[NOTEBOOK]There’s no hiding from tradeMany readers called the JoongAng Ilbo about a recently published article about an export vessel, transporting tires, that had to sail back to Korea after failing to obtain customs clearance from Mexico.
One of the readers insisted that the Korean government should assume responsibility for the fiasco. He said it was the government’s fault that the company couldn’t export the tires, because it was last-minute tariffs that caused the ship to turn back, not any question about the quality of the goods.
The government is not directly accountable for trade loss in the private sector, but it surely has made a blunder for which it needs to repent.
As exports of Korean-made tires to Mexico are temporarily suspended, some European makers are raising prices on tires there and enjoying handsome profits, exploiting the unexpected surge in demand. The government’s neglect of its duty has translated into loss in the private sector.
The thwarted attempts to ratify the free trade agreement with Chile in the National Assembly are the latest hot potato. The National Assembly cannot afford to postpone the bill any longer.
The lawmakers have been criticized for compromising the national interest to please voters as the general election approaches. Also, the international community has begun to label Korea an untrustworthy nation as the deal has dragged on.
But ratification would not end the trouble. After Chile, there are many countries waiting in the queue to sign free trade agreements.
Chile was chosen as Korea’s first free trade partner because there is such a buffer between the countries. Geographically, Chile is one of the farthest countries from Korea. Their seasons are opposite, and the time difference is exactly 12 hours. Transportation between the countries is inconvenient, to say the least. It seemed like the most suitable country with which to begin removing trade barriers, since the shock from trade with Chile was expected to be small.
But this seemingly easy task has taken more than five years since both governments, in 1998, first agreed to pursue a free trade agreement.
Negotiations that began in 1999 were concluded in October 2002. Though the government introduced the bill to the National Assembly for ratification in July, it is still pending. Japan, Singapore, Mexico, Thailand and New Zealand are mentioned as potential future partners. Someday, we will have to sit across the table from China and the United States.
Negotiations with China and the Untied States would be much more difficult, due to their immense trade capacity and complex relations. No matter how the deal is made, certain domestic industries will have to suffer. If a free trade agreement is signed with China and cheap products pour in, many Korean businesses would oppose the deal.
Free trade agreements have become an international trend. Up to 1991, there had only been 31 such agreements signed worldwide.
But in the last 13 years, over 100 free trade deals were made. Fifteen have been closed this year alone, and more than 10 more are expected by the end of the year.
As the 12th largest trading country in the world, Korea has no choice but to follow the flow. Among the 148 members of the World Trade Organization, Korea and Mongolia are the only two countries with no free trade agreements. Even Mongolia has recently suggested a free trade agreement to Seoul, in a realization that we should not be left alone.
The concern is over the responses of the industries that are expected to suffer from such treaties. Avoiding free trade agreements altogether, to save the agricultural industry from potential losses, is no solution. Beyond the loss or gain in each industrial sector, the government needs to pursue the overall national interest when making a decision.
We should draw up special programs to enhance the competitiveness of the agricultural industry, and seek ways to overhaul the industry’s structure.
The government and the politicians are responsible for inducing a social consensus. If the government and political leaders continue to neglect their duties to persuade, educate and prepare the citizens and industries for the free trade agreement, we are bound to repeat the “tire fiasco.”
* The writer is business news editor of the JoongAng Ilbo.
by Min Byong-kwan