[Letters] Free trade is not always beneficialFree trade is not always beneficial
Korea’s middle class is in danger. Each round of new statistics reports more Koreans falling into the lower classes. With unemployment on a persistent rise, households are struggling to get by. At the same time, the country’s conglomerates are reporting record profits. Incomes at the top are growing while opportunities for job seekers are shrinking. The gap between rich and poor is growing. If some factions of the Korean government and business community have their way, this growing in inequality may accelerate to an unprecedented level.
A high ranking Korean diplomat told the Chinese press that the two countries will likely begin negotiations on a free trade agreement in 2011. Korea wants a free trade agreement to compete for the Chinese market in semi-conductors and electronics with Taiwan, after the Taiwanese signed the Economic Cooperation Framework Agreement with the mainland in June.
The bill will face opposition from small and medium-sized manufacturing firms, as well as farmers and fishermen. A free trade agreement that would expose Korean firms to low Chinese labor costs. Cheap imports would be disastrous for domestic industry. If workers in these sectors lose their ability to compete, they will struggle to earn a living in an economy that demands education and specialized skills. Even well educated candidates are struggling in the current job market.
South Korea’s Gini coefficient, the major indicator of income inequality, places it among the world’s more equal countries, fifty places ahead of the U.S and seventy-two places ahead of China. For visitors from abroad, the peace found on the streets of Korea is remarkable; locals call it chian. There is great wealth and poverty in this country, but compared to other societies, many Koreans are neither rich nor poor; they enjoy the independence and dignity that a middle class life affords.
Koreans may look to the example of North America, where the NAFTA agreement of the mid-1990’s hollowed out the American and Canadian working classes, as something to be learned from and avoided. Societies with high levels of social dysfunction tend to be unequal societies, and inequality would certainly rise with the removal of trade barriers with China.
Protectionism is a dirty word in policy circles these days, but the Korean government has some things that are indeed worth protecting. Policies to ensure the viability of domestic industry would go a long way to maintaining stability.
The details remain to be worked out, but now is the time to stress a prioritizing of Korea’s domestic peace in any free trade negotiations. Politicians shouldn’t assume that free trade is always beneficial; they would be wise to tread carefully. There is much to lose.
*Steven Borowiec, a freelance writer based in Seoul