KITA collected suggestions made by 342 CEOs from the trading businesses, which were presented to the government as recommendations to be reflected in policies

Suggestions contain imminent issues that affect the trading sector, including supply chain, logistics, marketing, business environment and carbon neutrality issues and other recommendations

The Korea International Trade Association (Chairman: Christopher Koo) delivered a policy recommendation paper titled “Requirements from the trading business sector to the incoming government” to the Ministry of Industry, Trade and Energy on July 19. This paper includes suggestions presented by 342 CEOs from large and small to middle-sized trading firms.

The CEOs unanimously stressed, “The government should take pre-emptive actions to support firms to properly respond to supply chain, logistics and marketing issues, upgrade their business environment and achieve carbon neutrality and it is highly plausible that the business environment for exports may deteriorate due to a disruption of raw material and subsidiary material supplies and logistical bottlenecks.”

The paper specially revealed that instable supply of general-purpose semiconductors is resulting in other industrial sectors from experiencing disruptions in producing finished products. An official from a company producing semiconductor equipment expressed frustration by saying, “Although we placed orders from global micro control unit (MCU) makers at 30 times the prices we used to pay prior to the Covid pandemic, we can only secure 10% of what we actually need” and added, “Moreover, even the delivery of that small fraction will be delayed by six months, triggering difficulties in producing semiconductor equipment.”

In regards to seeking a solution to the ongoing disruption in supplies of raw materials and subsidiary materials in the trading sector, KITA advised, “The government should implement measures to incentivise conglomerates to utilize their own networks to contribute to stabilizing the supply of these materials for SMEs.” Additionally, KITA recommended the government to alleviate the financial burden the trading sector is facing by making use of a scheme to suspend payment of value added tax and expanding the application of import quota tariff on raw materials that are imported for the purpose of being exported.

Another factor that aggravates difficulties is tougher environmental requirements made by global conglomerates that take part in RE100 ？ a global campaign to transit 100% of corporate energy consumption to renewable energy. These global conglomerates are requesting companies that perform business within their supply chain to be aligned with carbon neutrality requirements in line with RE100. A company producing auto parts complained, “Although finished car producers request us to submit a plan of switching to renewable energy and reducing greenhouse gas emissions, not to mention difficulties in securing green energy sources, conducting a quantitative measurement of the level of companywide greenhouse gas emissions is far from being realistic at the moment.” Consequently, KITA proposed the government to introduce a method that allows making quantitative measurements of carbon emissions and make improvements to policies to allow SMEs to have easier access to renewable energy.

KITA also proposed the government to introduce measures to support trading businesses that need to perform full-fledged post-Covid in-person marketing activities. Those measures include a) an expansion of inbound/outbound flight services, b) an exemption of submitting a Covid negative certificate when returning to Korea after business trips, c) an expansion of providing government financial support to cover logistics costs with an aim to minimize the adverse effects of logistics disruptions and d) an establishment of pan-governmental umbrella organization in charge of logistics affairs.

Byeong-yoo Kim, the Head of the Membership Affairs Group at KITA mentioned, “We plan to engage in in-depth discussions with the Ministry of Industry, Trade and Energy to resolve the issues pointed out in the paper and reflect the requests raised by companies in policies.” He also added, “By mobilizing a Task Force for Deregulation, we will be committed to collecting the voices expressing difficulties experienced by trading businesses and focus on year-round activities to compile complaints on unnecessary trade regulations and the obstacles these regulations produce.”