firmly in place has been confirmed through an abundance of historical evidence.
Korea-US FTA, an opportunity not to miss out
Korea has completed its 6th round FTA talks with the US up until January. Time is dwindling as the end of March is the deadline for the US government to report to its congress of the outcome. There are two more rounds to go but so far none is deemed to be optimistic.
As each round of the talk took place strong anti-FTA protests were staged. The voice of the opponents grew more vocal than the proponents of the current FTA talk--- even among the general public, according to the poll: The broadcast media has long been bulwarking against it: Not a single government party member has so far come out to defend it. When the anti-thesis of the FTA is so pronounced as now, it is hard not to cast doubt about what good it would be to have such agreement: Is Korea going to be overridden by the US economy as the pessimists say?
An FTA is aimed at maximizing the interest of the two counterpart nations: Its effects transverse from partial market liberalization to its consolidation by tearing down the trade barrier to a near nil. However, there have been two negative views: one from those who oppose market liberalization itself and the other from those who see that the FTA conditions will be disadvantageous to the interest of Korea.
The first is hard to accept. Yes, there will be groups that will face downside from market liberalization and their resistance is well anticipated. But, a liberalization process can not stop. Throughout the history, no nation has prospered without an open door policy. And if we look at the recent surge of China and India, what an open-door policy can do to an economy is clear. If market liberalization is not so widely opted for as now, a nation may be run without it. But when almost every nation has entered or will enter FTA with others, it will be no longer an option but a modus operandi.
The second may sound plausible. They argue that the degree of lowering of the restriction level is greater for Korea than for the counterpart nation. But when one nation's market barrier has been greater than that of the other prior to an FTA, it is clear that a freedom level equal to the both nations can only be achieved by lowering the barrier level of one nation more than the other. An FTA would be lame if an even level market liberty is denied.
There are areas that are highly sensitive to each nation. For Korea, they are; rationalization of pharmacist rates, automobile tax reform, and liberalization of the agricultural products market including rice, and a few service items, and to tag items from the Kaesung industrial area as S. Korean product. The US feels burdensome to relax in areas such as trade remedies, country of origin regulation for textile goods, increase in visa issuance to professional service providers and so on. There are more but substantial advancement has been made in resolving them.
We have now come to a point where there is need for a political step forward in this matter. Nevertheless the government's attitude is baffling for many, especially for international trade relation specialists as no one from the government has so far come out and talked about its decision to wrap up. But we believe soon or later the government will come up with one. When the tide is so high against the FTA, even if an agreement is reached, congressional ratification may be hard to achieve. But it is not impossible: those groups in disadvantage, once the international treaty is made, will move onto the issue of compensation. Rather than facing huge cost of nullifying the international agreement, focus will move more realistically to improve domestic competitiveness.
There is more to expanding our market to the US territory and gaining international standard competitiveness: The FTA will not only merely serve Korea's economic interest but it has a symbolic significance in reassuring the two nations' alliance.
There is one more. A nation with very limited natural resources and relying heavily on international trade, Korea needs to upgrade the level of openness and to upsurge as an international trade center. An FTA with a super-size economy will lead to that. After with the US, the Korea-Japan FTA should follow, which has been in stalemate: Japan's sensitivity over the current FTA progress has been clearly pronounced. With its economic structure, it would be also difficult for China not to seek an FTA with Korea. Even the EU, which has been unenthusiastic for the past 10 years, is also showing strong interest in entering FTA with Korea from this year.
This means, if everything goes well, Korea will be the only nation in East Asia, or even in the whole Asia, to have entered a FTA with every giant economy of the world. Thus, the Korea-US FTA will be a turning point leading up to more significant times. Isn't this what Korea has wanted all along? If market liberalization is a high-way to growth, where we have already jumped in, why not take a head start and occupy the major position in the drive?
Why did the US want to go in a FTA with Korea? Some say, with the current degree of openness, the US has nothing to lose but gain from the trade agreement. This is too simplistic. Korea is the 11th largest economy in the world. No economy is big enough to enter an FTA with Korea without having to open up additional markets. The US needs East Asia as its most dynamic growth axis and Korea happened to be its most suitable partner at this time. This is why they are in with us.
Korea has two months to go but we are in disarray with problems such as the constitutional reform case, North Korean nuclear tension, political reform, presidential election, economic downturn and so on. But the FTA is too good a chance for us to give away. It might be a short term risk but will pave us a road to a long term economic advantage. When did Korea ever fail to reverse a crisis into an opportunity? Confidence is what we need to take a timely step forward.
Sung Keuk-Je / Prof. Kyung Hee Univ.