[EDITORIALS]Free trade accord with Japan

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[EDITORIALS]Free trade accord with Japan

Diplomatic negotiations for the conclusion of a free trade agreement between South Korea and Japan have bee stalled for three months. It seems both countries are only interested in verbally attacking each other without setting a date for another meeting.
Korea blames the Japanese government for the failure. Accoring to Korea, Japan insisted on opening only half of its agriculture and fisheries market during unofficial negotiations.
Of course, this is a far cry from the principle of free trade, “practical and high level of liberalization.” On the other hand, Japan passed the buck to South Korea claiming, “Korea refuses to exchange a memorandum of understanding fearing an increase in imports of industrial goods.” Japan is not in a position to recognize products manufactured at the Gaeseong Industrial Complex in the North as South Korean products because it is now considering whether to impose economic sanctions on North Korea over the abductee issue.
Japan must first take into account Korea’s difficult position. Korea determined to risk short-term damage when it decided to sign a trade deal with Japan. Korea’s average import tariffs are about three times higher than Japan’s tariffs. Naturally, Japan will benefit more from the deal and Korea’s trade deficit with Japan could increase by as much as $1.4 billion. It will be burdensome for Korea’s auto, machine parts and material industries to compete with Japan.
The Korean government must persuade businesses in a more frank manner. It pursued protectionist policies for 40 years, but the machine parts industry is still fragile. The competitiveness of Korea’s parts industry is far below those of Hong Kong and Taiwan. Korea must restructure its industries and distribute resources more efficiently.
The trade agreement includes many issues on which the future of the two countries’ economies depends, such as industrial goods trade and technology transfers. The talk shouldn’t be stranded because of the agricultural and fisheries sector problems. The deal is the first full-scale free trade negotiation that befits the economic status of both countries. It will lead both countries to a trilateral trade agreement with China. The importance of Northeast Asia in trade has grown on par with that of the European Union or the North American Free Trade Agreement. If negotiators of both countries meet with open minds, they will find a solution.
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