea in December and will return to work in the Legal Division in the Foreign Ministry in Wellington. His position was filled by Jane Mulryan who was head of the China Unit in the Ministry’s Asia Division before coming to Korea. She has previously served as Deputy Head of Mission in the New Zealand Embassy in Ankara from 2001-2005.
