FTA Between South Korea and the U.S. Comes Into Effect Amid Much Praise, and Fear
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The Korea-U.S. free trade agreement, first signed in 2007, has come into effect with the leaders of both countries calling it a good economic model that will help boost the strategic partnership between the two sides. However, activists are worried that South Korea’s agriculture and services industry might be compromised with the trade pact.
The Korea-U.S. free trade agreement, first signed in 2007, has come into effect with the leaders of both countries calling it a good economic model that will help boost the strategic partnership between the two sides. However, activists are worried that South Korea’s agriculture and services industry might be compromised with the trade pact.
The free trade agreement, which was first signed five years ago, is a big boost for export-dependent South Korea, who now has similar agreements with the world’s two largest economic areas after a deal with the European Union went into force in July. South Korea is still in talks with China about setting up a similar FTA.
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Trade between the two countries was valued at $101 billion in 2011, up from $90.2 billion in 2010. According to the U.S. International Trade Commission, the FTA is expected to increase the volume of trade by $6.4 – $6.9 billion annually.
With the deal, tariffs on 80 percent of products traded will be removed immediately, with the coverage expected to increase to 95 percent within five years.
South Korean news agency Yonhap said the country’s leaders had a telephone conversation this morning, with President Obama expecting the deal to ‘boost investment, trade, exports and jobs in both nations and contribute to tearing down trade barriers around the world.’
However, critics are not convinced that the deal would benefit South Korea, especially the South Korean agriculture and services industries.
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A South Korean shopper told the BBC:
[quote] I’m worried that the huge food American companies will expand their presence here and that Korean companies will lose their competitiveness and position, and that ultimately we will become subject to greater American influence. [/quote]
Others complain that the FTA would only benefit the big companies, based on previous FTAs with Chile and the European Union.
A recent survey by a South Korean paper revealed that retailers were planning to import more American products, yet only a quarter of retailers said they would pass on the full tariff savings to their customers.
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