Two FTAs a study in contrasts for local exporters
Exporters are benefiting from the free trade deal with the United States after just 100 days, but the country’s FTA with the European Union has not prevented a drop in shipments to the crisis-hit continent one year after it was signed.
However, imports from the U.S. have retreated since the pact took effect on March 15, while those from the EU have grown since last July.
According to a report released by the Ministry of Strategy and Finance to commemorate the 100th day of the Korus FTA, which falls today, exports to the U.S. have risen 8.4 percent from March 15 through June 15 compared to the same period last year. This comes as total exports, excluding those to the U.S., slid 2.5 percent over the same period.
“Exports of key items like auto parts and petrochemical products [to the U.S.] increased by 16.8 percent, leading the growth in total value,” said Park Il-young, an official at the Finance Ministry.
Korean-made products are expanding their presence in the U.S. import market. Their market share rose to 2.89 percent as of April from 2.42 percent in March, according to Korea International Trade Association.
Meanwhile, the Korea-EU FTA has not yet produced favorable results, largely due to the sovereign debt crisis in the continent. Exports to the EU plunged 12.1 percent from July 1 last year to June 15 this year, compared to the previous year.
“The decrease in exports to the EU stemmed from a significant reduction in orders for shipbuilding from Europe,” Park said.
By volume, local shipmakers saw their exports to the continent plummet 47.3 percent over the same period.
In contrast, Korea is importing more from the EU now than it was before the trade deal was signed, with inbound shipments growing 13.5 percent on-year, according to the report.
“As Korea began importing European crude oil in order to diversify its oil-buying channels beyond the Middle East, oil imports rose from zero to $1.58 billion after the FTA was implemented,” said Shim Kyu-jin, another ministry official.
Imports of consumer goods such as handbags, shoes, watches and cosmetics made by European companies have also increased by 10 to 30 percent.
“Both FTAs have served as important pillars to shore up the economy amid growing external uncertainty,” Shim said.
The International Monetary Fund analyzed Korea’s economy early this month and reported that the two deals will give the economy a push in the second half of the year.
Meanwhile, the Fair Trade Commission (FTC) said yesterday it tested the prices of 22 goods that are imported from the two trade partners and found that 15 of them have been reduced in price since the respective FTAs took effect. It wrapped up its survey on June 14.
The FTC said that nine of 13 U.S. imports have had their prices trimmed by 21 percent on average.
By Song Su-hyun [email@example.com]
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