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Vol 3· Issue 2· February 2014

Message from the Embassy

President Park Speaks at the 44th World Economic Forum in Davos on January 22.
Entrepreneurship and the creative economy took the spotlight during President Park Geun-hye's keynote speech at the 44th World Economic Forum Annual Meeting held in Davos, Switzerland on January 22. During the session, "Reshaping the World Through Entrepreneurship, Education and Employment," President Park urged world leaders to join Korea in fostering entrepreneurship as a sustainable path to resolving diverse global economic challenges.  She also proposed a move toward the "Davos Consensus," a belief in entrepreneurship as the driving force of sustainable, inclusive growth.

 

Drawing from a Korean proverb that "beads are not considered jewelry unless they are woven together," President Park described the connection between the two themes of her speech - creativity and entrepreneurship. President Park explained that the beads of creativity, which are non-depletable, environmentally friendly and inherent to all people, are woven together by entrepreneurship to create new markets and to build new jobs.

 

As a creative economy promotes the convergence of different industries and cultures, the Korea-U.S. Free Trade Agreement (KORUS FTA) has opened the Korean services market to U.S. businesses and advanced the sharing of ideas and services between Korea and the United States. This month's newsletter expands on various service industries that have found success in Korea under the KORUS FTA including legal, professional and travel services.


Feature Article
The KORUS FTA Takes Trade in Services to a Whole New Level

 

The KORUS FTA opened a new era of trade in services between Korean and U.S. businesses when it was entered into force on March 15, 2012. While exports of goods are a large part of bilateral trade between Korea and the United States, trade in services cannot be overlooked because the service sector represents the majority of both countries' gross domestic product (GDP). Korea and the United States' service-driven economies capitalize on well educated and highly skilled workforces, with the services sector representing almost 58 percent of Korea's GDP and 78 percent of U.S. GDP.

 

The KORUS FTA is a powerful growth catalyst as it creates a clear pathway for service-oriented businesses wishing to expand. In fact, trade in services between Korea and the United States continues to grow, and the U.S. services trade surplus to Korea is expanding by approximately 20 percent annually. During the first three quarters of 2013, the trade balance on services was $6.25 billion, a 25.7 percent increase over the same period the previous year.

 
As seen in the graph below, bilateral trade in services has consistently increased and the balance on U.S. exports of services continues to rise and create numerous opportunities for businesses in legal, professional and travel services.
Services Graph
Source: Bureau of Economic Analysis, Department of Commerce

The KORUS FTA Opens the Korean Legal Services Market 


As a result of the KORUS FTA, for the first time in history U.S. law firms can establish offices in Korea to advise on U.S. and international law. U.S. firms immediately seized the opportunity to expand into the previously closed market. As of August 2013, a total of 18 law firms received permission to set up a presence in Korea, of which 14 were U.S. firms. Beginning next month, U.S. firms can partner with Korean firms, and in 2017, with the full opening of the Korean legal services market, U.S. firms will be able to directly hire Korean attorneys.

 

As the legal services market continues to open under the KORUS FTA, opportunities are growing for U.S. firms, as well as Korean attorneys who can share their in-country expertise. The opening of the legal services market in Korea is noteworthy for U.S. firms, especially for those that already have established Korean business clients.

 

Just one example of a U.S. based firm expanding into the open Korean legal market is McKenna Long & Aldridge (MLA). MLA, an international law firm headquartered in the United States, opened its Korea office in Seoul soon after implementation of the KORUS FTA. 

 

"The opening of MLA's Korea office was a natural extension of the firm's long history of representing Korean clients, as well as U.S. and other clients with matters in Korea. Since opening the Korea office, MLA has exceeded its goals and objectives. The opportunity to partner with Korean law firms beginning next month is significant, not just in substance, but also as representative of having reached the last milestone before the full opening of the legal services market." - Andrew Park, Korea Office Managing Partner, McKenna Long & Aldridge

 

Demand for Professional Services Grows under the KORUS FTA

 

The KORUS FTA is also opening new avenues for professional services, including specialized business and management consultants, as U.S. businesses expand into the dynamic Korean marketplace. Between 2008 and 2012, U.S. business, professional and technical services exports increased 51 percent. Many success stories on U.S. Korea Connect point to the importance of understanding the Korean marketplace and finding the right Korean business partner as ways of increasing company's likelihood of success, making specialized consultants an increasingly important asset. In the United States, companies are also hiring Korean workers and discovering immediate value in their expertise and existing professional networks.

 

Korea's economy expanded at the fastest pace in nearly two years in the third quarter of 2013, and Bloomberg ranked Korea first among all nations in its Global Innovation Index. In addition, the creative economy developing in Korea is fueling a renewed spirit of entrepreneurship and innovation. All of these combined factors under the KORUS FTA create a highly lucrative environment for entrepreneurial U.S. consultants with specialized expertise, which is highly valued by Korean companies. 

 

Don Southerton, a consultant specializing in supporting and launching U.S. brands in Korea and Korean brands in the United States, believes the comprehensive services section of the KORUS FTA breaks open the Korean market and is a game changer.

 

"The KORUS FTA provides groundbreaking changes for the services sector that is oftentimes overlooked. Services professionals and business consultants with highly specialized expertise are in an ideal position to penetrate a ripe and flourishing Korean market and should actively explore the opportunities in the Korean market and capitalize on the open services trade framework provided in the KORUS FTA." - Don Southerton, CEO, Bridging Culture Worldwide

 

Trade in Travel Services Soars to New Heights

 

Travel services are also benefitting from the increased opportunities brought by the KORUS FTA. In the first three quarters of 2013, U.S. exports of travel services to Korea totaled more than $3.5 billion, an increase of 10.7 percent over the previous year. 

 

The demand for direct flights between Korea and the United States, the No. 1 tourism country for international tourism receipts during 2010 - 2012, has increased. For instance, Seoul is now one of the top 10 premium markets in the world, and Korea is among the top 10 countries with the highest number of travelers to the United States. In 2012, 1.25 million Korean tourists visited the United States, a 64.8 percent increase from 2008. Korea also received a record-high 11.4 million foreign tourists in 2012. 

 

To the delight of many travelers, both American and Korean airlines have announced new non-stop service between the two countries. In May 2013, American Airlines launched new services between Seoul Incheon International Airport and Dallas/Fort Worth. Korean airlines are also answering the call of international travelers. Korean Air announced it will make Houston its newest U.S. destination, adding nonstop flights to its Seoul hub starting May 2, 2014.

 

As the services industry continues to drive the economies in Korea and the United States, the KORUS FTA is supplying a welcome boost of opportunities and taking the Korea-U.S. relationship to new heights.

Spotlight on the KORUS FTA

According to the trade statistics data released by the Korea Customs Service, U.S. exports to Korea increased 1.3 percent to $3.62 billion in January 2014. This solid performance by U.S. exports over the previous year is noteworthy especially during a sluggish month of trade where Korea's global imports decreased, and Korea's exports to the United States fell by 2 percent. This positive U.S. performance also reduced the trade deficit with Korea by almost 11 percent. 


Events

Ambassador Ahn Ho-young Participates in Korea-U.S. Business Council Interim Meeting

 

Ambassador Ahn Ho-young traveled to Dana Point, California, for a Korea-U.S. Business Council (KUSBC) and U.S.-Korea Business Council (USKBC) Interim Meeting from February 3-4, 2014. Ambassador Ahn spoke about the political and economic outlook in 2014 and the upcoming second anniversary of the KORUS FTA.

 

Business leaders from Korea and throughout the United States joined government officials and academic leaders to discuss a variety of topics, including Korea-U.S. bilateral cooperation in the creative economy, innovation and energy, and continuing progress on the implementation of the KORUS FTA. U.S. Ambassador to Korea Sung Kim, KUSBC Chairman Cho Yang Ho, USKBC Chairman Paul Jacobs, Acting Deputy USTR Wendy Cutler, USKBC President Tami Overby and many other luminaries in government and business organizations attended the meeting.

 

Economic Minister Gheewhan Kim Travels to San Diego, California

 

Economic Minister Gheewhan Kim visited San Diego, California, for his first official outreach trip to the city following the annual U.S. Korea Business Council Meeting, on February 5-6, 2014. Minister Kim spoke with local business representatives about trade opportunities with Korea at a joint Korea Economic Institute - World Affairs Council of San Diego dinner meeting. Minister Kim also met with San Diego City Councilmember Sherri Lightner and participated in a public speaker series at the University of California, San Diego. Phil Eskeland, Executive Director of Operations and Policy at the Korea Economic Institute, accompanied the Minister.

 

Featured Video

President Park speaks at the 44th World Economic Forum Annual Meeting in Davos, Switzerland. 

 

Watch the video below to see President Park's keynote speech during the "Reshaping the World Through Entrepreneurship, Education and Employment," session on January 22.

 


In the News

Why Korea Will Be The Next Global Hub For Tech Startups

Forbes, February 6, 2014

"Bloomberg News recently published the Bloomberg Global Innovation Index and ranked Korea first among all nations by comparing a group of indicators such as research and development capability, productivity, tech density and patent activity." Read more here.

Trade, "Gangnam Style" Act as Key Motives for Houston-Korea flight

Houston Business Journal, February 4, 2014

"As America's fourth largest city and one of the most diverse cities in the U.S., Houston makes an ideal spot for Korean Air to send "Gangnam Style"- enthusiasts to the Gangnam District in Seoul." Read more here.


Senator Rubio Meets With Korean Foreign Minister
CBS Miami, January 24, 2014

"U.S. Senator Marco Rubio (R-FL) met with the Korean Foreign Minister Yun Byun-se in Seoul on Friday as part of his trip to Korea." Read more  here.

 


About U.S. Korea Connect

The U.S.-Korea Free Trade Agreement (KORUS FTA) is an international partnership designed to promote the free flow of products and services between the United States and Korea. This new economic relationship will spur business growth, create jobs, generate new markets for U.S. goods and services, and strengthen an important strategic alliance.