Time to debunk FTA mythsSociety is being caught up in hearsay again as rumors swirl over the fate of the long-stalled Korea-U.S. free trade agreement, which was recently approved by the U.S. Congress but then hit a roadblock in Korea as the liberal camp expressed its steadfast opposition to calls to quickly ratify the deal. Of the sticking points, provisions on investor-state dispute settlements (ISD) have generated the most controversy.
Despite many of the rumors being gross or minor distortions of the truth, many people still give them credibility. The same was true when a mad cow scare gripped the country in 2008. Wild speculations gained more currency than they were due. Some people claimed most Americans do not eat home-grown beef, while others said they just ship the worst of it to Korea. Other scaremongers said it was possible to contract the disease from instant noodles, cosmetics and imported diapers.
The legends gaining ground about the Korea-U.S. FTA are proving equally bizarre. They are spreading quickly on the Internet and have even been quoted by senior government officials, legislators and scholars. Some argue that Korea’s history and culture will be wiped out once the FTA is signed, as Koreans would have to change the way they do business and also their behavior to avoid being sued by U.S. lawyers.
There is also talk of the arrangement entirely favoring the U.S. In other words, those who oppose the deal have tended to bury their heads in the sand and are governed completely by blind anti-American sentiment or self-serving political goals.
Take the ISD provisions as an illustration of how issues are getting blown out of proportion. These exist in most free trade pacts. They do not serve to benefit U.S. investors and companies, as the international arbitration system serves to settle disputes between foreign and local companies and states. Without such protection, no investor would take the risk of investing overseas. Some 147 countries have already adopted the ISD system. Korea, too, has used it for the last half a century. Such clauses are included in our FTAs with partners that include Chile, Singapore and India. They also exist in our investment agreements with 81 countries, such as Japan and China. And in many cases that have gone to the international panel of arbitrators, U.S. companies came out on the losing side. In fact, this system will benefit Korean companies more as we have more to invest in the U.S. market than the other way around.