Korea and the United States are about to start negotiations on a free trade agreement (FTA). It is the biggest running point for Korea since it joined the tide of regionalism, having supported the multi-party trade in line with the World Trade Organisation (WTO). In terms of influence there can be not comparison to other agreements already agreed on or under negotiation.
An FTA with the U.S. would be like medicine with a little poison in it. It could be deadly if not handled right. It would be an opportunity to access the world's largest market without having to go over any barriers. Symbolically it would elevate Korea's status. On the other hand, the U.S. is formidable. Korean farming can be expected to suffer as a result of the agreement. The U.S. is the most competitive country anywhere in the financial and service industries. It is the main home of international financial capital, and it would be scary to have American capital romping around the Korean financial market without any barriers. Is not the current situation one in which there are calls for better regulations because foreign capital occupies far too great a proportion of the market already?
They say Korea will benefit from an increase in GDP of between US$2.9 billion to US$13.5 billion and that the agreement would lead to the creation of 100,000 new jobs, but those are figures from semi-governmental agencies and they give you the impression they were designed to influence public opinion. According to the analysis of some, Korea could have a trade deficit with the U.S. four years after an FTA took effect. It is hard to even calculate in economic terms the cost of conflict between sectors of the economy that would benefit and those that would suffer. When a farmers' organization obstructed a public hearing on the issue organized by the Ministry of Foreign Affairs and Trade just this Thursday, it was only the beginning.
Korea has to engage in cold-headed consideration of its options. It is too late to refuse to negotiate. Doing so would make Korea look like it is ignoring the tide of free trade. The country cannot neglect the risk that it could lose export markets if it loses out against competing nations over free trade agreements. Trade accounts for 70 percent of Korea's GDP, and that is far too much to give up.
If it is something the country cannot reject, then one option might be to fight it head on. But there is a premise involved. The damage has to be minimized by sufficiently examining the potential benefits and negative side effects and through detailed strategy and preparation. FTA's take on many different appearances. There is much variety in terms of what tariffs get removed or when they get removed, and what exceptions are recognized. Sometimes only listed classifications in areas like services and investment liberalization are part of a market's opening, and sometimes it is the other way around. Korea needs to work to delay the opening of agriculture and other markets of concern and make the agreement fit with our circumstances. The process has not been in good faith. One worries there will be a repeat of the way the government failed to stand up to the U.S. in the screen quote negotiations. It goes without saying that the government needs to reduce the eventual conflict by establishing measures for areas of the economy that would be hurt.
An FTA with the U.S. is not something that needs to be done as if Korea is left with little option and for which it should be ready to sacrifice anything. It needs to be able to walk away if the U.S. makes demands that are unacceptable. Japan started earlier than Korea in arranging FTA's, and yet still has not signed one with the Americans. The goal must not become the agreement itself and have that make Korea be dragged around in the negotiations. That would be like carrying the firewood into the fire.
The Hankyoreh, 3 February 2006.
[Translations by Seoul Selection]
[Editorial] Don't Be Absolutely Set on FTA with USA |
