| 摘要 | ABSTRACT
1. Research Purpose
The free trade agreement between Korea and China has come in effect from the end of 2015 after it had reached a final deal on November 2014 through over three years of negotiation. However, the agreement is considered to be insufficient in terms of market openness including petroleum sectors as one of the participants is a socialist state.
Since Korean petroleum industry has created substantial national wealth through exporting petroleum products manufactured using imported crude oil and taken advantage of geographical proximity for trading with China, the FTA negotiation would be hopeful but the result was disappointing,
Considered of the growth of Chinese petroleum industry, there are concerns that competitiveness of Korean petroleum products in the China market may get weaker if opening the market is delayed and Chinese exports of petroleum products to Korea will accelerate when both markets are completely open.
This study is aiming at researching opportunities and challenges Korea faces on trading petroleum products with China based on the FTA articles, and drawing conclusions that addresses requirements for related industries and governmental policies in Korea to realize the purpose of the FTA.
2. Summary
Korean and Chinese petroleum industries are comparable in many ways. The both have crude oil refinery capacities above each domestic demand while they all import much of crude oil abroad.
They differ, however, in growth rate of petroleum demand so as do their economic level and growth rate. Korean petroleum industry shows sluggish growth of its oil refinery capacity as its domestic oil demand growth is slack and its foreign exports increase whereas Chinese petroleum industry invests in constructing new refineries based on rapid growth of its domestic petroleum consumption and its foreign exports are gradually increasing.
Further, Korea has four oil companies which are privately owned crude refiners while in China three national oil corporations(CNPC, Sinopec, CNOOC) with all of upstream and downstream assets are dominant and local and small refiners are on the way to slowly expand their market share.
Finally, pricing regime of the both countries needs to be discussed. In Korea, domestic prices of petroleum products are determined by the private refiners while despite a series of reforming of petroleum pricing regime, China still has the pricing mechanism that domestic fuel is priced by NDRC, a governmental branch of China.
When it comes to the both countries' international trading trends of petroleum products, gasoline, diesel, jet fuel, lubricating base oil, and asphalt are main exports in Korea, showing continuously a surplus of total 10~20 billion dollars from 2010. China's petroleum product is usually making trade deficit as a whole although some products such as jet fuel, gasoline and diesel are showing trade surpluses.
In their bilateral trading between Korea and China, the former's exports to the latter is dominant. Korea recorded a surplus of 6.1 billion dollars in petroleum trading with China in 2010 and expanded it to 10 billion dollars in 2011. After then it was decreasing and low oil prices in 2015 even drew it down to 3.9 billion dollars.
Under these circumstances, the extent of petroleum market openness from Korea-China FTA that recently took effect is assessed as unsatisfactory. It is because most export products to China such as diesel, lubricating base oil and asphalt but jet fuel are classified into the sensitive or highly sensitive tracks. In addition, as MFN(Most Favored Nation) tariff rates were designated as basic rates that are applied to determining preferential rates of the FTA, it should be noted that the reality which execute rates of China that are applied to actual trading with Korea are lower than the MFN rates wasn't reflected in the agreement as opposed to FTAs that China already signed with other Asian countries such as ASEAN.
Another problem arises from that China petroleum market is lack of transparency and credibility. Considering China pricing mechanism of domestic petroleum that is determined by the government, market penetration of foreign petroleum companies to China may be impossible in fact if the government prices the domestic products lower than international oil prices as it did during the time of high oil prices. Further, China can increase domestic market share of its state-owned oil companies through overcoming their inefficiency based on their vertical integrated structure and government subsidies.
It should be also noted that Chinese competitiveness of petroleum products is being rapidly improved. As stated above, Chinese government are seeking to promote China petroleum industry as an export industry by forcing the domestic refineries to improve quality and efficiency of their products. In the mean time, it is envisaged that competitiveness of Chinese petroleum exports has been advanced through related indicators although it is still much weaker than from Korea. Chinese government also guided domestic refiners to upgrade their facilities by reinforcing quality standards of auto fuels for domestic use. Sulphur contents for gasoline and diesel are scheduled to regulate below 10ppm from 2017.
Despite these dynamics of Chines petroleum industry, the FTA between Korea and China is regarded as opportunities for new market creation to Korean petroleum industry as the latter has still considerable competitiveness advantage over the former. RCA(Revealed Comparative Advantage), TI(Trade Intensity) and TC(Trade Complementarity) indexes for the both countries petroleum trading are showing this reality well. Thus, overcoming the challenges and exploiting opportunities the Korean industry faces in the FTA will be the key to maximizing the effect of market openness for the both countries.
Existing studies related to analysing the effects of Korea-China FTA have limitation in the aspects that they have been worked without reflecting China's non-liberalized market features and under conditions where the both petroleum markets are completely open as a result of the FTA. From this perspective, this study is designed to analyze the effects theoretically using the game theory under consideration of China's petroleum market features. For these purpose three theoretical models are adopted: Model 1 assumes a situation where Country 1 having one private and monopolistic refiner signs FTA with Country 2 having the same type of a refiner. Model 2 considers other industrial environment in that Country 1 with one private and monopolistic refiner underwrites the agreement with Country 2 operating an vertically integrated state-owned oil company. Model 3 takes the world where Country 1 with one private and monopolistic refiner make the agreement with Country 2 operating an vertically integrated but privately owned oil company. Under these model structures, firm profit and social welfare of each country at sub-perfect Nash equilibrium are analyzed and some conclusions are made as follows.
Firstly, in the case of larger cost inefficiency of the vertically integrated firm in Country 2, the refiner's profit growth in Country 1 from FTA is highest in Mode 2 that most reflects petroleum industry structures in the both countries while it is highest otherwise in Model 3. It means that the both markets should be open as soon as possible for Korean refiners under the condition where Chines oil companies have much higher costs.
Secondly, social welfare growth of Country 1 from FTA is expected to be highest in Model 3 but to be lowest in Model 2. It means that Korea government doesn't have much incentive to remove petroleum tariffs between the both countries as soon as possible.
Finally, Model 3 is the best choice for growth of the social welfare and refiner's profit in Country 1 if inefficiency of the company in Country 2 is relatively small and thus petroleum market's liberalization and state-owned oil companies' privatization in China are the key for Korea to realize the world of Model 3.
Based on above analysis, following measures from Korean government and firms are required for Korea to take a full fruit from Korea-China FTA.
The first is that diversification of Korea refiners into upstream businesses such as shale gas development in China using Korea-China FTA should be considered as export competition of petroleum products in Asian market is getting strong.
Secondly, revision of rules of origin for lubricating base oil and accelerating tariff reduction of petroleum products in Korea-China FTA needs to be discussed in negotiations of the FTA additional process and RCEP as well as requiring China to liberalize its petroleum market.
Thirdly, considering the point that China doesn't impose any tariff on its crude oil imports, Korea needs to shift the existing tariff levied on its crude oil imports into the form of internal tax to prepare the future where tariff barriers of petroleum industry between the both countries are completely removed. In addition, based on recent experiences that China has heightened non-tariff barriers on imports from Korea due to the Korea's THAAD allocation issue, Korea is required to respond to such measures through strictly applying its fuel quality regulations to China's exports of petroleum products.
3. Research Results and Policy Suggestions
If Korea wants to enjoy wholly positive effect of FTA with China, acceleration of market liberalization and equitable tariff reduction between the both countries are needed as well as enhancing Chinese market transparency should be preceded. To meet those requirements, Korea government needs to utilize additional negotiation process of Korea-China FTA or RCEP negotiation.
In addition, revision or utilization of petroleum related policies should be reviewed. Tariff imposed on crude oil imports that may become reverse discrimination to Korean petroleum products in domestic market should be reconsidered as the Chinese products are expected to increase exports to Korea in the long-term as a result of the FTA. Further, Korean certification process for automotive fuel quality is required to be reinforced as a non-tariff instrument to response to China's unexpected non-tariff measures.
Korean refiners are required to exploit the FTA for diversifying their oil related businesses considering intensifying competition of petroleum exports in Asia. To materialize this strategy, they should be committed to keep in touch with China oil companies.
BAS 2016-14.pdf |
