From the 2009 IMF economic health check of Korea:

The International Monetary Fund expects the Korean economy to grow by 2½ percent in 2010 but called on the authorities to continue with efforts to reorient the economy from exports to the domestic service sector.

·           Korea should reorient economy away from dependence on exports

·           IMF supports continued expansionary fiscal, monetary policies

·           Recovery to be weighed down by household and small business debt

Korea is a heavily export-dependent economy and was severely hit by the global fall in demand following the worldwide slump. The country suffered its largest drop in exports on record and at the low point in January 2009, exports were down 35 percent from the previous year.

In its annual report on the state of the Korean economy, the IMF said the weak demand from Western consumers now, and into the foreseeable future, had increased the need for Asia’s fourth largest economy to move away from its export-led growth model.

"Looking ahead, a key medium-term challenge will be to rebalance growth toward nontradables and make the services sector an additional engine of growth, " said IMF mission chief for Korea Subir Lall.

Call to maintain expansionary policies

IMF Directors “agreed that macroeconomic policies should continue to focus on supporting growth until a self-sustained recovery is firmly established,” they said in a statement.

 Following the financial stress, the Korean economy contracted by 5.1 percent in the last quarter of 2008 from the previous three months—among the sharpest contractions worldwide. Korean authorities responded by implementing a sizeable and frontloaded fiscal stimulus package and monetary easing.The stimulus measures had a stronger than anticipated impact, boosting confidence and supporting economic activity. This, together with the depreciation of the South Korean currency, the won, has caused the IMF to adjust its growth projections for 2009 from -3 percent to -1 ¾ percent.

However, the report suggests the less gloomy outlook will be tempered as external demand remains sluggish and the impact from the stimulus measure and export gains from the depreciation of the currency begin to fade. The IMF forecasts the economy to grow at 2.5 percent in 2010.

The recent recession has posed the biggest economic challenge to this northeast Asian country since the 1997–98 Asian crisis. This time around, a recovery is likely to be dampened by highly leveraged households and small and medium-sized enterprises (SMEs) and the sluggish pace of global recovery.

Following the earlier downturn, many large corporations underwent major restructuring. Consequently, Korean banks increasingly channeled credit to SMEs and households. However, in many cases, the money borrowed by SMEs has not gone into productive investment. In its report, the IMF said Korean authorities should consider rolling back some of the support measures for SMEs introduced late last year.

Reducing employment protection for regular workers and expanding social protection for nonregular workers would help improve labor market flexibility.

Korean households are also facing record levels of debt. Following the Asian crisis, South Koreans were encouraged to borrow, propelled by government policies and cheap credit. According to Organization for Economic Cooperation and Development (OECD) figures, in just over two decades, the household savings rate in Korea has plummeted from a world-beating 25 percent to a projected 3.2 percent in 2010—the lowest among OECD countries.

If the projections are accurate, next year South Koreans will save roughly half the amount that Americans do.

US DEVELOPMENTS – JULY 2009 Attached please find the latest monthly report from the Chamber of Shipping of America. The report covers: 

• USCG guidance on piracy (which although addressed to US flag ships may be of general interest)

• Fuel switching issues in California

• A correction to the US Customs Interim Final Rule concerning ‘10+2’ filing requirements.

   ANNEX US DEVELOPMENTS JULY 2009

ICS/ISF NEWS – JULY/AUGUST 2009

The newsletter can also be accessed via www.marisec.org/ics-isfnews/July-August2009.pdf

 ICS/ISF NEWS - JULY/AUGUST 2009

  KS-SF-09-059-EN

 The EUROSTAT Statistics in Focus edition 58/2009 (attached) reports:   

In 2007 freight SSS totalled around 1.9 billion tonnes, some 61% of total EU-27 maritime goods transport. The United Kingdom and Italy, with 366 and325 million tonnes respectively, contributed most heavily to the total. The share of SSS in total maritime transport varied widely from one country to another.   

The majority of SSS reported by the EU-27 ports concerned partner ports situated in the Mediterranean (28%) and the North Sea (27%). Liquid bulk (including liquefied gas, crude oil and oil products), with almost half the total tonnage, was the largest cargo type. It accounted for about 60% of total SSS cargo in French and Dutch ports. 

  KS-SF-09-058-EN

EUROSTAT ‘Data in Focus’ 22/2009 covers Maritime transport of goods – 3rd quarter 2008. The data offer information by direction, types of cargo, reporting member state, partner country etc.

 Maritime transport of goods – 3rd quarter 2008

Attached please find the EUROSTAT Data in Focus 20/2009 publication on Maritime transport of goods and passengers 1997-2007. The data are running up to end 2007 only and are not absolutely up to date, but they are complete and still offer an interesting picture.

Please be advised that some political groups have elected their president/chairman, notably:

 1.   The European People's Party (EEP) has re-elected Mr. Joseph Daul.  

 2.   The Socialist Group has re-elected Mr. Martin Schulz. The name of the Socialist Group has also been changed into Progressive Alliance of Socialists and Democrats.

 3.    The European Free Alliance have elected Mrs. Jill Evans .  

 4.   The Greens have elected a co-chairmanship, notably Mr. Daniel Cohn-Bendit and Mrs. Rebecca Harms.  

 5.   The European United Left/Nordic Green Left group has elected Mr. Lothar Bisky.  

Some political groups, such as the Liberals (ALDE) are expected to appoint a chairman or president in the coming days.   

Way forward  

On 14 July, the newly elected European Parliament will meet for the first time in Plenary in Strasbourg and will elect its new President. However, for the time being, there is no agreement over the next president of the European Parliament.   

On 15 July, the European Parliament might vote on the candidacy of Mr. Barroso for a second term at the helm of the European Commission. Mr. Barroso has already received support from the Member States at the European Council meeting of June 2009 but he now needs to be confirmed by a majority vote in the European Parliament. To that end, consultations are ongoing between the leaders of the political groups in the European Parliament. Moreover, the Czech and incoming Swedish Presidency are – reportedly – leading negotiations with the political groups in the European Parliament to see whether there is a majority in the European Parliament ready to support a re-election of Mr. Barroso as Commission President.  

ICS participated at the recent meeting of the United Nations Open Ended Inter Consultative Process (ICP) on Oceans and the Law of the Sea, held at the UN headquarters in New York between 17-19 June.  It will be recalled that the UN ‘ICP’ provides an opportunity for governments to consider issues in advance of the annual discussion on UNCLOS at the UN General Assembly.  However, the ICP is also open to participation by NGOs.  Thus, apart from the need for the shipping industry to be represented for reasons of profile (IMO was also in attendance), there has also been a need in recent years to be ready to counter any negative interventions by environmentalist and trade union organisations (which, for example, have previously used the ICP to attack the open registry system).  Large numbers of (largely US based) environmental NGOs were present this year, including Greenpeace. 

In the event, this year’s meeting was uncontroversial from the shipping industry’s perspective.  However, it provided an opportunity for ICS to make a general statement on behalf of the industry on various issues including flag state performance, piracy, the need for IMO to lead the discussions on reducing ships’ CO2  emissions (under the umbrella of UNFCCC), and the need for governments to attend the UNCITRAL signing ceremony in Rotterdam this September. (The government participants to the ICP are mostly foreign affairs officials from embassies to the UN with little direct involvement in the operational regulation of shipping.)  

The main purpose of this year’s meeting (its 10th session) was to review the ability of the ICP to meet the original mandate given to it by the General Assembly in 1999 after UNCLOS came into force in 1994.  Interestingly, the majority of governments that spoke (particularly the G77 bloc of developing countries) expressed concern about the way in which the ICP has sometimes been turned into a negotiation in advance of the General Assembly debate, rather than as forum for general education and the informal exchange of views.  (The unhelpful decision of the ICP, a few years ago, to request the General Assembly to ask IMO and other UN agencies to explore the meaning of the so called ‘genuine link’ between ships and flag states was an example of such ‘out of hours’ negotiations, although the governments’ concern was actually with regard to mainly non-shipping issues, such as legal rights to exploit the seabed).  It was also agreed that in future the agenda of the ICP should be more structured, so that interventions permitted in the plenary session will be more relevant to the topics selected for discussion.  This will hopefully reduce the ability of NGOs to use the ICP to launch attacks on the shipping industry on issues not directly connected with the published agenda (as ITF and its environmentalist allies have previously been able to do).     

 The ICP has a mandate for a further three years, although the consensus amongst governments was that it provides a useful preparation for General Assembly debates and general information exchange, and should therefore probably be continued.