[OUTLOOK]Government must convince criticsEver since President Roh Moo-hun mentioned free trade agreement negotiations between Korea and the United States in his New Year’s address in January, the government’s announcement of a plan to reduce the screen quota has pushed the entire nation into a debate over a trade agreement with the United States. In fact, most mainstream economists support free trade agreements with economic giants such as the United States, in principle. While Seoul has already concluded free trade deals with Chile and Singapore, it is true that these pacts are not very meaningful to Korea’s trade. In addition, concluding many trivial agreements with small nations can bring more losses than gains to the economy. Not long ago, the chairman of the Asian Development Bank warned that too many bilateral free trade agreements were being made in East Asia and that they might impede free trade in reality due to complicated rules, such as the rules of origin, rather than boosting trade. Therefore, the free trade agreement between Korea and the United States, which is expected to be the most advanced in terms of its scope and magnitude, will become a great opportunity to overcome the shortcomings of smaller pacts.
Strategically speaking, negotiations for a free trade agreement between Korea and the United States have a profound meaning. While Seoul has pursued deals with Tokyo and Beijing, those attempts posed various problems. Agreements with Japan and China might end up as novelties with no particular gains but full of exceptions. However, once a deal is sealed between Seoul and Washington, it would certainly inspire Tokyo and Beijing to take negotiations with Seoul more seriously. Some say that the importance of the U.S. economy has decreased compared to the past, and therefore, that we should hurry to conclude a free trade agreement with China instead of the United States. However, that argument neglects the fact that a great portion of the goods manufactured by Korean companies operating in China are exported to the United States. America is still the largest consumer market in the world, and that status is not likely to change for now. While the significance of China should never be underestimated, it is not yet a substitute that can replace the United States.
However, the negotiations for a trade agreement with the United States are expected to be turbulent. While a deal between Korea and the United States benefits the national economy in principle, the beneficiaries are the unspecified, silent majority. In contrast, the damage from the pact will be concentrated on a few relatively smaller groups engaged in certain industries. They are well organized and their claims are incendiary and specific rather than logical. Naturally, they speak up loudly and clearly, and when a debate between the beneficiaries and the sufferers intensifies, it could be amplified into an anti-American ideological dispute. In order to prevent such a rupture, firstly the government, the principal of the negotiations, needs to study the positions of the interested parties more seriously. It should never repeat the rough-and-ready maneuver of holding a public hearing only one day before announcing the negotiations with Washington. In particular, the government should compensate and subsidize those industries suffering losses within the boundary of not inflicting damage on the national interest. Once a compensation system is set up, the government should publicize its policy well to make the most of it.
Moreover, expert opinions need to be respected throughout the course of the negotiations. The products of research that experts have conducted for a long time with a macroeconomic perspective should never again be overturned by unilateral claims of some interest groups or impulsive agitations by civic groups.
Secondly, the government needs to make an effort to convince those who are likely to suffer losses by providing actual examples instead of ambiguous statistics and numbers. There are many precedents in Korea and abroad where the expected damage from markets opening is generally exaggerated. However, what is most important is the will of the government.
Since the two countries need to negotiate on many sensitive items in a short time, the government could feel heavy political pressure. However, if the government and the governing party have the conviction that a free trade agreement between Korea and the United States will benefit the national interest in the long run, the deal can be concluded successfully with only half the effort the administration has made to legislate bills for correcting historical errors and for the revising the private school act.
* The writer is a professor of economics at Yonsei University. Translation by the JoongAng Daily staff.
by Lee Doo-won