[Viewpoint] FTA is a shield against a double dipLately, something unusual is happening with the U.S. economy. The atmosphere has completely changed from the beginning of the year when financial authorities were debating when to announce an interest rate increase.
Since the tax credit of up to $8,000 offered to first-time home buyers ended in April, housing transactions have nearly disappeared. The mortgage loan interest rate has plummeted to a historic low. The economic upturn that seemed to have started earlier this year was just the result of the government’s economic stimulus measures.
Outside the United States, circumstances are just as gloomy. The $1 trillion relief package seemed to have ended the financial crisis that hit Europe, but there is no sign of resolution or recovery now. Germany, which is responsible for providing the funds, is reluctant to take on the burden for failed economies.
Understandably, Germany is not pleased with the Southern European nations that squandered money and are still not aggressively making efforts to revive the economy. And the United States does not have any magic tricks to make things better. Arizona has enacted a controversial law allowing the state government to crack down on illegal immigration, which is under the jurisdiction of the federal government. In short, Arizona is not willing to give jobs to illegal immigrants.
Humanity paid a high price for the Great Depression of the 1930s. If you try to survive by bringing down others, you will all go down together. Countries around the world experienced the worst of the depression as they closed their markets. Korea weathered the financial crisis of 1998 because it boldly broke down all boundaries. By tearing down the wall surrounding the market, Korean companies found ways to move outward.
The United States finds itself in a similar situation. The U.S. government poured in $787 billion to boost domestic consumption, but the market has not warmed up. The Buy American Act, a clause passed in 1933 that requires the suppliers to the U.S. government to use U.S.-made products, was revived. Its purpose was to protect jobs in the U.S., but it is repellent to Europe, Canada and China.
For the United States to get out of this quagmire, it should not try to survive at the expense of other economies. The answer is free trade, which will benefit all parties. Fortunately, President Barack Obama has proposed early ratification of the free trade agreement between Korea and the United States. The Korea-U.S. free trade agreement is not enough to significantly change the U.S. economy, but its impact on both countries and the global economy will be unimaginable.
The FTA will be a shield for Korea against the second economic crisis. The European and U.S. markets are struggling, and the aftereffects are sure to come to Korea very soon. If Korean products are freely sold in the U.S., Korea might be able to win an advantage over China, Japan and Taiwan.
The remaining obstacles are cars and beef. Beef is a sensitive issue in Korea, but there is room to respond with far more flexibility when it comes to the automobile industry.
Korean cars are enjoying immense popularity in the U.S. marketplace. To continue this success, Koreans need to buy more U.S.-made cars. Considering the enormous size of the U.S. market, Korea is giving up one to get three or four. Rather than debating the renegotiations, we need the wisdom to secure our actual interests.
*The writer is the New York correspondent of the JoongAng Ilbo.
by Jung Kyung-min