[EDITORIALS]First Chile, then JapanIt is fortunate that the leaders of South Korea and Japan have agreed to start negotiations on a free trade agreement between the two countries at the summit meeting in Bangkok. They also set a deadline for negotiations in 2005. The agreement will boost Seoul’s lukewarm policy on free trade agreements.
Seoul’s decision to promote a free trade agreement with Japan came from a sense of crisis that it could be driven out from the center of world trade. Although South Korea is one of the ten largest trading countries in the world, its name is found in none of the 184 free trade agreements concluded among countries worldwide.
When the South Korea-Japan free trade agreement is concluded, the effect on our economy will be enormous. A huge economic bloc, with a combined gross domestic product of $5 trillion, or 17 percent of the world’s total, will be created. The short-term effect on the Korean economy will be bad; Korea’s current account deficit will grow bigger. But, if we take a long-term view, Korea’s trade imbalance will be improved and competitiveness will be enhanced.
But Seoul should approach negotiations with Japan with prudence. As the size of the Japanese economy is almost 10 times bigger than Korea’s, Korea’s economic dependence on Japan could grow deeper if we take a wrong approach. We must prepare plans that can minimize the damage of parts and basic material manufacturers and lessen the trade imbalance.
At the same time, we have to reflect on our past record. After many complications, the Korea-Chile Free Trade Agreement was signed. But the bill has been pending at the Assembly for the last four months because farmers reacted violently. Then the share of Korean cars in the Chilean market dropped to fifth place from second. The trade volume between Korea and Chile is small, so the damage to Korean farmers will be limited, but the pact is still stalled. How can we hope that a treaty with Japan will be ratified?
The agreement with Chile must be ratified first.