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Gaesong Industrial Complex (GIC)

Gaesong Industrial Complex (GIC). GIC Project Special economic zone to be developed in stages Launched in August 2000 by North & South Korea Located 60 kms. away from Seoul Covers area of 26 million square meters Objectives: Improve North Korean economy

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Gaesong Industrial Complex (GIC)

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  1. Gaesong Industrial Complex (GIC) GIC Project • Special economic zone to be developed in stages • Launched in August 2000 by North & South Korea • Located 60 kms. away from Seoul • Covers area of 26 million square meters • Objectives: • Improve North Korean economy • Facilitate reform (market economy) • Reunification of North/South Korea • Peace and stability in the Korean peninsula/East Asia

  2. Gaesong Industrial Complex (GIC) GIC Project • 1st Phase • 15 participating SMEs, 13 started constructing their factories. • Of the 13 companies, three have started production • One company is testing its production line • Remaining 9 companies are still constructing their factories • Major products: stainless kitchen utensils, apparel, footwear, watches and jewelry, semiconductor and auto components, broadcasting equipment

  3. Gaesong Industrial Complex (GIC) • Mechanism • Preferential tariff treatment (same treatment granted to South Korean originating goods) • Rules of origin applies • Other elements in implementation

  4. Gaesong Industrial Complex (GIC) • Other elements • Coverage and scope • 100 tariff lines at HS 6-digit • To be selected from a universe of 232 lines • Individual list for all ASEAN Member Countries • Application of special safeguard mechanism • Unilateral • Unconditional (no obligation to prove injury, no obligation for advance consultation except for advance notification, no obligation for compensation) • No limit to the duration/frequency of suspension • Option to rescind • Anytime after five years • Subject to annual review • Report on Operations • Provision of export statistics

  5. Gaesong Industrial Complex (GIC) • Criteria for Selection of Products • Zero rating (resulting from the application of the TRM approved formula in determining sensitive products) • No trade balance (no exports, no imports) • No imports from Korea in 2004-2005, minimal imports in 2003 of US$1,000 • Falls under the Sensitive Track in the ASEAN-Korea FTA

  6. ASEAN-Korea Free Trade Area TIG Modality Trade in Goods (TIG) Agreement • Provides for the substantial reduction/elimination of tariffs and other barriers to trade by 2010, with flexibility up to 2012 • Various Tracks • Normal Track (2006-2010) • Sensitive Track (2012-2016) • Gaeseong Industrial Complex (GIC) products accorded originating status

  7. ASEAN-Korea Free Trade Area (AKFTA)

  8. ASEAN-Korea Free Trade Area (AKFTA) Modality for Tariff Reduction and Elimination under the Normal Track

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