FTA targets miss the mark: expert

Korea has not given enough thought to selecting nations or regions it needs to sign free trade agreements with, an economist said yesterday at an economic seminar at Yonsei University.
FTAs with nations with no customs duties, like Hong Kong, would have had the greatest positive impact on local industries, said Kim Do-hun, a researcher at the Korea Institute for Industrial Economics and Trade.
Kim said the focus of Korea’s FTA negotiations has thus far been misguided.
“When the government picked countries or regions to target for FTAs, it considered upgrading the local economy and expanding the exports market, but it didn’t give enough thought to the effect agreements would have on local industries,” he said at the 2008 International Economics Joint Conference, which was organized by The Association of Korean Economic Studies.
Kim compared the United States, the European Union, Japan, Australia, Canada, China, India, Russia, Brazil, Hong Kong and Asean nations in terms of free-trade priority. Kim said Hong Kong should have been the first choice, followed by China and Mexico.
Among the industrial development factors Kim said the country should have taken into account, he cited Korea’s industrial structure.
He also pointed to the targeted country’s export market, its importance as a trading partner, its level of technology and industry, Korea’s industrial competition with the targeted country and Korea’s future growth engines.
Indirect factors Kim mentioned include levels of customs duties, the targeted country’s trade account balance and agricultural competitiveness and other nations’ FTAs with the targeted country.
Of the 11 countries or regions he discussed, the United States ranked seventh behind the EU, which came in sixth. Japan ranked last. Canada was ninth, and India was 10th. Korea is in preliminary free-trade discussions with Canada and India, but has made little progress.
“The country’s first FTA negotiations were with Japan, they were suspended because the economic shock was seen as being too serious. This is why the order should have been switched,” Kim said.
Kim said considering Korea’s industrial growth, China is very important and should come before Japan as an FTA target.

By Limb Jae-un Staff Reporter [jbiz91@joongang.co.kr]