Korea-China FTA returns to agenda
Korea Herald | 12 October 2009
Korea-China FTA returns to agenda
By Jin Hyun-joo
A free trade pact between Korea and China is expected to pick up pace after the two countries on Saturday agreed to consider the deal. But a bumpy road is expected for the agreement because of sensitive issues, such as agriculture, watchers said.
"We will consider signing a Korea-FTA deal under the principle of mutual interests," the Foreign Ministry said in a summary of a trade and economic cooperation agreement made between Korea and China.
The pact, which was signed by Korea’s Trade Minister Kim Jong-hoon and his Chinese counterpart in Beijing, raised expectations that the two sides would soon launch official intergovernmental talks on a free trade deal after concluding years-long joint research.
Since 2004, Korea and China have conducted a joint feasibility study on a free trade pact, which seeks to lower or abolish a wide array of tariff and non-tariff barriers to promote bilateral trade. However, the two sides have yet to launch an official government-level talk amid concerns about the impact the deal would have on their respective industries.
China is Korea’s biggest trader partner and its largest investment destination.
Korea has so far clinched a slew of free trade deals with the United States, the European Union, Chile and Singapore.
Korea is worried the deal would pave the way for imports of cheap Chinese agricultural products, hurting the nation’s already fragile agricultural sector.
Experts say a Korea-China deal would deal a bigger blow to the local agricultural sector than the Korea-U.S. free trade agreement, which was signed in 2007 and awaits approval by the respective legislatures of Korea and the United States.
The agricultural and fisheries sector is expected to see its trade deficit jump 486 percent to $12.3 billion ($10.6 million) as a result of a Korea-China free trade deal, according to a paper by the Korea Institute of International Economic Policy released at the end of 2004.
Koreas’ trade surplus is also expected to shrink by 37.6 percent or $7.6 billion as of 2004 because of the surge in Chinese imports, the report said.
In contrast, Korea’s manufacturing sector is expected to see its surplus rise 11.7 percent to $2.6 billion as of 2004, while the country’s gross domestic product is forecast to climb 2.3 percent to 17.9 trillion won.
The pact could also deal a blow to small and medium-sized enterprises in Korea’s labor-intensive industries.
For China’s part, the deal could undermine its automobiles and steel sectors, in which Korea has a competitive edge.
On Saturday, Kim and his counterpart Chen Deming signed the report, which lays out directions and goals on bilateral cooperation in economy and trade for the next 10 years, the Foreign Ministry said.
Under the guideline, Korea and China also agreed to double bilateral trade to $300 billion by 2015 and to expand cooperation into energy, environment, finance, logistics, information communication technology fields, from the current manufacturing sector.
The talks between Kim and his counterpart were held on the sidelines of a meeting of the heads of Korea.
In a press conference jointly held with Korean President Lee Myung-bak and Chinese premier Wen Jiabao, Japan’s Prime Minister Yukio Hatoyama expressed hope that a trilateral FTA involving Korea, China and Japan would make progress. He also said that prior to the pact, the three countries would need to sign an agreement promoting investment as early as possible next year, Yonhap News reported.
The heads of the three countries gathered in Beijing on the occasion of the tenth anniversary of their trilateral cooperation. Lee and his Chinese and Japanese counterparts declared they were "committed to the development of an East Asian community," agreeing to expand cooperation across a wide range of issues, including climate change and sustainable growth, AP reported.
