[Outlook]Korea-China FTA red flags

The issue of a free trade agreement between Korea and China has surfaced again as President Lee Myung-bak visited China. The two countries’ private sectors have conducted a joint study on a free trade agreement for two years.

Now, the final conference of the study, which included both the public and private sectors, is being held in Beijing. The study focused on the economic effects of a free trade deal between the two countries, the possible scope of a deal, potential effects on different industries and measures to protect private manufacturers. The conclusions are to be released soon.

China has been far more active in pursuing a bilateral trade accord than we have. Effects of such deals are very difficult to estimate in advance.

However, considering the trade structure between Korea and China, China is much more competitive than us when it comes to agricultural products and fisheries.

These sectors will almost certainly be damaged in Korea by a free trade deal. Thus, Korea has been very careful about approaching an accord with China.

In general, when a country pursues a free trade agreement with another, the primary goal is economic, but a free trade agreement also has strategic factors, such as securing a country’s survival, and pursuing prosperity and influence.

In this sense, the reasons China is pushing for a free trade accord with Korea can be summarized as follows.

First, it is about economic benefits. China intends to pursue sustainable economic growth and development, using a Korea-China free trade agreement which would complement both countries’ economies. China plans to learn intermediate technology and management skills from Korea in order to advance its industries and enhance its competitiveness.

The Korean development model applies less pressure than the U.S. liberal market model, which poses political and economic risks. By successfully starting a free trade accord with Korea, China also expects other countries in the region to join an economic bloc led by the two nations.

A free trade agreement between Korea and China would certainly increase economic cooperation between the two countries and have positive effects on China’s economy, but the impact wouldn’t be so large as to be assured of a strong influence.

Besides, economic engagement and cooperation between the two countries are expanding already, without a free trade deal, and the two countries’ economies are growing increasingly dependent on each other.

China wants to increase economic interdependence between Korea and China by signing a free trade accord. At the same time, it plans to secure its influence on the Korean Peninsula by increasing cooperation between South Korea, North Korea and China, using its existing pull here.

For China, the Korean Peninsula is a neighboring country geographically, and at the same time China’s interests with strong countries like the United States, Russia and Japan meet on the Korean Peninsula.

Therefore, a free trade agreement with Korea is important in terms of securing a stable environment.

In a way, China’s pursuit of a free trade agreement with Korea could be a response to the Korea-U.S. free trade deal. China regards the Korea-U.S. trade accord as the United States’ way of keeping China in check. China thus intends to enhance its economic bonds with Korea in an attempt to offset U.S. influence on the Korean Peninsula.

A stronger say for China on the Korean Peninsula through a Korea-China FTA could lead to further moves by China to take the lead in regional cooperation in East Asia.

How should Korea respond to China’s strategic approach? Some maintain that if this trend is inevitable we should take it and form multiple free trade agreements after the Korea-U.S. FTA and a possible Korea-EU trade accord.

Others say that there is no reason to pursue it without any safety measures when negative effects are expected.

After the research into the viability of a Korea-China free trade agreement is released, the two countries will start a tug of war. Amid globalization, free trade agreements are strategic choices.

All countries with a market economy are faced with these choices, and as such the most important thing is to communicate with the people and persuade them of the benefits.

Korea should show China how careful it is when negotiating free trade agreements with other countries.

We should remember the chaos over the deal to import U.S. beef and the free trade agreement with the United States, and should do our best to get the most positive result possible.

*The writer is the director of the Research Center for International and area studies at Hankuk University of Foreign Studies. Translation by the JoongAng Daily staff.

by Kang Jun-young