Korea Joins $1 Tln Trading Power Club
Becomes the ninth country to surpass the $1 trillion trade threshold
Korea has joined the club of $1 trillion global trading powers as the nation logged $515.3 billion worth of exports and $485.5 billion worth of imports on a customs basis as of 3:30 p.m. on Dec. 5 to see the trade volume crossing the $1 trillion threshold for the first time.
Korea has become the ninth country to surpass the $1 trillion trade barrier following the United States, Germany, China, Japan, France, the U.K., the Netherlands, and Italy.
According to a report by the Korea International Trade Association (KITA), the country will log $561 billion in exports and $530.5 billion in imports by the end of the year. The trade surplus will amount to $30.5 billion, the association said. Korea will usher in an era of $1 trillion trade for the first time in its history this year as both exports and imports continue to rise, despite lingering uncertainties such as the European debt crisis surrounding Greece, the sagging U.S. recovery, and volatile commodities prices,KITA said in a statement.
The nation's trade after its liberation from Japanese colonial rule was insignificant. Trade volumes in 1946 were a mere $64 million, and agricultural produce and mineral products accounted for the bulk of the traded goods.
It was in 1974 that Korea broke the $10 billion trade threshold. This was a remarkable feat the nation had achieved after overcoming the troubles from the Korean War (1950-53). Korea has now joined the $1 trillion trade club 23 years since the nation hosted the Seoul Summer Olympics in 1988.
The eight $1 trillion trading powers took an average of 26.4 and 8.4 years to see their trading volumes surge from $100 billion to $1 trillion and from $500 billion to $1 trillion, respectively. But for Korea, the comparable figures were 23 years and six years.
In terms of exports, Korea is forecast to rank seventh in the world this year following China, Germany, the United States, Japan, the Netherlands, and France. Korea saw its exports skyrocket 10,000-fold from $55 million in 1962 when the nation ranked 104th, lower than Uganda, Sudan and Tunisia.
The $1 trillion can translate into building 136 mountains as tall as the 8,848-meter-high Everest with 100-dollar bills or doling out a $700 smartphone to all 1.3 billion Chinese.
Exports have served as a driving force to support the national economy. The nation was able to overcome the 1998 Asian financial crisis and come out of the 2008 global financial crisis, caused by the U.S. financial troubles, earlier than other countries as exports surged despite plummeting corporate investments and household consumption.
KITA said during the first five months of the year, the country's exports and imports shot up more than 26 percent year-on-year to $227.2 billion and $213.1 billion, respectively.
The trade association attributed the upturn to surging demand for the main export products of ships, chips, cars, and petrochemicals amid a rebound in the world economy and trade activities with Japan.
Exports of petroleum products including gasoline and diesel in the first half of the year are estimated at $24.7 billion, up more than 73 percent from the same period last year, as some Japanese refiners halted their operations in the face of the earthquakes.
A look at the nation's exporting industry chronology indicates that Korea is showcasing a classic model of transforming itself from a developing economy into an advanced one. In the past, wigs, iron ore and tungsten emerge as its mainstay exporting items, but things have dramatically changed: moving to advanced products such as semiconductor chips, automobiles and smartphones. Korea earned foreign currencies by exporting products from light industries with no advanced technology in the 1970s when the nation implemented an intensive development plan. At that time, textiles and wigs each took up a 48.8 percent share and a 10.8 percent share to cover more than 50 percent of the nation's total exports.
It was the late 1980s when the nation's export items began to be diversified as shipbuilding and sound instruments each took up 3.5 percent and 3.4 percent. During the 1990s, textiles remained the nation's number one export category with 11.7 percent, but semiconductors, video gadgets, computers and automobiles rose to the rankings of the top 10 exporters with a 7.0 percent, 5.6 percent, 3.9 percent and 3.0 percent share, respectively, thanks to aggressive investments into electronics and automobile sectors.
During the 2000s, value-added IT exports made strides in the exporting sector as semiconductors topped exports with a 15.1 percent share, trailed by computers with a 8.5 percent share. The nation saw a shift in its mainstay exporting items, influenced by the business downturn of advanced economies and the financial crisis in Europe. A look into export achievements in the first 11 months of the year showed that semiconductors dropped to 3rd place, but the shipbuilding sector rose to the top with a 10.3 percent with petrochemicals and automobiles doing well with a 9.3 percent and 8.0 percent share, respectively.
TASK FOR USHERING IN AN ERA OF $2 TRILLION TRADE
Experts shared the view that the nation should make aggressive and massive investments into new growth engine sectors as preconditions for achieving the $2 trillion trade threshold. They also pointed out that the nation should expand from its main focus on making inroads into advanced economy markets and diversify its focus to developing economies such as countries in East Europe, the Middle East and Central and South America.
Lee Kyung-tae, president of the Institute for International Trade (IIT), an affiliate of KITA, said The nation's top six mainstay exporting items£shipbuilding, petrochemical products, semiconductors, LCDs, automobiles and smartphones£are susceptible to external uncertainties, and next-generation growth engine industries should be nurtured to brace for China's ascent. Korea needs to take the upper hand through the implementation of free trade agreements.
CELEBRATION OF THE $1 TRILLION TRADE FEAT
A ceremony to celebrate Korea's surpassing the $1 trillion trade threshold and the 48th Trade Day took place at COEX Convention Hall in southern Seoul on Dec. 12.
Approximately 1,200 people from government, trade, industry and other related business communities participated in the ceremony. Participants, including President Lee Myung-bak, gave thanks to those who contributed to the development of the domestic trading industry and pledged to make a leap forward for ushering in an era of $2 trillion trade.
During the ceremony, 816 people, including four foreigners, were honored with orders and other diverse prizes in recognition of their contributions to the development of the national economy.
In his congratulatory speech, President Lee said, The wigs made from their hair and the clothing that young female factory workers produced late into the night at their sewing machines served as the seeds for nation building through trade for nation building through trade and helped shape today;s Republic of Korea.Now, many countries in the world see the Republic of Korea in a different light. Samsung, Hyundai, and LG have now become familiar names with many people across the globe.
The G20 Seoul Summit and Hallyu, which is now sweeping the world, have contributed to significantly boosting the brand value of Korea. Korea Discount has given way to Korea Premium. Made in Korea' is no longer a weak point, but a strong point, Lee said.
The president added as a caveat, Global economic difficulties do not seem to be temporary, but tend to signal the beginning of an age of continuing uncertainty and contracting economic growth. We have to aggressively enter the U.S. and EU markets, taking advantage of the bilateral FTAs. We should also go into Southeast Asia and Africa as well as the Central and South American markets that are leading the global economic growth today. International trade has made Korea what it is today. Trade has been the engine of the country's economic miracle as well as the source of jobs and daily meals, said the president, adding, Now is the time to renew ourselves as we start toward the age of $2 trillion in trade. nw
(top) President Lee Myung-bak gives a congratulatory speech at the Trade Day anniversary event. (below) Accompanied by Minister of Knowledge Economy Hong Suk-woo, President Lee walks toward the COEX Convention Center to attend a ceremony for celebrating Korea's surpassing of the $1 trillion trade threshold on Dec. 5.
Photos on courtesy of KITA
Korea International Trade Association Chairman Sakong Il gives an opening speech during the Trade Day anniversary event.