’Seoul shouldn’t hurry FTA talks’
Korea Herald
’Seoul shouldn’t hurry FTA talks’
By Yoo Soh-jung
17 April 2006
Experts call for caution against following the U.S. deadline
When Korea and the United States enter formal negotiations for a free trade agreement in June, both countries are expected to begin a fight against time to meet a March 2007 target to conclude the talks.
But experts stress that the tight time frame, set in compliance with the expiration of the U.S. Trade Promotion Authority in July next year, should not overshadow the true purpose of the talks.
"This is a time limit facing the United States, and Korea should not be so focused on the date but be focused on ensuring that negotiations bring about balanced, reciprocal benefits," said Cheong In-kyo, an economics professor at Inha University. "We also need to adopt a negotiation strategy bearing in mind there is the possibility the schedule could be put off."
Washington has been urging Korea to seize the opportunity to facilitate the process for clinching a trade pact by avoiding the expiration of the Bush administration’s trade negotiation authority in July 2007. The U.S. Congress requires at least three months for approval.
Korea, the seventh-largest trading partner of the United States, would be the biggest economy with which Washington has a trade pact since it concluded the North American Free Trade Agreement with Mexico and Canada in 1994.
For Korea, an FTA with the world’s largest economy would accelerate negotiations for FTAs with other countries and help advance its service sectors, including finance, health and education, experts say.
Suh Jin-kyo, a senior researcher of the Korea Institute for International Economic Policy, stressed that meeting the deadline is not a priority concern.
"This is more about the level of commitment and drive by both countries to agree on an FTA that benefits their respective economies under more favorable conditions. So in this sense running on a tight schedule does not mean putting negative pressure on Korea," explained Suh.
He noted that the fast-track process of the formal talks set for between June and March is relatively quicker than most FTA deals require. The trade expert, however, stressed that since Korea and its second-largest trading partner have had strong economic ties since the 1990s, it is easier for both partners to agree on a deal than Korea did with Chile, its first FTA partner.
"The speed can depend on how familiar countries are with one another, and in the case of Korea and the United States, the expiration of the Bush administration’s trade negotiation authority just serves to facilitate the talks," said Suh.
Acting Prime Minister Han Duck-soo recently told representatives of the bilateral talks that FTA negotiations should be conducted transparently, while Korea "must thoroughly prepare to secure advantageous leverage within the given time frame of the talks."
The country’s Trade Ministry stressed that although the talks are running on a tight deadline, the point of negotiating means compromising, and that Korea would not be subject to any pressure.
"We would not agree on anything that would serve as a loss to our economy. If negotiations were leading in this direction, we would be ready to abandon the whole attempt," said Moon Jong-suk, deputy director of the Office of Korea-U.S. FTA at the Ministry of Foreign Affairs and Trade.
Jeong Jae-hwa, team leader of the FTA department at the Korea International Trade Association, urged Korea’s negotiators to take an aggressive approach in requesting the necessary easing of trade barriers and greater market access from the world’s largest economy. These include removing tariffs on textiles, clothing and shoes, as well as recognizing products made at the inter-Korean industrial complex in Gaesong, North Korea.
Korea and the United States recorded $72 billion in trade in 2004. Once the free trade deal goes into effect, Korea’s exports to the United States could gain as much as 15.1 percent, or $7.1 billion, but imports from the United States would rise as much as 39.4 percent, or $12.2 billion, the Korea Institute for International Economic Policy said.
Overall, the free trade pact with the United States may increase Korea’s real gross domestic product by as much as 1.99 percent and create 104,000 jobs in the long term, the KIEP said.
Asia’s fourth-largest economy currently has an FTA with Chile and Singapore. Korea also signed one on Dec. 15 with the European Free Trade Association, which comprises Switzerland, Norway, Iceland and Liechtenstein. It will come into effect in July.
