Korea-U.S. FTA / Il SaKong Interview

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Korea-U.S.
FTA / Il SaKong Interview








style="FONT-FAMILY: 'Times New Roman'; mso-ansi-font-size: 12.0pt; mso-bidi-font-size: 12.0pt">HONOLULU
(April 11) -- South Korea and the United States signed a landmark free trade
agreement (FTA) last week, the first of its kind between the U.S. and a major
Asian economy. According to the accord, within the next three years, all but
five percent of tariffs the two countries levy against each other's products
will be slashed. Small American passenger cars headed for Korea will do so
tariff-free. Tariffs on American beef will phase out in 15 years. In return,
among other things, Korean textile exports find their way to U.S.shores more
cheaply. Noticeably absent from the FTA, and for good reason, was the very
sticky issue of rice.





style="mso-bidi-font-weight: normal"> style="FONT-FAMILY: 'Times New Roman'; mso-ansi-font-size: 12.0pt; mso-bidi-font-size: 12.0pt">Il
SaKong style="FONT-FAMILY: 'Times New Roman'; mso-ansi-font-size: 12.0pt; mso-bidi-font-size: 12.0pt">,
founder and chairman of the Institute for Global Economics, a non-profit think
tank in Seou, former minister of finance in the
South Korean government, and current member of the style="mso-bidi-font-weight: normal">East-West Center board of governors, offers his
expert thoughts on the new Korea-U.S. FTA:


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style="mso-bidi-font-weight: normal"> style="FONT-FAMILY: 'Times New Roman'; mso-ansi-font-size: 12.0pt; mso-bidi-font-size: 12.0pt">East-West
class=basicblack1> style="FONT-FAMILY: 'Times New Roman'; mso-ansi-font-size: 12.0pt; mso-bidi-font-size: 12.0pt">Center class=basicblack1> style="FONT-FAMILY: 'Times New Roman'; mso-ansi-font-size: 12.0pt; mso-bidi-font-size: 12.0pt">
Wire: class=basicblack1> style="FONT-FAMILY: 'Times New Roman'; mso-ansi-font-size: 12.0pt; mso-bidi-font-size: 12.0pt">What
is the reaction among South Koreans to the Korea-U.S. free trade agreement
(FTA)?


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style="mso-bidi-font-weight: normal"> style="FONT-FAMILY: 'Times New Roman'; mso-ansi-font-size: 12.0pt; mso-bidi-font-size: 12.0pt">Il
SaKong: class=basicblack1> style="FONT-FAMILY: 'Times New Roman'; mso-ansi-font-size: 12.0pt; mso-bidi-font-size: 12.0pt">The
general reaction has been clearly positive, although there are strong voices of
opposition to the deal.


style="FONT-FAMILY: 'Times New Roman'; mso-ansi-font-size: 12.0pt; mso-bidi-font-size: 12.0pt">


style="mso-bidi-font-weight: normal"> style="FONT-FAMILY: 'Times New Roman'; mso-ansi-font-size: 12.0pt; mso-bidi-font-size: 12.0pt">EWC: style="mso-spacerun: yes"> class=basicblack1> style="FONT-FAMILY: 'Times New Roman'; mso-ansi-font-size: 12.0pt; mso-bidi-font-size: 12.0pt">What
do you think of the deal?


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style="mso-bidi-font-weight: normal"> style="FONT-FAMILY: 'Times New Roman'; mso-ansi-font-size: 12.0pt; mso-bidi-font-size: 12.0pt">Il
SaKong: class=basicblack1> style="FONT-FAMILY: 'Times New Roman'; mso-ansi-font-size: 12.0pt; mso-bidi-font-size: 12.0pt">In
my view, it is one of the best things that could have happened for Korea's
sustained economic growth. Undoubtedly, the Korean economy will benefit a great
deal through its freer access to the world's largest market. What is more
important, however, is that the Korea-U.S. FTA will provide significant momentum
for Korea to upgrade its overall economic
system faster.


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style="mso-bidi-font-weight: normal"> style="FONT-FAMILY: 'Times New Roman'; mso-ansi-font-size: 12.0pt; mso-bidi-font-size: 12.0pt">EWC: style="mso-spacerun: yes"> class=basicblack1> style="FONT-FAMILY: 'Times New Roman'; mso-ansi-font-size: 12.0pt; mso-bidi-font-size: 12.0pt">Why
then do some Koreans style="FONT-FAMILY: 'Times New Roman'; mso-ansi-font-size: 12.0pt; mso-bidi-font-size: 12.0pt"> class=basicblack1> style="FONT-FAMILY: 'Times New Roman'; mso-ansi-font-size: 12.0pt; mso-bidi-font-size: 12.0pt"> oppose the FTA so
strongly, and their objections seemingly have substantial
support?


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style="mso-bidi-font-weight: normal">Il SaKong:
As I mentioned, there are strong opposing voices. Although the
overall economic benefit will be substantial, some sectors do face potential
short-term losses. For example, currently about seven percent of
Korea's total population is engaged
in agriculture, accounting for only about three percent of the country's annual
GDP. However, as you may know, Korea has been industrializing and
urbanizing from an agrarian state so fast that most Koreans still have their
direct roots in the agricultural sector.





Consequently, the Korean general
public's emotional attachment and its sympathy to the nation's farmers are much
stronger than those economic statistics might indicate. So, the Korean
government is strongly committed to immediately remedying the situation faced by
local farmers and other sectors by offering them substantial amounts of
resources. I personally would like to see the government devote more resources
for enhancing the basic competitiveness of those affected sectors rather than
merely giving subsidies.





style="mso-bidi-font-weight: normal">EWC:
What is the real effect of the trade agreement on ordinary South
Koreans?





style="mso-bidi-font-weight: normal">Il SaKong:
Ordinary South Koreans, in fact, will come out of the deal as the
real winners. Their cost for food, household appliances and other consumer
durables like U.S. automobiles will be
substantially lowered as the deal becomes effective.





style="mso-bidi-font-weight: normal">EWC:
The U.S. auto
industry, as well as U.S. beef and rice farmers, are not
happy about those items being left off the table, or not seeing substantially
reduced tariffs. Do you think there might be room for some compromise?





style="mso-bidi-font-weight: normal">Il SaKong:
As far as I know, the Korean government is resolute about not making
any compromises. With regard to the U.S. beef imports, I understand that
the Korean government promised to lift the import ban as soon as the World
Organization for Animal Health's mad cow disease study is released in the near
future. I personally would welcome the resumption of beef imports from the
U.S.





As for the rice issue, I thought
it was wise for both governments to take it off the negotiation table so that
the deal could be successfully concluded. The inclusion of rice could have made
it politically more difficult to negotiate the FTA. You must understand, for
Koreans, rice is more than just a commodity. It has historical, cultural and
emotional dimensions.





With regard to
U.S. automobiles, I thought the deal
was a good compromise. I just hope the U.S. auto industry takes full
advantage of the deal, so that it can effectively compete with other automakers
in the Korean market.





style="mso-bidi-font-weight: normal">EWC:
What should South Korean manufacturers and businesses do now?





style="mso-bidi-font-weight: normal">Il SaKong:
In this world of globalization, regardless of the Korea-U.S. FTA,
Korean manufacturers and businesses cannot avoid greater global competition. I
believe that they do appreciate that fact. Therefore, they will have to try to
take advantage of the FTA to enhance their global competitiveness perhaps
through various networking and strategic alliances with their American
counterparts.





style="mso-bidi-font-weight: normal">EWC:
Some critics of South Korean President Roh Moo-hyun are saying this
deal gives away too much to the United States. Any observations on
that criticism?





style="mso-bidi-font-weight: normal">Il SaKong:
Unless a trade deal is a "win-win" sort of thing, you will not be
able to strike a deal in the first place. Obviously, the Korea-U.S. FTA is a
positive-sum game for both countries. As for Korea, as I
mentioned before, there are potential benefits which are difficult to measure in
quantitative terms. So, I don't think it is fair to say that the deal is
one-sided.





style="mso-bidi-font-weight: normal">EWC:
The United States
and South
Korea are strong allies on security issues in
the region. How does the FTA play into that? What is the connection between the
two, if any?





style="mso-bidi-font-weight: normal">Il SaKong:
I am very sure that the enhancement of the economic partnership and
the deepening of economic integration between the two countries will contribute
toward strengthening their security alliance. I personally have been a bit
concerned about the seemingly weakening security alliance between the two
countries in recent years. In this regard, I am pleased to see the deal made and
I sincerely hope the legislatures of both countries will approve the deal.





style="mso-bidi-font-weight: normal">EWC:
What made President Roh, known as a labor-bas