Trade Technical Barriers in Export Target Countries
Analysis Report on the Impact on Korean Exports
Trade Technical Barriers (TBT) imposed by major export destination countries have been found to negatively affect small and medium-sized export enterprises in South Korea. However, TBTs did not have a significant impact on the total export value or on large corporations.
According to the report titled "Analysis of the Impact of Trade Technical Barriers (TBT) in Export Destination Countries on Korean Exports," published on the 12th by Jang Yongjun, a professor in the Department of Trade at Kyung Hee University, and Shin Sangho, a senior researcher at the Bank of Korea Economic Research Institute, an increase in TBTs resulted in a decrease in the number of exporting companies.
The report explained that recent international trade issues have centered around non-tariff measures, with TBTs accounting for the largest share, which is why it was chosen as the research topic. It analyzed that the TBT issue stems from major foreign countries using non-tariff measures as strategic tools to prevent the leakage of strategic materials and core technologies and to secure leadership in advanced industries.
According to the research results, a survey conducted on seven manufacturing industries in South Korea from 2015 to 2019 revealed that a 1% increase in overseas TBTs led to approximately a 0.22% decrease in the number of exporting companies.
This indicates that the increase in TBTs generated additional costs, prompting the exit of small-scale companies unable to bear these costs and suppressing new entries, thereby reducing the number of exporting companies.
However, the increase in TBTs was found to have no significant effect on export value. The report interpreted this as South Korea’s exports being concentrated in large corporations with a high capacity to absorb costs, thus the export value was not greatly affected.
Furthermore, the report explained that increases in capital accumulation, added value, and labor productivity by industry have the effect of reducing the negative impact of TBTs on exports. Industries such as electrical and electronic manufacturing, machinery manufacturing, and non-metallic mineral and metal product manufacturing, which have high capital accumulation, added value, and labor productivity, are less affected by the negative impacts of TBTs.
However, this mitigating effect on negative impacts was mainly observed in the extensive margin (number of exporting companies), and was not clearly evident in the intensive margin (export value).
Senior researcher Shin Sangho emphasized, "According to the research results, it is important to lower the level of TBTs through bilateral and multilateral direct trade negotiations to address the negative impacts caused by the increase in TBTs," while also stressing, "Ultimately, strengthening the productivity and market competitiveness of our export industries is the necessary strategy for entering new overseas markets."
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