The Ministry of Trade, Industry and Energy (MOTIE) announced that the amendment to the “Act on Trade Adjustment Assistance” passed through the National Assembly plenary session on Jan. 25.
As part of the measures to strengthen the manufacturing sector in response to the implementation of Free Trade Agreements (FTAs), the Trade Adjustment Assistance System introduced in 2007 has been criticized for staying at the level of short-term loans aimed at preventing the closure of FTA-affected businesses, showing limitations in enhancing the fundamental competitiveness of businesses. Recently, the trade environment has evolved not only due to market opening through FTAs but also due to norms related to supply chains, the environment, and other factors. As a result, there is a growing consensus that support is necessary to address these changes.
The amendment has changed the name of the law to “Act on Response and Support for Changes in Trade Environment,” aiming for easy understanding by the public. It has also expanded the scope of support from the existing FTAs to include “trade treaties and others.” Through this expansion, businesses in South Korea can now receive support not only for changes resulting from FTAs but also for environmental changes due to the conclusion of new trade agreements, such as the Indo-Pacific Economic Framework for Prosperity (IPEF).
In addition, previously only companies suffering “serious damage” from FTAs were eligible for support. However, companies with “anticipated substantial impact” due to trade treaties and similar agreements can also be included in the future. This relaxation of the eligibility criteria allows for proactive support, enabling the enhancement of competitiveness.
Furthermore, the government is transitioning from one-time financial assistance to “Technical Assistance” supporting technological and managerial innovation. Introducing a system of close support from specialized agencies, ranging from business diagnosis to the formulation and implementation of competitiveness enhancement strategies, is anticipated to act as a catalyst for the leap of businesses into global top-tier status through trade-related transformations.
The revised “Act on Response and Support for Changes in Trade Environment” is expected to be officially enforced from Jan. 1, 2025, following approximately 11 months of preparation, including the revision of subordinate regulations.