President, PM deny FTA will cause economic polarization
The Hankyoreh, Seoul
President, PM deny FTA will cause economic polarization
But lawmakers, experts say increased wealth disparity is inevitable
10 April 2007
A controversy is growing as the government continues to deny claims from opposition lawmakers that economic polarization will worsen in the wake of a South Korea-U.S. free trade agreement (FTA).
Prime Minister Han Duck-soo said in an April 9 parliamentary session that "there is no problem over economic polarization regarding the South Korea-U.S. FTA." On April 2, President Roh Moo-hyun also said, "Small and medium-sized companies could gain price competitiveness in the U.S. market [through the trade deal]. I’m embarrassed because opponents argue there will be ’economic polarization’ without giving sufficient grounds for their claims."
Prime Minister Han continued, "If we were to reach a free trade deal with China or African nations, our labor-intensive industries will face worsened times. However, the South Korea-U.S. FTA is different. Economic polarization is a matter of concern for the U.S. We face no such problem." The prime minister argued that since Korea imports high-tech goods and technology from the U.S., the FTA will pose little damage to those industries.
"As for agriculture, rice is excluded from the deal, and the markets for other items, such as beef and apples, will be opened over the next 15 to 20 years," Prime Minister Han continued, adding that the government could prevent economic polarization due to losses to farmers by implementing compensation plans.
The minor opposition Democratic Labor Party (DLP) strongly denounced the remarks. Kim Hyeong-tak, the party’s spokesman, said, "A free trade agreement means fiercer price competition via tariff eliminations. So, falling prices and workforce restructuring are unavoidable consequences. The damages will ultimately rest on the shoulders of laborers and small and medium-sized companies."
The DLP’s research team predicted the South Korea-U.S. FTA would cause about 150,000 lost jobs, while the pact would increase South Korea’s gross domestic product by 0.22 to 0.28 percent.
Researchers outside of politics were divided on the trade deal’s effects, as well.
Heo Chan-guk, a senior researcher at the Korea Economic Research Institute, which is in support of the FTA, said, "If an FTA takes effect, we will witness some economic polarization. However, economic welfare gained from the FTA could offset the economic polarization."
Kyungwon University professor Hong Jong-hak said, "Even economists who support an open market policy admit that economic polarization will be worsened following a market opening. With a lack of safety nets for have-nots, economic polarization is an unavoidable consequence from the FTA."
