For China FTA, baby steps OKSouth Korea and China announced that they have formerly begun negotiations for a bilateral free trade agreement. Trade Minister Bark Tae-ho held a meeting with his Chinese counterpart Chen Deming and said the two sides will begin the first round of talks later this month.
A free trade pact with the country’s largest trading partner would have more significance than economic benefits alone. A trade deal with China, following a similar pact with the United States that went into effect in March, would serve as important geopolitical leverage for Korea amid growing competition among the world’s top superpowers and the sensitive alliances between Seoul and Washington, and Pyongyang and Beijing.
Korea cannot further delay a free trade deal with the world’s second-largest economy when China is eagerly pursuing tariff-free trade zones with its other neighbors. But the government must tread carefully and be extremely thorough in the upcoming talks as a Korea-China trade deal could cause repercussions on a scope unmatched in similar pacts with other countries.
The two sides agreed to hold talks in two stages. Korea has categorized agriculture and fisheries as sensitive fields, while China has set aside automobiles, machinery and petrochemicals for future talks. The sensitive items should either be excluded from tariff cuts and waivers - or have these take effect at a later date - if the two countries want to make headway in the talks. But even a free trade deal that excludes these would be a good start in opening up the two markets. The services-investment sector and other popular products should be liberalized far beyond the World Trade Organization-set guidelines to generate reciprocal benefits.
Most importantly, the government must consult with local industry in the process of negotiating with China. Resistance to the deal could be unavoidable if it does not draw up actions to minimize damages to industries after market opening. Ideally, the deal with China will proceed smoothly, unlike in the case of the Korus FTA, as both sides have been paving the way for it and conducting studies for the last seven years. However, the work has been mostly research-oriented and has not really reflected public opinion or industrial consensus.
The government should not rush to finalize a deal. Instead, it should lay a firm groundwork through hard negotiations in the first stage of talks and allow the incoming government to proceed at a comfortable pace so that no mistakes are made.