[LETTERS to the editor]Three arguments in favor of the FTAAs witnessed this week when angry activists disrupted the public hearing on the free trade negotiations between Korea and the United States, the issue of the proposed agreement is meeting sharp opposition from activists and farmers. The issue is important to both countries, but perhaps more so for South Korea; an FTA will heavily influence the future of the Korean economy. In Korea, the prevailing sentiment among those who oppose an FTA has been to focus on anticipated negative side effects, fearing an extreme burden on the public. This stems from fears left over from the experience of the 1997 Asian financial crisis. However, an FTA between Korea and the U.S. is integral to South Korea’s continued prosperity.
The overwhelming antipathy against an FTA with a superpower seems pessimistic and based on a misunderstanding. First, an FTA between Korea and the USA will not seal the fate of our agriculture sector and second, Korea needs to recognize and develop a competitive service industry. Last, an FTA is the key to survival in the 21st century.
With skyrocketing land prices shrinking agricultural areas, Korean farmers fear the flood of American agricultural exports. In this regard, the continuing outrage from Korean farmers is understandable and also reminiscent of two past events: 1) the ROK-Chile FTA, and 2) the opening of the rice market, neither of which devastated Korea’s farming sector. The Korea-Chile FTA brought about radical protests by farmers and some members of Parliament, which set back ratification by six years. However, once it came into effect in 2004, the FTA was called successful by many economists.
In the recent opening of the rice market, the farmers once again engaged in violent protests. However, rice imported from the United States has been piling up in warehouses because it is unpopular with Korean consumers. Evidently, an FTA with the U.S. will not damage Korean rice agriculture.
Moreover, the Korean service industry should gain competitiveness and raise its standards. Korea has been resisting competing with the United States in the service industry due to its relatively weak service sectors, including education and health care. What Korea needs to recognize is the importance of tertiary industries.
In order to overcome primary and secondary sector limitations, Korea needs to develop its comparative advantage and its human resources, in the service sectors. It is a widely accepted principle that the market mechanism of competition enhances the quality of products. When Korea liberalized its IT trade with Japan, Korea’s IT sector was still behind Japan’s. Although at the time, large corporations like Samsung opposed the plan, competition has led Korea’s IT industry to overtake Japan’s. It is undeniable proof that competition is the essence of success.
Free trade agreements have become a global trend, and with approximately 200 now in effect, it is inevitable that Korea join in.
To the international community, South Korea represents success and optimism through free trade. In the 1960s, Korea was one of the poorest nations in existence, with a GNP of $80 per person. However, since beginning free trade in 1970, it has become the 11th largest economy in the world. Goldman Sachs predicted Korea’s economy will reach second or third in the world provided if it liberalizes extensively.
by Yun Sae-mi