Forging ahead with FTAsKorea has taken a large step toward strengthening its global competitiveness and boosting its status on the international stage, inking a free trade agreement with the European Union this week. The agreement is slated to take effect next July, provided the appropriate government bodies on both sides ratify the pact.
The deal will lower tariffs and open the door to markets in all 27 European Union countries. In a nutshell, the euro zone - which has a combined gross domestic product of $16 trillion and a population of 500 million - will be more or less wide open for Korean products and businesses.
According to the Korea Institute for International Economic Policy, the free trade pact could boost Korea’s GDP by an estimated 5.6 percent over the next decade and lead to as many as 253,000 new jobs.
In addition, duties on most industrial products will be scrapped within the next five years, while tariffs on our mainstay exports such as automobiles and electronic appliances will come down incrementally. This will help raise the price competitiveness of Korean products against competing goods in the European market.
It’s not all roses for Korea. The agreement could hurt local farmers and agricultural producers that lack global competitiveness. According to some estimates, annual agricultural imports from the EU will increase by $31 million as a result of the FTA, taking market share away from Korean farmers and companies.
But the benefits of an FTA with our second-largest trading zone far outweigh the drawbacks. The government must therefore come up with subsidies and support programs for industries that cannot compete effectively, and it should aggressively promote the benefits of the FTA to the National Assembly, which ultimately must approve the pact.
The Korea-EU deal will likely help unclog a bottleneck that has delayed a similar agreement with the United States. Washington cannot afford to ignore the impact of the Korea-EU FTA, and thus could pave the way for the finalization of the Korea-U.S. pact, too.
Korea is very close to becoming the only country to strike free trade agreements with both the U.S. and the EU. Full access to these two economies would bring enormous benefits to Korea. We must now ensure quick and smooth legislative approval of the EU deal. The government and politicians also should work together to explain the benefits and drawbacks of the pact to promote understanding and, ultimately, backing. The National Assembly must also address the legislation as an important state matter, not a political issue.