[Viewpoint] An economic Iron Curtain?

The Korus FTA is still waiting to be ratified after it was signed in June 2007, two and a half years ago.

The benefits that the free trade agreement is supposed to bring are once again being delayed as voices of opposition in the U.S., especially in the automotive industry and Congress, declare that sections of the FTA regarding automobiles were negotiated unfairly against the United States.

In particular, Congressman Sander Levin has argued that there is an unfair imbalance in bilateral trade, claiming that Korea annually exports 700,000 cars to the U.S., while the U.S. exports only 7,000 to Korea.

Yet this argument does not take into account the huge difference in market size between Korea and the U.S., nor does it take into consideration the continuous, sincere efforts on the part of Korea to ensure the openness of its market. Levin has even gone so far as to suggest that Korea has been maintaining an economic “Iron Curtain” against U.S.-manufactured products.

Winston Churchill used the term Iron Curtain in a famous speech at the onset of the Cold War to describe the Soviet Union’s closed, secretive society and its antagonistic external policies.

For the Korean people - who suffered through the Korean War, a fratricidal battle over ideology - the term signifies a closed communist society and has particularly painful connotations.

Hence, Levin’s reference to an economic iron curtain is inappropriate and insensitive.

In regard to the openness of the Korean automotive market, imported cars have steadily increased their market share from 0.84 percent in 2000 to 7.21 percent in 2008.

In 2009, the country saw a sizable drop in automobile imports, which captured just 5.65 percent of the domestic market. It ranks as the first drop in a decade. However, this was mainly due to the global economic recession, not an overall change in the dynamics of the market here.

The global trend toward localization of automobile production is another important factor when measuring imports and market share of foreign cars. When this is taken into account, the market share of foreign cars, including GM Daewoo and Renault Samsung, reached 20.8 percent last year. Furthermore, the outlook for the Korean economy is optimistic, with expectations that automobile imports to Korea will grow as we continue to recover from the crisis. It is also worth noting that European and Japanese automakers, which already have a lion’s share of the imported car market, are expected to expand their share.

For the last five decades, Korea has actively pursued a trade policy based on trade liberalization, and its economic development has been attributed to such openness. It was in this vein that President Lee Myung-bak proposed a standstill in protectionism at the G-20 summit held in November 2008. And it was in recognition of the active role Korea plays in promoting free trade that the country was chosen as the venue to hold the G-20 summit this year.

Therefore, it is regrettable that a congressman of our close ally - who, as chairman of the Trade Subcommittee of the U.S. House of Representatives, should have a clear understanding of our bilateral trade situation - has accused Korea of building an iron curtain.

*The writer is a first secretary of the Ministry of Foreign Affairs and Trade.

by Lee Tae-won