Trade Adjustment Assistance Projects
What is trade adjustment assistance project?
Purpose
- It is to promote trade adjustment assistance to minimize damage on trade and restore competitiveness of companies which were damaged or are likely to be damaged due to free trade agreement (FTA) by providing loan and consulting.
FTA status in Korea *As of April 2022
Companies with which FTA took effect (18 cases)
| Country | Implementation status | Meaning | ||
|---|---|---|---|---|
| Starting negotiation | Signing | Effective | ||
 Chile |
1999.12 | 2003.02 | 2004.04 | The first FTA for Korea, serving as a bridgehead to enter the Latin American market |
 Singapore |
2004.01 | 2005.08 | 2006.03 | Bridgehead for ASEAN market |
 EFTA(4countries) |
2005.01 | 2005.12 | 2006.09 | Bridgehead for European market |
 ASEAN (10 countries) |
2005.02 | 2006.08 (Agreement on trade in goods) |
2007.06 (Agreement on trade in goods) |
The first FTA concluded with large economic zone |
| 2007.11 (Agreement on service) | 2009.05 (Agreement on service) |
|||
| 2009.06 (Agreement on investment) |
2009.09 (Agreement on investment) |
|||
 India |
2006.03 | 2009.08 | 2010.01 | BRICs countries, large market |
 EU(27 countries) |
2007.05 | 2010.10.06 | 2011.07.01 (Tentative) 2015.12.13 (Total) *2011.07.01 Tentative application for 4 years and 5 months |
Large advanced economic zone |
 Peru |
2009.03 | 2011.03.21 | 2011.08.01 | Bridgehead to enter the resource-rich Latin American |
 USA |
2006.06 |
2007.06 | 2012.03.15 | The largest economy in the world (by GDP) |
| 2018.01 (Revision Negotiation) |
2018.09.24 (Revision Negotiation) |
2019.01.01 (Revision Protocol) |
||
 Turkey |
2010.04 | 2012.08.01 (Framework agreement, Agreement on trade in goods) |
2013.05.01 (Framework agreement, Agreement on trade in goods) |
Bridgehead to enter European and Central Asian markets |
| 2015.05.26 (Agreement on service and investment) |
2018.08.01 (Agreement on service and investment) |
|||
 Australia |
2009.05 | 2014.04.08 | 2014.12.12 | Resource rich country, major Oceania market |
 Canada |
2005.07 | 2014.09.22 | 2015.01.01 | Advanced North American market |
 China |
2012.05 | 2015.06.01 | 2015.12.20 | Korea’s No. 1 trading partner (as of 2019) |
 New Zealand |
2009.06 | 2015.03.23 | 2015.12.20 | Major Oceania market |
 Vietnam |
2012.08 | 2015.05.05 | 2015.12.20 | Korea’s 5th largest investment destination (as of 2019) |
 Colombia |
2009.12 | 2013.02.21 | 2016.07.15 | Resource-rich country, emerging market in Latin America |
 Latin America (5 countries) |
2015.06 | 2018.02.21 | 2021.03.01 Full effects |
Creating new markets in Latin America |
 UK |
2017.02 | 2019.08.22 | 2021.01.01 | After Brexit, agreed to continue trade |
 RCEP |
2012.11 | 2020.11 | 2022.02.01 | Continuing Korea-UK relationship after BREXIT |
- EFTA(European Free Trade Association)(4 countries) : Switzerland, Norway, Iceland, Liechtenstein
- ASEAN(10 countries) : Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Vietnam, Thailand
- EU(27 countries) : Austria, Belgium, Czech Republic, Cyprus, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, Netherlands, Poland, Portugal, Slovakia, Slovenia, Spain, Sweden, Bulgaria, Romania, Croatia
- Latin America (5 countries) : Panama, Costa Rica, Honduras, El Salvador, Nicaragua
- RCEP(Regional Comprehensive Economic Partnership)(14 countries except for Korea) : Korea, 10 ASEAN countries, China, Japan, Australia, New Zealand
Eligible applicants and assistance cases
Requirements for trade adjustment assistance
Requirements
- Companies which experienced reduction of sales (or production) by more than 10% due to increase in import from FTA partner country as a result of tariff cuts
무역조정 지정요건 Classification Period recognized for damage Damage intensity and basis period for comparison If there is damage on trade For the past 2 years from the date of application - Reduction of sales or production volume for 6 months or 12 months by more than 10% year on year
- Damage equivalent to damage above is recognized considering operating
- Companies which certainly are expected to experience decrease in sales (or production) by more than 10% due to increase in import from FTA partner country due to tariff cuts
무역조정 지정요건 Classification Period recognized for damage Damage intensity and basis period for comparison If it is certain that the company will suffer trade damage certainly For the 1 year from the date of application - If the sales or production for 6 months or 12 months are expected to decrease by more than 10% from the previous year (considering changes in operating profit, employment, utilization rate and inventory comprehensively)
Trade adjustment Recognition period
- Ex) When application is made in January, 2022, the trade damage period can be set for 6 months or 12 months from January 1 2020 to January 2022. The comparison period is the same period of last year.
Assistance cases
-
- Trade adjustment product : fiber glass insulation
- FTA Korea-US FTA /span>
- Company : : Sewoon ○○○○
- The company successfully developed eco-friendly new products and secured new customers to overcome damage from decrease in sales of fiber glass insultation due to Korea-US FTA
“In order to respond to rapidly changing industrial environment, finding an answer to the question on who to change is the first step.”
-
- Trade adjustment product : carbon fishing rod
- FTA : Korea-China FTA
- Company : ○○Industry
- The company faced crisis due to increase in import of cheap fishing road but overcame crisis by improving quality and production efficiency.
“The big fish caught by our customer is our big fish. Add pleasure of fishing for our customers by providing high quality fishing rods for money”
-
- Trade adjustment product : related to plastic injection and mold
- FTA : Korea-ASEAN FTA
- Company : ○○Tech
- The company overcame crisis caused by low priced imported goods and volume with the development of high value added products and product diversification
“We provide the best quality products by establishing companywide quality management system with the sprit of thinking and passion, harmonization and cooperation and responsibilities and practice.”
-
- Trade adjustment product : related to chocolate and chocolate snack
- FTA : Korea-EU FTA
- Company : ○s○
- Attracting consumer interest and securing competitiveness with differentiation from Europe’s high end chocolate brand and product strategy focusing on value for money.
“Even in the crisis, if we know our capabilities and competitors clearly, there is a way to win.”
-
- Trade adjustment product : Multi-tap
- FTA : : Korea-EU FTA
- Company : : ○○ Electricity
- Exploring ways to survive with product differentiation and sales channel diversification in the highly competitive multi-tap market
“Innovation does not necessarily require a lot of money. If you think about innovation fully, you may find more efficient way for innovation.”
Major support
- Supporting for loan and consulting for 3 years after being designated as company subject to trade adjustment assistance
Loan support
Eligible applicant
- Companies designated as a company subject to trade adjustment assistance by the Ministry of Trade, Industry and Energy
※ Within 3 years from designation date
Support
- Funds: Funds required for facility investment and site securing necessary for the implementation of the trade adjustment plan (production and test inspection facilities (including used facilities), informatization facilities, distribution and logistics facilities, business site construction, land purchase costs, business site security funds (purchased , auction, public auction), etc.)
- Operating funds: Raw and subsidiary materials purchase costs necessary for the implementation of the trade adjustment plan, production costs and incidental costs, sales channel and market development costs, development-related costs, labor costs (other expenses incurred in business management related to trade adjustment)
Loan interest rate
- Fixed annual rate of 2.0%
※ Policy fund base rate of 2.15% for the second quarter of 2022
Loan period
- Facility fund : Within 10 years (Mortgage loan with 5-year deferment, credit loan with 4-year deferment)
- Working capital : Within 6 years (Credit loan with collateral based on 3-year deferment)
Loan limit
- KRW 6 billion a year per company (including annual working capital of KRW 500 million)
※ Within annual limit of KRW 7 billion for companies located in other regions
※ For companies whose export increased, which created more than 10 jobs for the last year and which made facility investment of more than KRW 1 billion for the past year (including this time), the working capital limit is KRW 1 billion
Loan method
- Direct loan from KOSME or proxy loan via banks
Consulting
Eligible applicant
- Consulting on trade adjustment : Company designated as being subject to trade adjustment assistance from the Ministry of Trade, Industry and Energy
※ Within 3 years from the designation date - Consulting for business stabilization and competitiveness: Companies approved by the KOSME Trade Adjustment Review Committee among companies which suffer from or are likely to suffer from decrease in sales (or production) by more than 5%
Support details
- All management and technology areas required for the implementation of trade adjustment plan (business strategy, HR organization, marketing, sales, finance and accounting, customer satisfaction, global management strategy, production innovation, quality, information and technology, energy green management, R&D, business transition, etc.)
Support limit
- Trade adjustment consulting : Up to KRW 120 million within 3 years per company (multiple times within 3 years • Consulting for management stability and competitiveness: Up to KRW 40 million per company (one time)
Support ratio
- 80% of consulting expenses
Execution period
- Up to 6 months (possible to extend by 2 months one time)
Support procedure
Trade adjustment assistance (loan, consulting)
- Multiple applications can be made for 3 years from the designation date per company
-
- Support for preparation of application and
- KOSME
-
- Application for designation as trade adjustment assistance company
- Applicant
-
- Judgement on trade damage
- KOSME
-
- Designation of companies subject to trade adjustment
- Ministry of Industry, Trade and Energy
-
- Application for loan and consulting
- Designated company
-
- Support for loan*
• consulting - Designated company
- Support for loan*
* If the suitability for trade adjustment plan is found to be appropriate, loan support can be provided (evaluation on suitability with trade adjustment plan is done once when the application for loan
is made for the first time.)
Consulting on management stability and competitiveness
- One company is able to make application once.
-
- Supporting preparation of application and registration
- KOSME
-
- Application for consulting
- Applicant
-
- Judgement on trade damage
- KOSME
-
- Pre-diagnosis
- KOSME
-
- Evaluation on implementation plan
- KOSME
-
- Providing consulting
- KOSME
