Group calls for end to FTA benefit-sharing planA local business lobby group is calling for a halt to the trade benefit-sharing proposal because of the difficulty in identifying the winners and losers of a free trade agreement (FTA).
The trade benefit-sharing system is a unique Korean policy that legally requires the main beneficiaries of FTAs to compensate agricultural producers and fisheries who suffer financial damages.
The system was submitted as a bill in 2012 by several ruling Saenuri Party lawmakers. However, it is still stuck in the legal audit committee.
The controversy resurfaced last week when the lawmakers asked Prime Minister Hwang Kyo-ahn to accelerate the legislation, as the Korea-China FTA may pass the National Assembly soon.
“It is impossible for an industry to calculate the pure benefits of an FTA because it should consider a vast variety of factors ranging from tariff reduction to the general economic situation, currency rate and raw material prices,” the Federation of Korean Industries (FKI) wrote in a statement released on Monday. “Even within a single industry, some companies benefit while others don’t, depending on how the company uses the FTA or not.”
The FKI showed a study that analyzed the economic impacts of FTAs with the United States and European Union to back its opinion.
The trade balance of Korean auto, machinery and agricultural products improved in the three years after the Korea-U.S. FTA in 2011, the study showed, while local livestock products faced export damages.
In the case of the Korea-EU FTA, the trade balance of the auto, machinery, agricultural and livestock industries all worsened during the period, due to an overall economic slowdown in the eurozone.
BY KIM JI-YOON [firstname.lastname@example.org]