[Korea] Trade Ministry | Saudi Arabia

[Jay]

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To: Saudi Ministry of Energy < VBCFan >

From: KimDaejeong@mtie.kr.gov < Ministry of Trade Investment & Energy >

Subject: [Energy] [KSA] Petroleum Agreement

Security: Private and encrypted Protected by the NIS and MoFA DPB

Dear H.R.H. The Minister of Petroleum and Energy

I hope this email finds you well and in good health. The Republic of Korea hopes that an arrangement can be made to bring petroleum into the Republic of Korea through Saudi petroleum companies. As a pillar of stability and cooperation, the Kingdom has shown strong leadership in the region during turbulent times. With over 300,000 Koreans during the past twenty years living in Saudi Arabia, it is not a distant memory for many. We hope the following terms for a possible agreement on both trade and petroleum are beneficial. We look forward to your response and amendments to find a suitable agreement.

Korean-Saudi Petroleum & Trade Agreement

The Republic of Korea (herafter Korea) and the Kingdom of Saudi Arabia (hereafter Saudi Arabia)
Reaffirm their faith in the fundamental values of human development and prosperity, setting forward a vision to move ahead as partners and members of the international community, work together towards achieving mutually beneficial trade relations.
Reaffirm the principles of resolving disputes diplomatically and working together to address challenges and concerns that relate to matters of trade and energy.

Articles of Trade and Commerce

The two parties herein agree to the following terms for trade and agree to the good faith principle of removing tariffs on all goods for importing corporations, entities, and governments. This agreement and its terms shall be governed by in accordance with the international normals regarding trade and shall be resolved by the respective legal courts of Korea.

1. The Republic of Korea shall be provided in two daily shipments of petroleum which will sail between the Republic and Korea and Kingdom of Saudi Arabia and the necessary vessels provided for by the Republic of Korea.
   1. Two tanker will sail and will be fully loaded with Mineral Fuels (Refined Petroleum) by the Kingdom of Saudi Arabia
      a. One tanker will offload in the Port of Incheon and one Tanker will offload in the Port of Busan
2. The Republic of Korea shall offer to provided weekly shipments of high end goods which will sail between the Republic and Korea and Kingdom of Saudi Arabia and the necessary vessels provided for by the Republic of Korea.
   1. One container carrier will sail and will be fully loaded by the Republic of Korea with:
      a. Semiconductors
      b. Automobiles
      c. Electronics
3. The Republic of Korea shall support these endeavors through providing the necessary trading vessels to facilitate the terms of this agreement.
4. The governments of Korea and Saudi Arabia, shall take steps upon signing this agreement remove any tariffs on these goods. This provision shall remain, and shall not be based on a quota-system, ensuring that the importing states may continue to import any quantities they wish based on concuss and agreement.

Signed with sincerity,
Kim Dae-Jeong
Minister of Trade Industry Energy
Republic of Korea

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Republic of Korea
Ministry of Trade Industry Energy
All information is protected from release by the Diplomatic Communications Security Act 1997
Authorized viewing is limited to those directly emailed, cc'd, and bcc'd​

 

[VBCFan]

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To: mailto:KimDaejeong@mtie.kr.gov Jay

From: Saudi Ministry of Indsutry and Natural Resources/Ministry of Commerce/Saudi Armaco Oil, Majid Bin Abdullah Al Qasabi

SC: Private & Encrypted

Dear Kim Dae-Jeong,

Thank you for the great message you bestowed apon us recently. I would like to tell you on the behlaf of his excellency Fahd bin Abdulaziz Al Saud that the kingdom of Saudi Arabia and its people rejoice that our two great nations can establish diplomatic ties and begin an era of something new. I would like to let you know that Saudi Arabia has already begun plans for a massive economic expansion throughout the world and we as you know have already purchased a number of vessels to facilitate trade between our great nation and others around the world. We would like to agree to trade deals 1,2, and 4 and as soon as we have our trade vessels ready we can begin shipment of oil and whatever other resource you require. You additionally may begin the import of Semiconductors, Automobiles, and Electronics as soon as your government decides to. We greatly value high end products and all imports shall go to Jeddah Islamic Port. All oil will depart from Ras Tanura port which is provided by our partners Armaco who run all oil and mineral fuel production natiowide. As for agreement number 3, We would like to request that at least one oil carrying vessel flagged by the Kingdom of Saudi Arabia depart to South Korea. All other vessels unless requested may be flagged and owned by the Republic of South Korea. Tarriffs for all Fuel Mineral products can be reduced to 25% in exchange for the removal of all tarrifs imposed by the ROK. The kingdom of Saudi Arabia imposes this as a second to final deal, the ROK may offer a second counter offer but if that offer is deemed unacceptable then the deal will be cancelled. This would not mean the Kingdom of Saudi Arabia would not make future deals but the current proposed deal wouod be cancelled. We hope to speak to you soon.

Signed,
Majid Bin Abdullah Al Qasabi
Ministry of Commerce
Kingdom of Saudi Arabia

 

[Jay]

To:Saudi Ministry of Indsutry and Natural Resources/Ministry of Commerce/Saudi Armaco Oil, < VBCFan >

From: KimDaejeong@mtie.kr.gov < Ministry of Trade Industry & Energy >

Subject: [Energy] [KSA] Petroleum Agreement

Security: Private and encrypted Protected by the NIS and MoFA DPB

Dear H.E. Minister Majid Bin Abdullah Al Qasabi,

The Republic of Korea looks forward to cooperation with the Kingdom of Saudi Arabia to advance both our economies and expand our market access. Trading vessels represent one aspect of trade, and lowering the barriers to international commerce, making the flow of capital easier and secure, and lifting the restrictions for foreign direct investment and joint-ventures are equally crucial. We hope that this economic expansion program is one that will be mutually beneficial to Korea, Saudi Arabia, the wider Asia & Middle East, and the globe. We hope that the Korea National Oil Corporation (KNOC) can work with ARAMCO to expand production and modernize petro-chemical industry in Saudi Arabia.

The ROK currently operates the Ti Supertanker vessels which can carry 3,166,353 barrels of oil. These supertankers are what the Republic of Korea envisioned would facilitate the terms of of Article 1 of the Articles of Trade and Commerce. We hope that your number of vessels at whatever carrying rate they have may be able to augment this with a fleet operated by the Saudi Government.

Onto the issues listed by your government. On the first issue about where the vessels originate from, the Korean Government does not have an issue if both vessels come from the Kingdom of Saudi Arabia. However, we do have an issue if the carrying capacity of these vessels is below 2.7 million barrels per vessel which falls significantly shorter than the 6.2 million barrels the ROK tankers can provide for the purpose of this agreement. On the issue of tariffs applied, the Republic of Korea holds a number of reservations over a 75%-0% tariff proposal.

The ROK can not propose a removal of tariffs on Saudi Goods if Saudi Arabia maintains a 75% tariff on Korean Goods. Raising the costs of goods will ultimately be passed onto the consumer. The ROK would rather see tariffs fairly applied. Semi-conductors are mainly a intermediate good used in the production of electronics and other goods and serve an important part of the supply chain for re-servicing electronics. As an intermediate good, imposing a 75% tariff means that Korean semi-conductors would not be competitive in the Saudi Market and would make exporting to Saudi Arabia costlier for both the exporter and the importer and ultimately the consumer whom the tariffs impact as well. A 36.7% Tariff is acceptable to the Republic of Korea on Semi-conductors. On the issue of Automobiles, as a final product, the Republic of Korea believes that lowering tariffs will ultimately benefit Saudi citizens far more than higher tariffs. The Saudi domestic market does not actively produce automobiles and by having lower tariffs on Korean automobiles, the incentives for purchasing a automobile are higher. This is directly beneficial to the Saudi Government as revenues form petroleum used in vehicles has a strong correlation with more vehicles per capita. The mutual beneficial relationship on automobiles is more of a reason that tariffs on Korean automobile companies such as Hyundai Motors, KIA Motors, and GM Korea should be lowered. The Republic of Korea believes a 12.5% tariff is appropriate on Automobiles. On the issue of electronics, the benefit largely comes to Saudi consumers who are expected to become one of the most digitally connected communities and nation on earth in the coming years. Expanding access to internet and online services is fueled not by infrastructure, but affordable gadgets. S-LCD, Samsung, Samsung Telecommunications, Seoul Semiconductor, Sindoh, SK Hynix, and LG all stand to gain from lowered tariffs by increasing their product exports in Saudi Arabia. Working with local markets to produce final goods for Saudi consumers allows a beneficial arrangement on the basis of the V.A.T. policies of the Kingdom. Lowered tariffs means expanding Saudi Arabia's digitalization and modernization programs and advances the domestic telecommunications market. Meeting the demand of higher electronic usage means higher energy consumption and increasing demand for internet and communication services for domestic companies such as STC and Mobily.

Ultimately, a tariff-free Saudi import on petroleum is beneficial to Korea and Saudi Arabia. The ROK is able to import petroleum from Saudi Arabia at large quantities while Saudi Arabia expands its market access in Asia and taps into the Korean economy. Maintaining higher tariffs on South Korean goods only reduced by 25% does not allow Korean companies to be competitive in the Saudi Market and ultimately makes trading difficult. The Republic of Korea firmly believes on the principles of free trade and eased restrictions as the building blocks of trade relations. The Republic of Korea finds it more acceptable on maintaining 50% tariffs on Saudi petroleum exports if Saudi Arabia maintains 50% tariffs on Korean automobile, electronic, and semi-conductor exports. If the Saudi Government wishes to insist on the 75% tariff rates on Korean goods, the Korean Government will reciprocate with a 75% tariff rate, both agreeing towards a 25% tariff reduction on imports on the basis of the Trade Agreement. In the end, higher import prices means higher purchase prices for goods. Domestic consumers ultimately pay the tariffs on goods, whether it is Koreans filling their car tank or Saudis buying a new handphone. The impact also undermines Saudi Arabia's economic development by making components crucial for electronics and transportation of goods and people expensive.


Signed with sincerity,
Kim Dae-Jeong
Minister of Trade Industry Energy
Republic of Korea

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Republic of Korea
Ministry of Trade Industry Energy
All information is protected from release by the Diplomatic Communications Security Act 1997
Authorized viewing is limited to those directly emailed, cc'd, and bcc'd​

 

[VBCFan]

To: mailto:KimDaejeong@mtie.kr.gov Jay

From: Saudi Ministry of Indsutry and Natural Resources/Ministry of Commerce/Saudi Armaco Oil, Majid Bin Abdullah Al Qasabi

SC: Private & Encrypted

Dear Kim Dae-Jeong,

Thank you for your reply, we will propose to a 0% Tariff deal in order to limit complexity and increase trade between our two nations, this deal will also include all of the above that you proposed(excluding tariffs) and you may use your supertankers to ship the oil as long as at least one vessel can dock at the designated port. You may begin whenever you feel fit. Thank you on the Behalf of Saudi Arabia and Aramco and we hope to correspond soon.

Signed,
Majid Bin Abdullah Al Qasabi
Ministry of Commerce
Kingdom of Saudi Arabia

 

[VBCFan]

Jay

 

[Jay]

To:Saudi Ministry of Indsutry and Natural Resources/Ministry of Commerce/Saudi Armaco Oil, < VBCFan >

From: KimDaejeong@mtie.kr.gov < Ministry of Trade Industry & Energy >

Subject: [Energy] [KSA] Petroleum Agreement

Security: Private and encrypted Protected by the NIS and MoFA DPB

Dear H.E. Minister Majid Bin Abdullah Al Qasabi,

The Republic of Korea looks forward to cooperation with the Kingdom of Saudi Arabia to advance both our economies and expand our market access. Thank you for your cooperation and willingness to negotiate. We have submitted the necessary documents to begin the trade relations. Please note, all details as according to our conversation were followed and if any issues arise please do not hesitate to email or contact me. We look forward to cooperation beyond trade in the energy sector through KNOC cooperation with Aramco and supplying the Saudi Government with a strong fleet of supertankers and other petroleum ships.

On behalf of H.E. President Kim, please extend his Excellencies thanks and regards to His Royal Majesty the King. H.E. hopes for strong ROK-Saudi Relations and the continued beneficial agreements we've concluded. Where Koreans once came to drive trucks and haul goods in the hundreds of thousands, I hope that Koreans can come back to bring their skills as engineers, doctors, and financial experts to assist the Saudi Economy. Once again, I look forward to cooperation with you in the future.

Signed with sincerity,
Kim Dae-Jeong
Minister of Trade Industry Energy
Republic of Korea

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Republic of Korea
Ministry of Trade Industry Energy
All information is protected from release by the Diplomatic Communications Security Act 1997
Authorized viewing is limited to those directly emailed, cc'd, and bcc'd​