Korea must pursue bigger FTAs

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Korea must pursue bigger FTAs

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More than 500 guests attended the 2014 Seoul Conference on Trade and Industry at the Grand Intercontinental Hotel in southern Seoul on Monday. The event is co-hosted by the Ministry of Trade, Industry and Energy, the Korea International Trade Association and Korea Institute for International Economic Policy. [NEWSIS]

Korea will need to make a shift in its trade policy from bilateralism to multilateralism in response to the changing global trade landscape, according to experts at the 2014 Seoul Conference on Trade and Industry held on Monday in Seoul.

“Fifteen years ago, Korean trade policy was defensive and dominated by protectionist interests in Korean industry, agriculture and labor,” said Jeffery J. Schott, senior fellow at Peterson Institute for International Economics. “By 2007, Korean trade policy had shifted gears dramatically. Bilateralism was in the forefront of Korean policy, while it was still a reluctant multilateralist that had already discounted the value of the Doha Round.”

The conference, co-hosted by the Ministry of Trade, Industry and Energy and Korea International Trade Association, was held to mark the 10th year of Korea’s status as a hub for free trade agreements and to discuss the future of the country’s trade policy.

Schott pointed out that the country is still a “distracted multilateralist” because it is a somewhat placid participant in a number of negotiations between multiple countries. The researcher gave credit to the effort put in by Korea over the past decade to make positive changes in its trade policy, but said it has a role to play in bigger FTAs.

“Korea can become a focused multilateralist if it participates in the Trans-Pacific Partnership that it has wavered on,” Schott added. “Korea’s near-term priority should be to join the TPP and upgrade its pact with China via the Free Trade Area of the Asia-Pacific, known as FTAAP. Participating in substantive plurilaterals like TISA [Trade in Services Agreement] and ITA2 [Information Technology Agreement] will help spur new Korean reforms.”

Cheong In-kyo, an economics professor at Inha University, supported Schott’s idea, saying that Korea’s current FTA policy face challenges.

“The country should be prepared for mega FTAs such as TPP and FTAAP and its decision [to join] should be based on correct calculations of benefits and costs,” Cheong said.

According to international media on Sunday, U.S. time, 12 countries that are officially participating in the U.S.-led TPP resumed talks in Washington, D.C. The countries, including the U.S. and Japan, aim to pound out an agreement by early next year.

The Korean government announced its interest in the TPP last November, but it has not made any progress toward a decision since then.

According to government officials, Korean Trade Minister Yoon Sang-jick is expected to meet with U.S. trade officials this month.

It has been 10 years since the establishment of the Korea-Chile FTA, Korea’s first with a foreign country. Since then, bilateral FTAs have become more widespread while broader agreements, like the WTO’s Doha Development Agenda negotiations, have been stagnant.

As of this year, Korea has entered into nine FTAs with 47 nations including the United States, the European Union and Asean, and has concluded five other deals. With the recent conclusion of an FTA with China, Korea has become the only Asian country with an FTA network linking the world’s four largest economic blocs - the United States, the European Union, Asean and China.

“For the past 10 years, Korea has experienced expanding trade and investment volumes through opening the market, which has been the first chapter of the country’s FTA story,” said Han Duck-soo, chairman of KITA and former deputy prime minister for the economy, who is a strong proponent of global free trade. “In the new chapter, Korea will play a central role in establishing regionalism by connecting the U.S. and EU with Northeast Asia utilizing its past efforts and experience.”

BY SONG SU-HYUN [ssh@joongang.co.kr]


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