FTA is an acronym for Free Trade Agreement, which makes tariffs lower or removes them for all kinds of goods and services between nations. Traditionally, it has not been free to export or import goods and services across nations due to tariffs. The Korea-U.S. FTA is negotiations to minimize tariffs and other barriers in trade between Korea and the United States.
The FTA talks started during President Roh’s presidency. He decided to begin meetings in February 2006. After that, the two nations concluded the negotiations through eight meetings. However, lawmakers of the USA’s Democratic Party expressed a negative reaction because of cars and beef issues. Moreover, there were several candlelight vigils about the FTA in Korea at that time. Thus, additional talks went on, and Korea agreed to open additional markets for cars and postpone the time to trade agricultural and stockbreeding products in December 2010. A complete agreement was reached in October 2011 when President Lee Myung-bak visited America. The Korean National Assembly finally ratified the Korea-US FTA on November 22, 2012. It comes into effect at the end of February.
The Korea-US FTA consists of 6 sections. In the agriculture field, rice and products related to it were excluded from the FTA, and beef and pork tariffs will be taken away over a grace period which is 15 and 10 years each. Second, goods from Gaesung industrial complex located in North Korea will be subject to a preferential tariff like Korean products. In the trade field, the two nations decided to introduce a new safeguard which can raise tariffs temporarily when imports increase rapidly owing to the FTA. In the service field, the mandatory days for the screening of domestic films will be shortened from the current 146 to 73 days a year. In the medical sector, drug approval-patent linkage systems, which can postpone production of generic drugs if the patentee objects, will be introduced. In the intellectual property rights sector, the period of copyright protection will be extended to 70 years after the author’s death or after the publication of copyrighted products.
Foreign media reported the Korea-US FTA ratification by the National Assembly with interest. The Chinese Newspaper Hwangusibo said, “The relationship between Korea and the United States will strengthen through the FTA, but Korea’s trade dependence on China is likely to decrease.” Simultaneously, the Japanese Newspaper Asahi Shimbun said, “If tariffs are removed on car parts by the FTA, Korea will have more price competitiveness than Japan. However, the service industry will be hit by it.”
The Korean government, the Korea Development Institute (KDI), and the Korea Institute for Industrial Economics and Trade (KIET), forecast 3.5 million new jobs in the service industry will be created and opening service markets will promote domestic competition which will increase efficiency. Also the gross domestic product (GDP) of Korea will grow by 5.66% with the FTA.
The FTA will have a large effect on Korea’s economy. It is difficult to judge if it will have a positive or negative effect on Korea by looking at just one or two parts of the FTA because it embraces a wide range of issues. You can get information on www.fta.go.kr. I hope the FTA will be helpful to create jobs and contribute to Korea’s economic development.
