Korea-China FTA moving forward
The Hankyoreh, Seoul
Korea-China FTA moving forward
Analysts from both countries seek to emphasize compatibility, but risks remain
By Jung Eun-ju, staff writer
19 April 2012
On April 17 and 18, ahead of the proclamation of the beginning of negotiations for a China-Korea FTA, economic and diplomatic experts from both countries gathered in Seoul and discussed methods of drafting the FTA. On the 17th, a high-level forum to mark the 20th anniversary of the establishment of diplomatic ties between Korea and China and to focus on shared growth between the two states was held at the InterContinental Coex hotel in Samseong-dong. On the 18th, a Korea-China forum was held at the Korea Chamber of Commerce & Industry on Namdaemun-ro.
The Korea side suggested initially signing an agreement centered on sectors that would bring profit to Korea, then expanding the scope of the FTA later on. Any deal with China presents serious risks to South Korea’s agricultural sector and small and medium enterprises. The Chinese side suggested cooperation in a wide range of areas, including investment, services and culture, claiming that the strategy of growth led by internal demand that it was pursuing also presented big opportunities to Korea. Experts from both sides agreed, however, that the later the FTA was concluded, the greater the disadvantage to Korea, given that the technology gap between Korea and China is only 10 years and China is catching up fast.
“In the current Korea-China trade structure, a large portion of which consists of processed goods, the effects of lowering tariffs through an FTA may not be great, but when China’s policy changes, we can expect an increase in cost competitiveness,” said Yang Pyeong-seob, director of the Beijing Office at the Korea Institute for International Economic Policy. Seoul National University professor Lee Keun said, “We need to first of all conclude a low-level, wide-ranging Korea-China FTA.”
Professor Lee proposed guidelines to the agreement, saying, “It would be desirable for Korea to refer to precedents set by recent FTAs signed between China or Southeast Asia, which excluded sensitive items such as agricultural goods. Korea could seek this kind of FTA with China.”
“A Korea-China FTA is most important for economic cooperation with Asia, and will provide vitality and opportunities to the world economy, too,” said former Chinese vice-premier Zeng Peiyan. Dr. Ping Fei of the Development Research Center (DRC) of China’s State Council argued that Korea and China complement each other, stressing the need for a low-level, wide-ranging agreement. “China and Korea are in comparatively advanced positions when it comes to markets and manufacturing costs, and the industrialization of technology and management techniques,” Ping said, “claiming that a systematic framework for synergistic cooperation was required. Wu Jing-lian, also of the DRC, added, "The two countries must cooperate from now on in new growth areas like electric cars, biotechnology and information technology."
Analysts on the Chinese side claimed that the Korea-China FTA would be the first step toward building a system of cooperation in East Asia. Li Guang-hui, head of an Asia research institute within China’s Ministry of Commerce, said, "Korea and China are strengthening their relationship as strategic partners, while promoting the sustainable development of the East Asian economy by increasing both of their crisis response capacities."
On Monday, the government held a meeting of ministers concerned with external economic relations, chaired by Minister of Strategy and Finance Bahk Jae-wan, and took a final decision to begin a Korea-China Fair Trade Agreement. Effectively, all procedures are now complete, three months after the heads of both states agreed, in January, to set in motion respective internal processes for the beginning of negotiations. The government has scheduled the announcement of the opening of negotiations for the Korea-China-Japan summit meeting on May 14-15, after reporting this month to the National Assembly.
