Korea to be battlefield of US-China trade war

Korea to be battlefield of US-China trade war

Farmers and activists protest against the March 15 effectuation of the Korea-U.S. free frade agreement in front of the Gangwon provincial office in Chuncheon, Wednesday. Farmers and fishers are expected to suffer most as a result of the bilateral trade pact. / Yonhap World hegemony war repeats in free trade deal By Kim Tae-gyu The war for hegemony between the United States and China continues with regard to which side will dominate the world economy in the future. The two-way standoff is also seen in their free trade agreements (FTA) with Korea as experts of Asia’s fourth-largest economy put almost the same weight on the significance of the two nations. Asked which side is more important to Korea in terms of an FTA, experts here failed to say conclusively in a survey by The Korea Times, Wednesday, a day before the nation’s trade pact with the United States comes into effect. Out of 10 market observers, five picked the United States while the remaining five opted for China with which Korea is poised to start FTA talks in the months to come. The two economic juggernauts, sometimes dubbed the Group of Two or G2, are expected to compete head-to-head to top the podium not only in the global economic hierarchy but also in the importance of their FTAs with Korea. Pro-America Traditionally, the United States was the biggest trade partner for Korea, which depended heavily on the former’s purchasing power to chalk up fast economic growth since the 1960s. Over the first decade of the new millennium, however, China replaced the United States to set up a crucial relationship with Korea but still a host of observers think that America’s influence is predominant. ``The FTA with the United States is crucial not just in economic terms but also in strategic terms in consideration of the strategic relationship between the two allies,’’ said professor Yun Chang-hyun at the University of Seoul. ``The agreement will benefit numerous local companies thanks to its positive political and security aspects, features that an FTA with China would be hard to bring about.’’ Yoo Jang-hee, professor emeritus at Ewha Womans University, agreed with Yun. ``The FTA with the United States is very comprehensive as it involves almost all areas. In comparison, the one with China is expected to be at a much lower-level as Seoul bureaucrats have iterated,’’ Yoo said. ``Have a look at the Economic Cooperation Framework Agreement signed by China and Taiwan in 2010. It excluded many sensitive items and so would the deal between Korea and China.’’ Trade Minister Bark Tae-ho has noted several times that an FTA between Seoul and Beijing would not be a very high-level one. His idea is to exclude items including a large amount of agricultural produce, which would cause great problems if cheap Chinese alternatives flooded into the country without the barrier of tariffs. In a recent interview with The Korea Times, Bark said that rice and other key items such as garlic and sesame would be included in the list of the ``hands-off’’ products. In return, China would ask Korea for products to be exempt from the trade accord. ``We have agreed with China that items in the ultra-sensitive FTA basket will not be included in the negotiations,’’ he said. Pro-China Half of the experts surveyed strongly contended that the FTA with China will overwhelm that with the United States even though the former would be of a lower level. Their reasoning was simple: China is the biggest trade partner of Korea and the reliance will further strengthen in the future when the economic interconnection between Korea and the United States becomes relatively weak. Professor Lee Phil-sang at Korea University argued that the gap in the two agreements’ would be as large as the difference between a tsunami and a tidal wave. ``China has superior price competitiveness to us while our technological clout has been much erased. In this climate, the FTA between the two will weigh on our economy,’’ Lee said. ``Our industrial infrastructure can be negatively affected. In addition, farm and livestock industries might suffer great hits although the government will try hard to protect them.’’ Due to the geographical proximity of the two countries, Chinese farm products are predicted to wreak havoc on Korea’s agricultural sector since fresh items, not frozen ones, can easily be imported. Hyundai Research Institute research head Yu Byoung-gyu agrees. ``Between Korea and the United States, the free trade relationship has already been pretty much set up while Korea has yet to establish a similar one with China,’’ Yu said. ``Accordingly, the trade accord with China would have by far the biggest effect on the Korean economy than that with the United States.’’

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