Experts optimistic about KORUS FTA

Experts optimistic about KORUS FTA

A customer checks U.S. beef as the price was cut ahead of the effectuation of the free trade agreement between Korea and the United States, at a supermarket in Seoul, Wednesday. / Yonhap Survey shows benefits outnumber disadvantages By Kim Tae-gyu Opposition parties have claimed that Korea’s free trade agreement with the United States (KORUS FTA) will hurt the former since the bilateral deal was renegotiated to benefit the latter compared to the original pact. Yet a majority of experts here pointed out Wednesday that the contract will eventually do more good for Asia’s No. 4 economy despite the compromises thanks to the win-win features of cross-border transactions. With the KORUS FTA going into effect Thursday, six out of 10 famed economists and market analysts surveyed agreed with the idea that Korea has to proactively embrace the deal. Three came up with neutral responses while one said that the deal will do more harm to Korea. The consensus of the six was the agreement creates fresh benefits, which were not available under the previous trade barriers so they will outweigh some interests foregone due to the renegotiations. “Let’s assume that the initial KORUS FTA would provide us with an additional advantage of 100 and the renegotiation cut down the amount to 80. Still, we can have 80,” said professor Yun Chang-hyun of the University of Seoul. “If we are opposed to the agreement, we will end up empty-handed. Plus, the deal with the United States has invisible profits because it has strategic significance in consideration of the relationship of the two allies.” Yoo Jang-hee, professor emeritus at Ewha Womans University, concurred. “Critics of the KORUS FTA tend to take issue with the renegotiations, which they argue overly favored the U.S. side at the expense of Korean industry in such areas as automobiles,” Yoo said. “If they are right, local carmakers are supposed to be against the FTA but the reality is that they welcome it. This story tells a lot regarding the future of Korea, which has to depend on exports for continued growth.” The KORUS FTA was initially signed in early 2007 but both parties went through another round of talks at the request of the United States before the final version was signed in December 2010. Despite Seoul’s repeated arguments that it managed to keep a “balance of interests,” the consensus seems to be that the nation conceded too much. In particular, critics take issue with the investor-state dispute (ISD) settlement provision, which they contend would enable American multinationals to bring a set of lawsuits against Korea. Asked about the ISD issue, the 10 experts surveyed were split into two camps on whether it is a toxic clause. There were some voices worried about the potential downsides. “The FTA with the United States is not about scrapping trade barriers since shipments of products account for just a small fraction of the agreement,” professor Lee Hae-young at Hanshin University said. “It is mostly about U.S. attempts to oblige Korea to accept systems under which its companies can easily access the Korean market. The deal is obviously against the national interest.” Lee added that the government’s official projection is simply overblown that the FTA will generate hundreds of thousands of jobs and substantially boost national output. State-run think tanks previously presented studies where they projected the deal would increase Korea’s gross domestic product by a maximum of 5.66 percent over the next decade and create up to 350,000 jobs. Trade Minister Bark Tae-ho echoed the rosy projection at a press conference Wednesday.