[NOTEBOOK]More Thinking About Free TradeMany countries are pairing off to demolish trade walls. It is difficult to swim against this current of free-trade agreements under the banner of the World Trade Organization.
Korea has been trying to form a free-trade agreement with Chile since 1998 as a part of an experimental trial. Chile was selected to be the first partner because its industrial and trade structures complement those of Korea. Because its seasons are antipodal, shipping times for agricultural products are also complementary. The Korean government believed that importing fruits from Chile during the winter alone would dampen protests by domestic farmers, and that the two countries would benefit from each other because Korea would export industrial products in return for importing agricultural goods.
Yet, the plan looks to end up as an agreement on paper only. Korean farmers are protesting imports of grapes from Chile regardless of when, occupying a highway and holding a demonstration in front of government buildings. Some experts have charged that it was a mistake to select Chile as a partner to begin with. After all, Chile plans to lift most of its tariff barriers in 2010 anyway. Some also pointed that Chile has only 20 percent of Korea's purchasing power, and is thus not much of a market for industrial exports.
Although forming a free trade agreement with Chile has hit a dead end, there are moves afoot in Korea to form agreements with Japan and the United States. Cho Suck-rai, Hyosung Group chairman, proposed the formation of an integrated economic body in Asia at the 34th meeting of Pacific Basin Economic Council held in Tokyo on April 10. Mr. Cho, who will assume the council's international chair next year, said that, "Forming free trade agreements between Asian countries as those in North America and Europe is absolutely essential."
At the 33rd Japan-Korea economic conference last month in Kwangju, Park Yong-sung, chairman of the Korea Chamber of Commerce and Industry, urged in his keynote address the consideration of "a Korea-Japan free trade agreement in order to counterbalance the worldwide trend to form economic blocs."
But Japan seems to have made a speedy return to protectionism. Tokyo recently launched an anti-dumping investigation into Korean products for the first time and exercised safe guards against Chinese agricultural goods. There is concern that the rising Japanese inclination to conservatism and rightists policies is hitting not only politics but also trade and commerce policies. To form free-trade agreements with Japan and the United States, the Korean economy must undergo profound restructuring, or our industries, which are not as competitive as those in these developed countries, would collapse. That is the cold reality of free trade.
We must build an industrial vision, choosing what to keep and what to give up and drawing a plan to redistribute resources correctly rather than going ahead with free trade without clear understanding. A detailed strategy to oust uncompetitive industries from our economy and to shoulder social resistance is necessary. If not, it would be wiser not to begin at all.
--The writer is an industrial news reporter of the JoongAng Ilbo.
by Lee Jong-tae