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Identifying Promising Export Items for SMEs under FTAs: Policy Implications

Author Youngjoo Lee, Soo-dong Kim, Ba-woo Kim, Chang Yong Han Date 2016.02.01 Page 26
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The Korean government implements free trade agreement (FTA)-related policies measures in an effort to help Korean businesses find new opportunities for growth on the global market. Effective and efficient FTA-related policies are crucial to small and medium enterprises (SMEs), which face great difficulties in accessing and seizing global opportunities. The existing system of FTA support focuses on exporting SMEs. However, that only benefits around 15 percent of all Korean SMEs. The remaining 85 percent that do not presently export products are left out of the system altogether. The Korean government thus needs to devise a new system that would enable all SMEs to seize upon new opportunities presented by FTAs and expand globally.
Companies can take advantage of FTA-related policy measures by first identifying whether the products they manufacture are among the so-called promising items under FTAs. This being the case, the government could significantly encourage the majority of SMEs to make use of the FTA export opportunities by selecting promising items fairly and providing information on them in a systematic manner. This study therefore aims to propose a new FTA support system for selecting promising items for trade under FTAs that could substantially promote exports by SMEs. Our study analyzes the policy implications of developing such a system and ensuring its efficient management.